Below is the final part of a presentation delivered by Dr Peter Phillips, minister of finance and planning, at the recently concluded Sir Arthur Lewis Institute of Social and Economic Studies 50/50 conference, held at The Jamaica Pegasus hotel, New Kingston
BE THAT as it may, any reckoning of the post-independence history of the English-speaking Caribbean must start with the substantial social and cultural progress that resulted from the transfer of power to local authorities.
Because of the limitations of time and in the interests of protocol, I shall confine my remarks primarily to the Jamaican experience.
Here, the record is well-known - social progress has been steady and measured. Average life expectancy, which was approximately 65 years in 1962, has been extended to over 75 years; equivalent to First-World standards. Communicable diseases such as polio, diphtheria, and the like, have been eliminated.
Infant mortality has been sharply reduced from 50 per thousand to 17. Similarly, in respect of educational opportunity, there has been a steady expansion. Post-primary education, which prior to 1962 was confined largely to the planter and merchant elite, and to a few aspiring elements of an emergent black middle class, was to be opened up by a succession of policy initiatives beginning with the implementation of the Common Entrance Examination in 1957.
The net effect was that secondary school enrolment (ages 12-18) moved from 8.7 per cent of students in the cohort in 1962 to 78.2 per cent currently. The pattern has been similar with respect to tertiary education, with .5 per cent or 1,783 students of the relevant cohorts enrolled in 1966 for post-secondary education as compared to current where 68,993 students are enrolled in tertiary institutions, which is over 33.1 per cent of the cohort. Of this amount, 19 per cent are enrolled in 'traditional' universities (UWI, UTech, etc), others are matriculated in community colleges, etc.
The sphere of politics also has been one in which steady progress has been experienced. The essential institutional framework of liberal democracy has been sustained and, indeed, deepened. In Jamaica, governments have been regularly removed by electoral means. Rights to free expression of opinion and free association have been enthusiastically and, at times, rambunctiously exercised; while the Parliament has evolved an increasingly elaborate and effective system of committees and other procedures, which have, in essence, provided for the continuous engagement of the opposition party and civil society representatives in the overall process of governance. Equally, note should be taken of the expanded role of 'independent' commissions of Parliament such as the Electoral Commission or the contractor general, which have acted substantially as restraints on the executive authority.
Bolstered by stability and democracy at home, the country has been able to pursue a wide-ranging and activist foreign policy. In the 50 years since Independence, passive 'pro-Westernism' has been supplanted by a vigorously exercised foreign policy organised around Jamaica's national interest in promoting regional integration and global development. While maintaining traditional relationships and attachments, Jamaica has broadened its representation and its relationships to include countries in Latin America, Asia, the Middle East and Africa, and has maintained an active engagement in the United Nations system and other councils advancing the agenda of developing countries.
The other side of the story
Yet, despite all these very palpable gains, Jamaican society still reflects to a considerable extent the scars inherited from its pre-Independence colonial history. For one thing, poverty and income inequality abound. Despite long-term reduction in the incidence of poverty, the most recent measurements suggest that one-fifth of the population subsists below the poverty line and that Jamaica has one of the most unequal distributions of income in the region. Even more, circumstances predisposing towards the inter-generational transfer of poverty seem particularly durable.
Among the indicators of this persistence of poverty is the high levels of teenage pregnancies, particularly among the poorest segments of the population and the high number of children born to single parents, which in turn points to the fragility of family structures, a feature of Jamaican society which has deep roots in our plantation society experience.
The long-term persistence of poverty and its socio-cultural supports are further exacerbated by the persistence of a two-tiered educational system offering unequal opportunities, despite prolonged efforts by successive political administrations to extend the scope of educational access and opportunity.
Today, despite the improvements in some newer schools, the educational system remains bifurcated with the so-called traditional high-schools achieving high-quality examination results as compared with newer non-traditional high schools where more than 75 per cent of the students fail to achieve the necessary passes in the basic subjects of mathematics and English.
It is also true that a major explanation of the long-term persistence of poverty lies in Jamaica's failure to maintain high rates of economic growth, even after an initially strong performance in the early post-Independence years when the economy grew by more than five per cent per annum, growth slowed from the 1970s onwards such that average growth for the entire post-Independence period has been less than two per cent, with per capita incomes hardly changing.
In the face of external shocks sparked first of all by sharply rising oil prices from 1973 onwards, the predominant consequence has been a steady rise in public debt as political authorities sought to sustain social gains with borrowed funds. Despite an average growth rate of less than one per cent since 1973, public debt has increased by more than 700 per cent.
Policy choices, which emphasised income redistribution and which institutionalised sectoral imbalances by means of an inefficiently administered system of incentives and waivers, which created major distortions and imbalances in investment choices.
Over time, too, the fiscal crisis of the state worsened as the tax base has shrunk and the burden of taxation has fallen disproportionately on the pay-as-you-earn workers. The failures of administration and corruption have further fuelled an endemic culture of tax evasion and avoidance, generating in its wake a growing cynicism about politics and public administration.
A way forward
Jamaica is now at the point where the debt is unsustainable. With a debt to GDP ratio of approximately 130 per cent, the country risks isolation from global capital markets and is confronted by the prospect of a sharp reversal of such social gains as have been made as an increasingly large share of revenues is spent on debt service; rather than on capital investments or social expenditures necessary to sustain programmes for the Jamaican people.
The fundamental challenge then, as we embark on the next phase of our journey as an independent state, is to lay the foundations of a new economic architecture for Jamaica. The critical elements of this new architecture have been identified and are widely being discussed. They include the need to sharply reduce the burden of public debt, which will, if done resolutely and efficiently, create room for the possibility in the medium term of more sustained social investments and capital expenditure.
In turn, debt reduction will require substantial and sustained fiscal reforms, including but not limited to tax reforms aimed at broadening the base of taxpayers and reducing rates while ensuring simplicity, efficiency and basic fairness to the overall tax system. Also, fundamentally important is the need to strengthen compliance and the enforcement capacity of the tax administration.
Public-sector transformation to reduce operating costs, while ensuring greater efficiencies and more competitive remuneration for public-sector employers over the medium term is also an indispensable element in the new fiscal environment which must be built.
All the fiscal measures will not suffice, however, unless we also focus policy and effort on addressing those factors which diminish the competitiveness of the productive sector. Central to this must be measures to create a more enabling environment for business operations. These could include, for example, shortening the time and complexity involved in company registration; securing development approvals, registering mortgages, effecting land transfers and the like. It should mean, for example, support by way of tax credits for worker training and research and development activities.
Quite apart from the focus on economic policy measures designed to achieve fiscal balance and improve factory productivity, overcoming the historical legacies of poverty and inequality will require other measures. Prime among those has to be the elimination of the inequalities in performance that are embedded in the educational system.
Effective diagnosis as to the critical factors which underpin and reinforce the differentials in performance between the traditional and non-traditional high schools still remains to be done. It is apparent, nevertheless, that the traditional high schools have benefited from strong community supports - from churches and alumni, which in turn provide relative autonomy for school administrators vis-à-vis government bureaucracy.
Simultaneously, these wider community interests help enforce accountability standards on the school leadership.
In summary, the tasks for the first decade of the next 50 years seem easily defined. The central objective is the elimination of poverty through wealth creation. The main focus of policy should be on fiscal management, investment facilitation and educational reform. To say this is not to devalue or remove from consideration those other areas of policy intervention necessary to reinforce the main effort. Justice reform, public-sector efficiency reforms, and improvements in the quality of governance will continue to be of importance as policy objectives in the near term.
Simply identifying the challenges, however, will not guarantee our success in surmounting them. That task, above all else, will require exemplary leadership in all spheres of national life to identify vital priorities and goals and to mobilise the collective will for their attainment.
Overall, the central challenge for the next 50 years must be to correct the inherited scars of social inequality which impede the prospects of Caribbean development.