Misdirected education spend holding back economic growth, says CDB head
DR WARREN Smith, president of the Caribbean Development Bank (CDB), says the region has done a poor job of investing in and developing its human capital, and has suffered for it, as evidenced by its anaemic economic growth.
On Wednesday, the banker urged a rethink of institutional investment in human resources, including more useful training, as one way to leverage better returns from capital outlay.
"I suspect very strongly that the technology and the innovation are not being sufficiently or adequately supported by the human capital that is required," said Smith in a presentation at the 10th annual Regional Investments and Capital Markets Conference hosted by the Jamaica Stock Exchange.
Comparing average growth rates achieved by a number of different Caribbean countries and some Asian countries, Smith said: "St Kitts-Nevis and Belize stand out as having the highest investment levels in relation to GDP among Caribbean countries, but when you compare St Kitts-Nevis' growth rates to places like India and China, in fact, what you will find is that their growth rates are substantially below India and China."
The twin-island Caribbean nation grew at a rate of 4.2 per cent in 2013; while China's economy expanded at a rate of 7.7 per cent, according to World Bank data.
"The lower investment cannot explain the growth rate," the CDB head added. "A number of studies have shown that it is the efficiency of that investment, which is not very great. In other words, we are not getting the bang for the investment buck," he said.
Alongside the region's indebtedness, another structural factor blocking growth, the development banker said, was the wrong type of education, noting that while the region boasts high literacy rates, it was lagging in education in science and technology.
"The type of education that we have spent so much time and money on is not necessarily appropriate for the needs of the economy. There has been underinvestment in what has been referred to as STEM - that is science, technology, engineering and mathematics. So, that is something we need to work on," he said.
Looking as well to what he described as the structural factors relating to doing business, he said that while the Caribbean looks to Singapore as its benchmark, it falls "substantively short of where Singapore is, notwithstanding the developments which have taken place, especially here in Jamaica. There is still much work to be done," he declared.
He adds that while the CDB itself continues to fund education and training, and provide technical assistance, removing the structural impediments will require investment in technology and innovation by countries in the region.