Claude Clarke, Guest Columnist

Christine Lagarde came calling last month. And in an uncharacteristically celebratory tone, she hoisted Jamaica as a shining example of how an economy in recovery should be managed. The International Monetary Fund (IMF) chief declared its Jamaican economic recovery programme, so far, an overwhelming success.

Rarely is the IMF so happy with a client state. But we should not be surprised. Like all bankers, nothing gives the Fund greater satisfaction than a borrower that faithfully services its loan. It is even more satisfied when the borrower is committed to doing so even at the expense of its own well-being.

Jamaica's Government has been prepared to go where others fear to tread. It has applied over 7.5% of the country's total economic output, extracted as taxes, to the repayment of debt.

Other governments have met massive public resistance in attempting to mine much less for that purpose. The Greek government's use of a primary budget surplus of less than 3% of GDP for debt payment was met with virulent public reaction. There were widespread demonstrations and nationwide strikes. Happily, in Jamaica, where much deeper cuts in what Government spends in return for the taxes it collects, no such thing has happened.

Jamaicans, perhaps sedated by our prime minister's popular appeal or dissuaded by the perceived fecklessness of the Opposition (or both), have accepted severe slashes in their quality of life from the IMF's knife with barely a murmur.

This is no doubt what has made such a strong impression on the IMF and has made Jamaica its new favourite child.

Further cause for celebration

The fact that economic growth of 1.6% was recorded for the first quarter of 2014 has provided further cause for celebration. The claim can now be made that the programme's austerity is justified and has begun to bear fruit. But before popping the champagne corks, the Government would be well advised to view the data through the lenses of realism and pragmatism.

The growth is almost entirely attributable to mining and agriculture. The rest of the economy registered the now normal near-zero growth. With growth of only 0.2%, as reflected in the hotels and restaurants component of GDP, the usually buoyant tourism sector virtually stood still. And the relative high-value, job-rich manufacturing sector continued its steady decline, this time, by 1.8%.

The extraordinary 18% growth in agriculture and 9% in mining were the result of unique events not likely to be repeated.

In mining, what we saw was the effect of an unusual dip in production in the first quarter of 2013. Output actually fell compared to the first quarter of 2011 and 2012. No growth can be expected in that sector in the immediate future unless the Government is able to persuade UC Rusal to reopen its two mothballed alumina plants at Kirkvine and Alpart which, given world industry conditions, it clearly believes is uneconomic.

The growth in agriculture essentially reflects the sector's recovery from the effects of Hurricane Sandy, an event we would not want to see repeated.

It is not my wish to pooh-pooh these instances of growth. But it is important to recognise that they are not the result of policies and actions on which future economic growth can be based.

Jamaica needs sustainable growth, not unique unrepeatable events. We need growth across the broad range of production and export services sectors in the economy. Instead, what we have been witnessing since the beginning of the IMF's austerity programme is the continuation of the same stagnation and decline in these critical sectors, which has become normal. Manufacturing declined by an average of 1.2% per year over the last eight years and in the first quarter of this year declined 1.8%. How do the IMF and the Government plan to change this negative pattern?

Production growth necessary

In one of her presentations here, Lagarde declared that "fundamental reform is the foundation for a better future". No one would disagree. But it is the nature of the reform that will determine whether production will increase and the economy will grow. Reform cannot provide a better future if it undermines the viability of our productive assets. And there can be no economic recovery without growth in production.

Reform measures that hobble producers with costs in order to increase Government's short-term revenue will hinder, not help, growth. Government charges that make Jamaican production unable to compete with foreign competition will harm, not aid, recovery.

It is fine for Jamaican producers to try to woo the support of the Jamaican consumer. But prioritising Jamaican production should also be a cornerstone of Government's economic strategy. The Jamaica Manufacturers' Association's 'Buy Jamaican' campaign is to be commended. But without government leadership and commitment, it faces an uphill climb.

The fact is that, after generations of being bombarded by foreign advertising and other subtle methods of indoctrination, Jamaicans generally believe that 'foreign' means 'better' and are often prepared to pay sizable price premiums for foreign goods in furtherance of that belief. Foreign products sold at higher prices are often seen as better value than lower-priced local products that are every bit as good.

As unfortunate and self-defeating as this is, it is true. That is why it is so critical to our economic development that there be a concerted effort to convince Jamaicans that purchasing products made at home not only benefits the economy, but can deliver better value to them.

Pro-foreign bias

I once stood in a supermarket and witnessed a shopper whose trolley had a large quantity of a products manufactured in Jamaica under licence from a US company. On being told by her daughter that the same product of the same brand but made in the US was on another shelf, the shopper promptly replaced the locally made product with the imported one, which was priced more than 30% higher.

Except for a slight difference in the packaging, the local and the imported products were identical, as under the terms of the licence, the ingredients, the formula and the manufacturing process had to be the same. Although there are some outstanding exceptions, one does not need a vivid imagination to see how much worse the pro-foreign bias is for a Jamaican brand.

Isn't the Government aware of the gigantic perception deficit suffered by local products? And shouldn't the Government lead the effort to change it?

Under both Tony Blair and David Cameron, the government of the United Kingdom, recognising the value of the British consumer to British industry, launched separate 'Buy British' campaigns. Central to both was engendering pride in British products.

The Jamaican Government should do no less. It should be working alongside the private sector to instil a sense of ownership and pride in things Jamaican in all Jamaicans. Why is JAMPRO not there? Where is our spirit? Where is our will?

While it has now landed a starring role on the IMF stage, Government remains missing from the arena of Jamaican production.

Claude Clarke is a businessman and former minister of industry. Email feedback to columns@gleanerjm.com [2].