What Jamaica Needs Now

By Dashan Hendricks

I remember, as a child, a song with the title "What Jamaica Needs Now," and among other things, it said "what Jamaica needs now is greater production". Then as now, that mantra holds true.

Still, for many, what to do for "greater production" remains elusive. We have often heard business leaders tout "step up to the plate" and "find those pathways to growth" without much else offered as to what those areas for growth are. 

The government, in the overhaul of its incentives regime, said it was doing away with the policy of picking winners and instead allowing for every business/industry to compete on a level playing field.

I, for one, find that notion misguided, simply because the playing field for businesses is not level. For example, we have seen a re-emergence of industrial policies across the world, first with the multi-billion dollar bailouts after the 2008 financial crisis to the targeting of other sectors in advanced industrial countries, such as green technology, high tech sectors, steel and even car manufacturing. From the U.S. to China, Japan and South Korea, governments are pumping billions into industry with the hope of creating jobs and know-how in each economy. The is also aimed at reducing these countries dependence on services as the engine of the economy.

Jamaica, for its part, does not have billions to spend, incentivising any industry. But the government could be smart with incentives by simplifying regulations and lowering taxes for businesses. Where it can, the government must also help businesses with straight forward measures such as research and development.

Some attempts have been made at doing some of those through the new Employee Tax Credits, but it does not go far enough. (I will look at this issue in a subsequent article). The Scientific Research Council, also helps in some research and development, but how much it can do is constrained by the lack of adequate resources.

Lessons of the past

We must be clear, however, in any attempt to pick so-called winners of industrial policy. Choosing winners is more than the government waking up and deciding to incentivise an industry. If we are to be successful, we must learn the lessons of the past.

One clear lesson is that if the "winner" industry does not incorporate an economy's comparative advantage, the policy is bound to fail. If we push to grow high tech industries or areas of heavy manufacturing, we might fail. According to a World Bank study, a country which assesses its comparative advantage and develops policies to develop that advantage, often ends up with better success stories in industrialisation.

Another lesson to learn in any attempt at growth, is that industrial policy works best if it follows the market. That is choosing industries that produce goods which people want. 

Without a body of research to say what those areas are, I would be misguided to make recommendations here, but I believe agriculture and agroprocessing would rank near the top if not at the top of areas Jamaica can exploit for industrialisation.

Agro Processing

Agro-processing is not limited to food consumption for humans and animals. Products made from non-food crops include by function, bio-fuels and bioenergy crops, building and construction, fiber, pharmaceuticals, renewable polymers and speciality chemicals. 

Those can be produced from algae, jatropha, switchgrass, hemp, linseed, bamboo, cotton, corn and potatoes among other crops. It is for us to be creative in finding the right incentives based on comparative advantage and following the market to get these industries going. That is what Jamaica needs now.