Letter of the Day: Growth czar no quick fix for economic stagnation
THE EDITOR, Sir:
The minister of finance, Dr Peter Phillips, is very committed to the present economic reform programme. However, notwithstanding his discipline, growth rates continue to be anaemic.
Therefore, the calls for his administration to appoint a growth czar are getting louder. This suggestion represents a misunderstanding of the workings of a market economy. Currently, Jamaica does not need another bureaucrat to identify mega projects, but a reformist who will facilitate entrepreneurship more efficiently.
The Ministry of Science, Technology, Energy and Mining (MSTEM) is often touted as a crucial ministry in the quest to acquire growth. But like its counterparts, MSTEM lacks workable ideas to supplement the growth agenda. For example, according to recent research conducted by the World Bank, over the period 2009-2014, fewer than 20 per cent of Jamaican firms introduced a new product to the marketplace.
Businesses that do collaborate with academia are 70 per cent more likely to create new products, according to the OECD. Despite the available data, nothing has been done by MSTEM to facilitate a stronger linkage between academia and industry. It requires cash to fund any programme of substance.
Therefore, the resources of the CHASE Fund must be used more judiciously. We cannot be funding sports and refrain from investing in science; this makes no sense. The Government, in partnership with the private sector, could finance an industrial PhD programme. This is one way to make companies more competitive.
In such arrangements, governments usually finance the tuition for the researcher, while private companies sponsor the research. A 2013 survey of Denmark's industrial PhD programme concluded that it created value for both students and businesses. Participating companies reported having increased revenue and new services, while it made students more aware of the practical implications of research.
Another important policy instrument to foster innovation in the private economy is the use of innovation vouchers. These vouchers enable small businesses to buy expertise from universities or research institutes regarding preparatory studies or the acquisition of new technologies.
According to a recent review of Austria's innovation voucher, had it not been for the voucher, projects would be smaller and occur at a later date. The Development Bank of Jamaica could be a possible source of funding for this initiative. We need political leaders with workable ideas to generate growth, not arrogant growth czars.