Tue | Aug 22, 2017

Rosalea Hamilton and Vanus James | Boosting jobs in constituencies

Published:Friday | September 23, 2016 | 9:00 AMVanus James and Rosalea Hamilton

This fiscal year, the Government plans to spend $459.4 billion, or 79% of the Budget, on day-to-day operations such as salaries and utility bills (i.e., recurrent expenditure) and $120.6b, or 21% of the Budget, on long-term development projects and programmes (i.e., capital expenditure). This means that we have $88.4b less available for capital expenditure than we had last year, to rev up the engine of growth and create the jobs in constituencies promised by members of parliament (MP).

It is this capital expenditure that is critical for driving growth in the economy and enabling the country to achieve the 1.7% growth in FY16-17 projected in the IMF's 11th and 12th EFF reviews. But how does this capital spending translate to boosting jobs in constituencies? Perhaps it is time to find a sustainable answer to this question.

To avoid jobless growth, what must be decided is which forms of capital spending most directly support the export-ready, job-creating firms. While the benefits of broad-based capital spending are foundational and important, successful job creation also requires that a portion of capital spending be directed to supporting the firms that are export-ready and can create jobs.

Some of this specificity comes from gathering and studying micro-data from businesses, such as the Scotiabank Enterprise-Wide Risk Management and Financing dataset collected by the Scotiabank Chair in Entrepreneurship & Development at the University of Technology (UTech), Jamaica. Such data enable us to better identify the export-responsive firms in specific constituencies and communities.

 

EXPERT-READY CREATIVE FIRMS

 

We can estimate that the highest concentration of the export-ready creative firms is in Kingston (12% of all firms). The other significant concentrations are the neighbouring St Andrew (8%) and St Catherine (7%). Significantly, the data enable us to provide targeted support to these firms in the context of Kingston's new designation as a Creative City of Music by UNESCO.

It should not be too difficult to assemble these firms for a dialogue about the type of public physical and social capital infrastructure that will most significantly boost their capacity to export. For example, investing in a state-of-the-art performance centre or music museum is an important investment proposed by music/cultural stakeholders for some time now. This can build global demand for high-quality entertainment that will attract an international market on an ongoing basis and support cultural tourism. This is the difference between public capital spending on infrastructure and sustainable job-creating capital spending.

Some of the specificity also comes from having active, ongoing dialogue about capital spending between the people and enterprises in constituencies and the sitting MPs involved in the Budget Debate. Under the leadership of the MP, this active dialogue infuses targeted job-creating projects and related capital spending into the budget process.

If this is complemented by the initiatives of firms in the constituencies that are involved in forging international partnerships to attract foreign investment to help domestic firms become ever more export-capable, job creation would follow along with a more complete market response to the initiatives that seek to improve the balance of payments and budgetary problems.

 

MP'S MORAL AUTHORITY

 

The leadership of the MP cannot be understated in this process. In addition to being able to commandeer data from the ministries, the MP has the moral authority to assemble the full spectrum of business leaders in his or her constituency to consider how best to create jobs through targeted capital spending. The constituents, however, must be willing to dialogue with their MP and make their voices heard.

Engaging dialogue around the Budget is now much easier with the assistance of the Jamaica's Citizens' Budget and Guide, prepared by the Institute of Law and Economics in collaboration with the Scotiabank Chair in Entrepreneurship and Development at UTech. This guide will assist Jamaicans in understanding many aspects of the Budget, including the Government's plans for capital expenditures.

Now more than ever we need to use micro-level data with available budget information and rethink our relationship with our MPs by making our voices heard, especially the voice of entrepreneurs, to ensure that we get the most from our capital spending to boost the much-needed jobs in constituencies across Jamaica.

- Vanus James, PhD, and Rosalea Hamilton, PhD, Scotiabank chair, Entrepreneurship & Development, UTech. Email feedback to columns@gleanerjm.com and rhsermaf@gmail.com or scotiabankchair@gmail.com.