WE NEED TO GET RID OF THE SYSTEMIC AND STRUCTURAL IMPEDIMENTS TO GROWTH THROUGH STRONG LEADERSHIP AND MORE TRANSPARENCY IN GOVERNMENT.

Any investment in the economy is only worthwhile when significant economic spin-off occurs in the economy occurs. Where huge debt were incurred in order to build our infrastructures we must ensure that the benefits of the immediate economic impact occurs now and not blindly rely on the long term net benefit that this government is forecasting since it may result in a negative rate of return on investment due the time value of money. Meaning it is better to have the benefits occurring now than later. This only occurs when your own workers are employed on the job, otherwise we are speculating about future benefits.

Another significant inference is the nature and types direct foreign investments we are attracting. We have witnessed over the last ten years, huge investments in our roads infrastructure and tourism, however, relative to the size of these investments the growth in GDP was at best marginal. For instance, some US$20 billion was invested in the Tourism Industry in 2013, according to Government Sources, yet the GDP was only US$14.79 Billion in 2013 and fell some 3% by 2014 to US$14.36 billion?

The economic leakages and why Foreign Direct Investment (FDI) have not resulted in significant growth in GDP are twofold; (1) The consumption of imported resources (Energy, Goods and Labours) to facilitate or build the project here in Jamaica and (2) the ineffective and or abuse of our taxation policies like the tax waiver. We have very good consulting engineering and business people here in Jamaica, all the government needs to do is to practice good management of the nation resources and enforce good business ethics.

If you were to do a correlation between GDP and FDI and you will see my point. Mark you, this occurred under both administrations. We need to get rid of the systemic and structural impediment to growth. One of which is the need for strong leadership and more transparency in Government.

The United Nations Environment Programme (UNEP) cites that in most all-inclusive mass tourism package tours, about 80% of travelers’ expenditures go to the airlines, hotels, and other international companies (who often have their headquarters in the travelers’ home countries), and not to local businesses or workers. Of each USD 100 spent on a vacation tour by a tourist from a developed country, only around USD 5 actually stays in a developing destination’s economy.  UNEP cites several studies that approximately tourism leakage to be up to 40% in India, 70% in Thailand, and 80% in Caribbean countries due to factors such as foreign-owned operators, airlines, hotels, and imported food and products.

According to the World Bank for every expenditure of $1.00 in the Jamaican Economy the resulting impact or growth in Gross Domestic Product (GDP) should be equivalent to $4.20. Despite the significant rise in personal consumption expenditure due to the inflows of remittance between 1990 and 2013 growth in the GDP and subsequently the Jamaican Economy remains marginal at best. This enormous disparity between expenditure and growth in GDP is troubling and reflects significant economic leakages stemming from corruption and bad economic decisions like maintaining a floating dollar, constant devaluation, failure to reduce the cost of energy and a regressive tax system. In real terms the value of our GDP should approximately US$58 billion (estimated) instead of the US$14 billion.