Jamaica too small to generate real wealth, says UWI academic
Executive Director of the Mona School of Business and Management, Dr Densil Williams, is calling for a change in mindset by Jamaican businesses, saying they must focus more on growing markets overseas.
Too many traders are under the illusion that the local market is sufficient to do business, the academic said, while intoning that Jamaica is too small to generate real wealth.
“Jamaican business people have to recognise once and for all that Jamaica is just too small and you are not going to make a lot of money in Jamaica. This is not to say that you can’t make money; but you’re not going to make a lot of money,” Dr Williams said as he outlined the case for exports at a seminar put on by the business school at the University of the West Indies last Thursday.
Tracing the history of economic growth patterns in Jamaica, the academic spoke of the interplay between increases in consumption, investment along with government spending and the effect on net exports in generating gross domestic product, but argued that historically none of the first three variables have managed to produce the GDP growth needed.
Starting from a base of US$14 billion, Williams said: "Let us assume that Jamaica needs to grow the economy by say 3 per cent. It simply means that you would have to add US$420 million to our GDP stock. If you want to grow by five per cent then you would need to add US$700 million”.
He reasoned that this would translate to a 239 per cent increase in exports for three per cent GDP growth and 252 per cent for five per cent growth.
“Our exports today is just about US$1.6 billion. If we are to grow using exports then we need to be exporting somewhere in the region of US$3 billion to US$4 billion,” Dr Williams said.
He argues that the numbers are attainable due to the untapped potential in certain exports, demand for which is unsatisfied.
“Mining continues to be the largest contributor to exports in Jamaica. But when we look at things like food exports at US$144 million that really doesn’t tell the story because that is what we are doing. When you look at the demand for it then that is where the story is,” he said.
He says of 99 export food items examined, four accounted for 97 per cent of all food exports.
It is up to the Government, he said, to set targets and lay the framework for export growth.
"You (government) have to say to the export sector ‘You have a specific target to achieve’ and then say to them ‘What is it that you need me to do?’. If I want a 300 per cent increase in exports then we must identify the players and target them,” Williams advised.
He adds that a $2 billion investment in exports could have a $9 billion impact on the Jamaican economy.
“We are into the business of wealth creation, we’re not just in the business of making money; we are into wealth creation and wealth creation means that we must try to beat the market,” said the business school head.
“What the local business person must say is ‘I know that I can make money locally but I can make more money overseas and therefore I am willing to take that risk’.”