Some time ago Prime Minister Bruce Golding pointed to what he saw as the disconnect between the vast levels of Foreign Direct Investments and the anaemic growth in the Jamaican economy. According to the Prime Minister, instead of turning 50 times, the foreign investment in the Jamaican economy takes one spin and makes an exit from our borders.

In a recent article, former Jamaican Prime Minister Edward Seaga explained that there is far more foreign direct investment in the Jamaican economy today than there was during the 1980s, yet we are experiencing less growth now than we were then. What could be the cause of this economic anomaly?

Such a question should be occupying the minds of those in the academy. It is my view, which is not inconsistent with that of the prime minister, that the structure of the Jamaican economy and nature of the investments are largely responsible for the meager growth outcomes.?

I must confess that I will not pretend to have a rigorous scientific explanation for the failure of the current levels of foreign direct investments to produce meaningful growth in our economy. However, I strongly believe that the low levels of indigenous investment in the Jamaican economy is a primary suspect in our current economic plight. Many Jamaican investors have become conditioned to earning wealth on the movement of the Jamaican currency or from the purchase of government paper. A high interest rate regime, a tool to stem currency speculation, is often a deterrent to real investments since few people want to finance their business ventures with expensive capital.

This has created tremendous opportunities for overseas-based entities which are able to source capital in their home markets at lower rates of interests than those prevailing in Jamaica. In such a scenario Jamaican entrepreneurs are often unfairly criticised for not taking advantage of local business opportunities on which foreigners quickly capitalise. However the foreigners are often coming in with cheaper capital.

I read sometime ago in the local media that some thirteen billion United States dollars was exported from the Jamaican economy over a relatively short period of time (I believe it was less than five years) in the form of repatriated profits - an amount equivalent to the entire debt stock held by the Jamaican government. This is almost one trillion Jamaican dollars taking flight from the economy. This sadly is not the full story as so much of what enters the economy must quickly go back out to pay for vital imports and to service our debt. How can we have any meaningful growth in such an environment?

In 2006, I was invited to be one of the speakers at the Diasporic Conference in Downtown Kingston. In my presentation I suggested that it was time for Jamaica to look to its diasporic communities for greater levels of investment which would enable us to secure indigenous foreign capital, an economic oxymoron but a national imperative.

China and India have fuelled their phenomenal economic growth through investments from their diasporic communities. Indigenous capital, whether formed within or outside national borders, is less prone to flight than its foreign counterpart. We should note Michael Lee Chin's position that money earned from his investments in the Jamaican economy stays here even though his operations are primarily based in Canada. While one applauds the valuable role remittance plays in poverty alleviation, one should think of the benefits which would accrue to the economy if more diasporic funds were invested in business ventures instead of conspicuous consumption. In fact, through proper investments more could be made available for the financing of lavish lifestyles. Of course, we need to point out that foreign investors provide a critical function in providing best practices and a more competitive environment which can serve to force greater improvement in how we operate. What is important is that we introduce the appropriate guidelines which will ensure that we derive the greatest possible developmental benefits from FDI while remaining business friendly.

At the conference, I recommended the establishment of a venture capital fund for the cultural industries. This fund would be seeded primarily by diasporic capital. It could also have local pension funds and other traditional holders of wealth as investors. I was therefore very heartened by the recent call by financier Ryland Campbell for the creation of the facilitative infrastructure for the establishment of venture capital funds. Noted Jamaican entrepeneur, Audrey Marks, has also lent her voice to the call.

This position has also been by supported Gordon 'Butch' Stewart. "Venture" has been my mantra for almost a decade. I have long held that we cannot have a true liberation of the vast entrepreneurial energy now dormant in our economy without decoupling the imperatives of capitalisation from those of collateralisation. Simply put it is very difficult to finance some of the more innovative ventures through debt. Without venture funding the United States would not have had Apple Computers, Microsoft, Google or Dell to name just a few companies whose brands have come to dominate our existence over the last quarter of a century.

We should heed Ryland Campbell's call and create the kind of climate conducive to venture funding. Here is a man who is not just talking he has been investing in a number of ventures outside of his core business, the latest being the Lennie Little-White-inspired Outameni attraction. Little-White admitted that his project, which was almost 10 years in incubation, would not have been possible without the intervention of Campbell.

We need more Ryland Campbells. There are many holders of capital who would want to invest in the cultural sector but do not know how to make the appropriate interface. A venture fund can be highly helpful in such a context. What is even more important is that venture funds not only assist in capitalisation of projects but in the transfer of skills. I have long held that skills development is as important to our national advancement as is capitalisation.

The fact is that some of the money invested in the country does not stay here because of the insufficient absorptive capacity of the Jamaican economy which is a function of the low levels of training within the marketplace. Many of the plum positions and the lucrative contracts to supply material associated with foreign investment go overseas simply we cannot satisfy the needs locally.

The big question though is what can we do to push our economy towards real sustainable growth. The answer lies in the securing of greater value added from the business activities we are currently pursuing while engaging in innovative pursuits to broaden our range of offerings.
We should decide which areas of our economy need to be identified for the achievement of growth and developmental imperatives. The next step is to determine what will be the cost - environmental considerations would be a part of this calculation.

What has been clear to me is that within our cultural industries lies our economic salvation. This is based on empirical evidence. A recent WIPO-sponsored study demonstrates that the creative industries of which culture is a major part is responsible for some seven per cent of our GDP. This, we should stress, has been achieved without any real emphasis being placed on the cultural industries as an engine of growth.

The cultural sector is recognised as the area with the fastest growth potential in our economy...What is more significant to me is that we have not really been able to track the real contribution of the cultural sector to the Jamaican economy. Are we able to say how many airline tickets purchased with foreign exchange from our national airline is due to our cultural industry? How much of what comes in as tourism income (which also has not been properly calculated) is directly or indirectly due to the strength of our cultural industries?

Anyone who doubts the value of cultural industries need only look at JK Rowlings, the creator of Harry Potter. Here is a story that is even more incredible than that of Hogwarts' alumnus. Rowlings was a welfare mom who had to do much of her writing in fast food joints because her home was not properly heated. We have seen the unmistakable influence and power of Jamaican culture it is now time for us to make use of the tremendous opportunities associated with this phenomenon.

clyde.mckenzie@gmail.com

Anita Baker gives the best she's got at St Lucia Jazz Fest

VP Records scoops up Mighty's Cornerstone

Two more parish queens crowned