Vantage Point, Commentary - With KEITH COLLISTER

The first question we need to honestly ask ourselves is why are we so poor in Jamaica?

Our economy is still mainly based on our natural endowments such as our beaches and bauxite, as evidenced by the fact that Jamaica's basket of goods exported is still almost the same as it was decades ago.

A country on a path to true development will see rapid changes in its export basket and value added, as it moves from raw materials to export manufacturing and internationally traded services. Government policy in Jamaica has, however, continued to emphasise 'physical' capital investment, such as highways, over people, and placed an overreliance on indicative measures of economic achievement such as net international reserves.

While macroeconomic stability is critical, it is not enough in a competitive world that instead requires that the Government must do everything it can to help the private sector succeed.

FAILURE TO COLLABORATE

Jamaica's main problem is that Government and the private sector have been unable to work together to create the sources of competitive advantage required for a high-productivity country, namely institutional, knowledge-based, human and cultural capital.

Canadian-based Jamaican businessman, Raymond Chang, in a recent speech, analysed Jamaica's strengths and weaknesses from an international investor's perspective.

According to Chang, Jamaica's strengths include its geographical position, English-speaking workforce, excellent infrastructure, sophisticated financial community, and a relatively stable political environment.

In his order of priority, our weaknesses included an enormous amount of red tape and bureaucracy, a level of political involvement in investment that is a recipe for corruption and inefficiency, and an education system that is grossly underfunded and misaligned with the current and futureproductivity requirements of a globalised market.

He also cited the impact of crime, not only its everyday impact on the population, but also the huge burden it imposes on the economy; a tax regime with no real incentive for production and which discourages real efficiency in the wage-earning sector; expensive energy and interest rates; and, a lethargic and inefficient labour force with a weak work ethic.

Chang's ideal is an investor-friendly environment, but he notes that today, Jamaica is a mere blip on the radar screen of world investors.

He cites a Canadian investor colleague telling him he is no longer interested in Jamaica because of 'country risk', by which he meant Jamaica's red tape and the number of times that he was being asked to 'grease palms'.

Finally, Chang notes that a relatively new kind of Jamaican cultural behaviour of entitlement, greed and 'ginalship' is becoming systemic throughout the society.

THE IRISH MODEL

In 1987, Ireland appeared to be going broke because of years of fiscal mismanagement. Most of their college graduates were emigrating, with a common refrain being "Will the last one to leave please turn out the lights".

Ireland had a very low to negligible growth rate in the 1980s when the rest of the world was booming. According to leading Irish economist, Dermot O'Brien, this was because it applied the wrong solutions to the problem, example raising taxes.

In that critical period, The London Times famously wrote that the international moneylenders were going "to pull the shutters down on Ireland". According to Deputy Prime Minister Mary Harney: "It was because we nearly went under that we got the courage to change."

Continues next week.

keithcollister@cwjamaica.com