Editorial | Global competitiveness, growth and high-paying jobs
The October 8th publication of the 2019 Global Competitiveness Report (GCR) by the World Economic Forum should be required reading for policymakers and business leaders. The report highlights some of the most profound development challenges facing the world economy, as well as for specific countries and regions, including Jamaica.
This report explores the relationship between competitiveness, shared prosperity and environmental sustainability, suggesting that there is no inherent trade-off between building competitiveness, creating more equitable societies that provide opportunity for all and transitioning to environmentally sustainable systems.
Not surprisingly, the report reinforces the now firmly established view in the development literature, and based on overwhelming evidence, that growth is the most effective way to lift people out of poverty and improve their quality of life.
Building on four decades of benchmarking competitiveness, the index maps the performance for 141 countries, representing over 98 per cent of global output. The index is built using a number of pillars covering broad socio-economic elements: institutions, infrastructure, ICT adoption, macroeconomic stability, health, skills, product market, labour market, the financial system, market size, business dynamism and innovation capability.
Singapore was adjudged to be the most competitiveness economy on the planet with a score of 84.8 out of 100 moving up one place ahead of the USA which scored 83.7 and fell from first place in 2018. The closer a country’s competitiveness score is to 100 is the better prepared it is to meet to the global challenges to compete successfully and build shared prosperity.
In the case of Jamaica, the country slipped one place in 2019 to 80th from 79th in 2018. Jamaica’s score was 58.3 out of 100, the exact score as Dominican Republic and Trinidad and Tobago. From the region, only Barbados, at 58.9, did marginally better. Having all the major economies of the Caribbean stuck at around the same score ought to at lease elicit some deep reflection from our regional analysts and policy makers.
When the elements of competitiveness used in the ranking are looked at closely, some worrying signs emerge quickly for Jamaica. Three critical areas that the country has been grappling with for years: security, public sector performance, and research and development scored poorly. Of the 141 countries ranked, Jamaica was, unsurprisingly, at 131st in relation to security. For public sector performance, the country’s ranking was 119th and for R&D it was 112th. Improvements in these areas can have broad based positive effects on the country’s competitiveness and growth.
COMPETITIVENESS FOUNDATION FOR GROWTH
The governor of the Bank of Jamaica recently lamented the fact that the types of low-value jobs that was been produced 20 years ago are quite similar to the ones being generated today. That is the result of the lack deep structural change in the productive base of the economy over the period. Indeed, while there has been significant investment in the telecommunication, road infrastructure and the BPO sectors, the basic composition of Jamaica’s exports has not changed significantly since the 1980s. The vast majority of the labour force is employed in the non-tradable services sector with relatively low skills. Productivity is generally low and thus wages are low. This low wage economic base can only be turned around by deliberate policies to incentive investments in new high technology industries and high-level human capital.
Economic competitiveness is the critical area of reform that the Government and the private sector must tackle in this post-IMF era if the higher rates of growth the country deserves, and the quality jobs that Governor Byles wishes to see are to be realized.
In July 2014, Jamaica signed a loan agreement with the World Bank for US$50 million to drive competitiveness and growth. After five years of implementation, there has not been much improvements in the country’s overall global competitiveness. It would be useful to hear the degree of progress and how much more work is needed to make rapid progress up the global competitiveness index. Long-term GDP growth and national prosperity depend on it.