Dreams versus visions

Edward Seaga

Sunday, February 17, 2019

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I once heard Prime Minster Andrew Holness say on a platform that there are two major categories among people: one is the “dreamer” and the other is the “visionary”. The dreamer shuts his eyes while he formulates the future; the visionary is able to forecast the future with open eyes.

There is a huge difference between these two categories: The dreamer with his eyes closed is most often hoping or guessing about the future, while the visionary is using his brain and imagination to figure out what lies ahead. These are two of the major considerations for our national knowledge base of the future.

We 'dream' about Caricom as one of the most beneficial strategies for Jamaica. These dreams have put together only one, sometimes successful strategy in Caricom — The University of the West Indies —in over 40 years. Still, we dream of a growing economy with booming exports created by the offspring of Caricom, the Caricom Single Market and Economy (CSME). The launching of the CSME 24 years ago has nothing special but hope to show. Yet we continue to dream while we set five-year targets to awaken or die.

For just over 450 years, from 1513 to 1965, the Jamaican economy ebbed and flowed with the fortunes of sugar, and for a shorter time and to a lesser extent in later years, banana cultivation. From these two crops many fortunes were made, mostly abroad, though many were also lost. But throughout these times Jamaica was primarily an exporter of goods — largely agricultural commodities.

Two new non-agricultural programmes — manufacturing and bauxite mining — emerged in the 1950s, creating valuable contributions to the economy which lasted for decades. In the decade immediately following Independence for Jamaica, 1962, tourism began to emerge mostly on the north coast. These new major players replaced the loss in agricultural exports, eventually positioning Jamaica for a glorious, export-driven future with strong surpluses; but this was not to be the case.

The growing export base of the Jamaican economy eroded from a position of strength in the 1960s to severe depression by the end of the 1970s.

First, agricultural exports slumped precipitously. From 431,000 tons in 1965, sugar declined and has remained on a declining trend to the present, despite a short revival in the 1970s. Current production of 150,000 tonnes is one of the lowest ever.

By the end of the 1970s, diminishing marketability, poor yields, and two hurricanes back to back wiped out what was left of the declining prospects of a thriving banana export industry. Exports plunged from 240,417 tons in 1965 to 20,000 tons in 1981. The current production is 65,000 tons.

With the advent of an imposed levy on bauxite production in 1974, as a reaction to the exceptional increase in oil prices at that time, the industry declined from 15.0 million tonnes of bauxite produced in 1974 to 12.2 million by 1980. Production, although now recovering, has never returned to the high point of 1974. Over the period, Jamaica slumped from being the number one world producer to number four.

Tourism, the great hope for domestic growth and new external earnings, rapidly declined because the counter-productive political and ideological policies of the Government of the 1970s discouraged North American visitors, who were the vast majority. By the end of that decade, hotels representing half the number of first class rooms in the country had to be taken over by the Government to avoid closure of several prime properties.

In 1974, the Net International Reserves (NIR) of the Bank of Jamaica were reduced to negative balances which continued for more than 20 years. The economy of the 1970s plunged into a state of deep depression, losing some 20 per cent of GDP over eight consecutive years of negative growth — a global worst performance.

Something substantial had to be done to stop the dwindling economic performance with Caricom. It was in 1973, during that depressing period, that the Caribbean Community (Caricom) was launched. Caricom was seen as the logical extension of CARIFTA, the Caribbean Free Trade Association launched in 1965. But equally, it was the expression of a hopeful expectation that as a vehicle for the establishment of a common market, it would be a regional mechanism to enhance declining exports by facilitating economic expansion within the region.

Against this background of high expectation, the performance of Caricom trade with Jamaica must be addressed to assess the impact on the Jamaican economy and the potential of Caricom for reviving the stagnant economic performance of the past many years, particularly through the new initiatives of a common market and a single market economy.

Regional trade with Jamaica over the years, since the inception of Caricom, has persisted as a low impact economic activity, particularly in exports. In 1973, exports from Jamaica to Caricom were 6.3 per cent of Jamaica's total exports and 5.2 per cent of total imports. By 2001, Jamaican exports to the region were an insignificant 4.1 per cent and imports from Caricom a substantial 12.7 per cent.

By 1974 the NIR were reduced to negative balances which continued for some 20 years. The economy plunged into a state of depression, losing some 20 per cent of GDP over seven consecutive years of negative global-worst performance — 1973-1980.

In the more than 40 years of Caricom trade, Jamaica has moved from being a net exporter to a net importer — a position which has prevailed since 1992 with a widening gap each year.

This shows that based on the continuation of the weak export performance and increasing imports, restoration of a positive balance of trade is impossible under current conditions. In this the scenario,“dreamers” will carry on while the “visionaries” will see the need for an end shortly.

— Edward Seaga is a former prime minister of Jamaica and currently distinguished fellow, University of t he West Indies, as well as chancellor, University of Technology, Jamaica

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