Letter of the Day | Jamaica needs higher dosage of growth booster
THE EDITOR, Sir:
One must commend the Economic Growth Council (EGC) for tackling the Herculean task of coming up with a growth plan for the Jamaican economy. There is a generous acknowledgement and a frank admission that they approached the task with sagacity and panache.
The ambition of five per cent growth in four years is good, but not good enough. It should be seven in four. The economy has fallen so far behind that five in four would put us in constant state of catching up.
Jamaica needs to make up for all those years of underperformance. If Jamaica had only performed at the average, there would not be this urgent need to grow above five per cent.
It is nice that the EGC has given us a road map with illuminated milestones. It would be nice if they tell what the size of the economy will be in these subsequent years. We need to focus on the numerator.
Growth could be the antidote to Jamaica's problem. The only drawback to the efficacy of the prescription from the ECG is dosage. They need to increase it from 5mg to 7mg. Providence has not irrevocably doomed Jamaica to being an economic laggard.
Using 2001 at the base year, we see that the Jamaican economy grew from $9.2b to $14b today. In the same period, Costa Rico grew from $16.8b to $52.9b; Dominican Republic, from $26.6b to $67.5b; Bolivia, from $8.2b to $33.2b; Peru, from $51.6b to $192.1; Panama, from 12.5b to $52.1b. In 2001, except for the Dominican Republic, which grew 153 per cent, all the others grew more than 200 per cent. In the case of Jamaica, we only grew 52 per cent. There is nothing evitable that the Jamaican economy should consistently underperform. Jamaica has underperformed the Caribbean, Latin America, emerging markets and the world.
BECOMING PROMINENT PLAYER
Ten years ago, the leading exports from Costa Rico were sugar, banana and coffee; today, they are medical equipment and devices. In the case of Turkey, it has become a leading European producer of appliances. Granted, the growth in Peru and Bolivia was commodities-driven. There is no rationale why Jamaica cannot become a prominent player in appliance manufacturing and health-care industries.
Looking at Panama, it grew 10 per cent in 2010 and has consistently grown above six per cent since. Foreign direct investment (FDI) is now 10 per cent of GDP and 57 per cent of this FDI is reinvestments. Jamaica should have an FDI target of seven to 10 per cent of GDP.
Since 2003, approximately 260 new companies have established a presence in Panama, involving 361 investment projects. What Jamaica needs is just 25 per cent of these companies and 30 per cent of these projects. Remember, the Panamanian population at four million people is not that much higher than Jamaica's.