Jamaica's elusive growth agenda

By Dr David Lowe

For as long as I can recall, the issue of growth and development has been at the forefront of intellectual discussions and policy debates. Several policies have been posited, with vigorous arguments concerning its benefits and potential.

At this point, under an International Monetary Fund agreement and the many challenges that we face, a far more important matter has been of critical importance than the ideas themselves. With all of the indigenous talent we possess, we must consider a question with serious introspection beyond the rhetoric of the political blame game.

What are the reasons for not achieving the elusive growth agenda and our inability to implement key game-changers? Is it our expensive energy supply, the untapped value of Jamaican agriculture, or the apparent unbalanced benefits in our trade policies?

In Adam Smith's seminal book, The Wealth of Nations, he made reference to the concept of the "invisible hand" - the forces that result from the motivation of private enterprises to maximise their wealth through trade and entrepreneurship, thus making society better off. What has prevented that invisible hand from working in Jamaica?

At the time of writing, we have established that the economy has grown in the last quarter. This important metric, in terms of our fiscal performance against targets, will give comfort to economists fixated on the need for 'positive growth' based on macroeconomic variables.

In our quest for growth, we must not mislead ourselves by achieving what many other countries are facing: jobless growth, or growth generated by austerity measures which seek to compress public spending and maximise tax revenues, without seeing a corresponding growth in private businesses.

It is the spending and investment of private enterprises that is required to enable a sustainable recovery, when sales and profits are growing at rates fast enough that they can think of retooling, conducting research-and-development expenditures, skills training, and hiring of new employees who will, in turn, become consumers of goods and services of other businesses.

MY OBSERVATIONS

I cannot offer to put forward a solution to Jamaica's problems in a short op-ed, nor would I claim it is possible. However, I wish to offer my own observations from my unique point of view which includes my experience of living and working in two developed countries and working in both the public and private sectors in Jamaica.

1 Improve trust: Improve the trust between the public and private sectors. This is not to imply that it is adversarial, but there is still a fundamental culture that needs improvement. Many national issues may have greater possibilities for success with a shared value approach for problem solving.

2 Commit to fiscal discipline and debt management: Many of the problems that confront us today are based on the lack of resources to handle recurring financial obligations based on policy decisions in the past that have been compounded to date. If Jamaica does not commit to financial discipline, we will compromise our ability to make game-changing initiatives.

3 Reduce bureaucracy: In a business context, Government should always be focused on the concept of enablement and compliance. The evaluation of our ranking in the Doing Business index is an ongoing issue as it relates to bureaucracy. Leveraging greater use of technology to empower people to get approvals and transact business with the government agencies can enable a more expedient process.

4 'Renew' the justice system and review laws: Repeal and amend outdated laws that are obstructive in the current environment. Reconsider the effects of the current Bankruptcy Act to enable entrepreneurs to have business continuity under a managed bankruptcy process so as to protect productive resources and employees during difficult economic times similar to what prevails in the United States and the United Kingdom. Let's remove the fear and stigma of a failed business in a market economy.

5 Focus on innovation and benchmark against world-class standards: We must develop our capacity to innovate and provide value to consumers and export markets. Innovation does not happen by dictate, but it can be cultivated through the application of science and technology in academia and private enterprise.

Let us not wait on Adam Smith's invisible hand, but address the enablers for real growth for sustainable macro and micro outcomes.

Dr David Lowe is vice-president - marketing and retail sales at Caribbean Producers (Jamaica) Limited.