Experts differ on whether to invest in winners or ‘losers’ to grow Jamaica’s economy
Experts clashed over whether funds should flow towards winning sectors such as tourism, as opposed to investing in ‘losing’ sectors such as education to spur economic growth, during a forum convened by Jamaica’s leading corporate lobby.
Growth levels are set to wane in 2023, with concerns that Jamaica’s future may revert to reflecting its lacklustre economic past.
“The economy can double to US$30 billion in annual output or gross domestic product in five years if we invest in winners,” said Wilfred Baghaloo, a partner at auditing firm PwC Jamaica, who was one of the panellists at a breakfast discussion hosted by the Private Sector Organisation of Jamaica.
Baghaloo said that in order to spur the economy, Jamaica should double down on investments in tourism, which is a top source of jobs and foreign exchange flows. Betting on tourism would result in increased flows into Jamaica, and provide greater demand for agro-processing and jobs, he reasoned.
But Dr Damien King, economist and executive director of think tank Caribbean Policy Research Institute, or CaPRI for short, opposed the idea of picking winners, saying it would result in bureaucrats rather than private-sector experts allocating resources.
“I find it curious when someone from the private sector speaks about picking winners. It is almost paradoxical,” King retorted. “My phrase is not picking winners, it is Government bureaucrats deciding where investments should go.”
The Jamaican economy grew by 4.3 per cent for the fiscal year ending March 2023, reflecting recovery from the pandemic-induced economic fallout a year ahead of projections.
Going forward, however, the current forecast for the economy sees growth falling back towards a one to three per cent range this fiscal year, prompting fear of a return to the sluggish growth that plagued the country for much of the last 50 years.
“We must look at macroeconomic growth not only for our winners, but for our losers who are the predators …,” said Dr Neville Graham, a general surgeon and founder of Winchester Surgical & Medical Limited, and the dean of Caribbean School of Medical Sciences, who addressed the PSOJ President Forum’s panel during the discussion segment.
Graham, while not a panellist, shifted the debate from macroeconomic jargon to include social issues. He indicated that greater investment in education would stem social ills, especially male criminality, and provide skills for high-level jobs. This would attract investment in higher-skilled businesses and raise the living standard, he reasoned.
“We are not going to change the educational level of the population in a hurry,” said panellist Charles Ross, chairman and president of Sterling Asset Management, in response.
Jamaica needs more private investment rather than over-investing in education, Ross said, while noting that Jamaica grew at the fastest rate in the world in the 1960s with a smaller educated workforce.
“We have to make the best use of what we have. How we improve productivity is through greater levels of capital investment. That is what we need at the moment,” Ross added.
King noted, however, that while education investment remains fairly high per capita, the country’s educational outcomes were one of the worst in Latin America.
Taking the middle ground, panellist Terry-Ann Segree, the strategy programming and innovation lead officer at the Inter-American Development Bank, said Jamaica required a multifaceted approach for development.
“We need private capital and investment, but there is a chicken-and-egg situation,” Segree said, in reference to education. “We have private investment in, but we do not have the human capital to support that. We find that there is a deficiency in regards to the skills gap needed to fill these jobs,” she said.
Jamaica’s unemployment rate was last estimated at 6.6 per cent in the July 2022 labour force survey conducted by the Statistical Institute of Jamaica. Societies are generally seen as being at or close to full employment with 5.0 per cent of the labour force actively seeking jobs.
But despite the low unemployment rate, the manufacturing and other sectors have been pointing to skills gaps, especially in the STEM disciplines – science, technology, engineering, and mathematics – during an era in which Jamaica and the world was in the process of a digital transformation. The upshot is that they have job openings that they find difficult to fill.
A large portion of the employed workforce is trained in traditional areas, with few in high-demand sectors such as technology.
Last week, the Planning Institute of Jamaica warned that the country needed to build a larger skilled workforce to guard against a return to low growth.
Jamaica grew for eight consecutive quarters to pull itself out from under the COVID-19 pandemic.
The PSOJ, since the onset of the pandemic, has placed social issues at the forefront of many of its public discussions. The corporate lobby and its members have publicly raised concerns about the social decay and educational decline induced by the pandemic, as well as its impact on the economy and on organised criminality.