Persaud Wilberne Persaud, Financial Gleaner Columnist
I do something utterly unusual today, comment on the column of a contributor to this newspaper albeit the daily and not the Financial Gleaner.
The columnist, Delroy Chuck, won't mind. We share a friendship begun more than three decades ago as students playing chess at the then truly regional, University of the West Indies. We had differences of opinion. Today is no exception.
The exception for me - commenting on a colleague's column - is driven by the fact that many thoughtful persons seem to share this view, reflecting an understandable nostalgia but with a strong and therefore dangerous infusion of wishful thinking.
Mr. Chuck suggests that: "Instead of knocking big businesses we should urge small ones to grow, expand and become even more competitive and productive. Jamaica's problems could be more readily and easily solved if we attracted more big businesses, especially if we could encourage Goodyear, Colgate-Palmolive, Mead Johnson, Ricketts and Colman (sic), Federated Pharmacies (sic), and the many big manufacturers to reopen their factories and provide jobs for so many poor Jamaicans." [March 21]
The river flows and this wish belongs to an era long past.
Globalisation
It reflects a complete mis-understanding of the phenomenon called globalisation. The firms mentioned-forgive the mis-spellings-were all big in Jamaica.
They came because of policy the New World group dubbed 'industrialisation by invitation' but which was a bastardisation of Arthur Lewis' prescription in his 1951 work done at the behest of Eric Williams, entitled "Industriali-sation of the British West Indies".
These firms came to produce behind tariff walls for a protected regional market. Initially the idea of bringing industrial activity to Jamaica was opposed both by the British and local business opinion.
However, they all generally replaced rather than displaced commission agencies that formerly imported the same products subsequently manufactured here - many will remember Phillips television sets assembled locally.
Lewis envisaged manufacturing in Jamaica for export to the U.S. particularly, but also to South America. He based his ideas partly on Puerto Rico's Operation Bootstrap, English as the common language, our legal system derived from English common law and the 'unlimited supply' of labour at a low wage rate.
The policy as implemented, however, provided industrial sites, cheap electricity and water, duty free raw material imports and income tax waivers to encourage big businesses to locate here - exactly as Lewis envisaged with one difference: Lewis insisted on exports, our policy was import substitution.
With a small market less than six million for the whole Commonwealth Caribbean, this project, once Lewis' export idea was abandoned, was bound to fail.
Efficiencies
Scale economies and other efficiencies are unachievable with small operations. The variant implemented by the East Asian Tigers was more in keeping with the Lewis idea.
A look at Jamaica's Pioneer Industries Act of 1949 is instructive. Even moreso is consideration of Jamaica's heyday producing tropical staples. The "West Indies were seen as the mainstay of the Empire. As the largest of the plantation colonies in the middle of the 18th century, Jamaica was the 'powerhouse' of the British imperial system and its governors the highest paid."
The quote is from Barry Higman's recently published superbly researched and written "Plantation Jamaica 1750-1850: Capital and Control in a Colonial Economy".
More importantly Higman demonstrates that this position was in great measure attributable to the fact that Jamaica exhibited incredible levels of productivity, that the export product was high value, that elaborate technologies and substantial buildings were both required and made available and that managerial expertiseprevailed albeit within a brutal system of slavery.
These basic principles, apart from slavery, will not change.
With a population less than three million, unless we wish to forego modern creature comforts - we don't - there is no shortcut to enhancing productivity and exporting goods and services if the economy is to grow and provide a good standard of living for our people.
Enticing big business with state- sponsored income encouragements is no solution.
The answer is to nurture local businesses, new, small, innovative, that will then prove to be attractive to big business whether local or foreign. Partnerships, buyouts and the like shall then prevail.
We plan to run a capitalist economy. It makes no sense to have a superstructure slowing it down to a crawl, forcing innovators and risk takers to constantly tread close to the edge of legality and seek rewards in places they should not.
Businesses cannot grow by urging. The days of industrialisation by invitation are gone forever.
wilbe65@yahoo.co
