The pursuit of growth — Part 1


The pursuit of growth — Part 1

Overcoming obstacles and creating the conditions for sustainable growth

Canute Thompson

Tuesday, September 10, 2019

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The Planning Institute of Jamaica (PIOJ) reported in August that the Jamaican economy grew by one per cent in the April to June quarter of the 2019/20 fiscal year. That is a 20 per cent performance, using the five per cent promised by the Jamaica Labour Party (JLP) on the campaign trail in 2015, and a 50 per cent performance using the official target of the Government. By either measure, one per cent is a weak performance. This meagre growth is taking place despite record levels of employment and massive spending on multiple infrastructure projects.

Every political administration would like to be known for growing the economy sustainably; not in stops and starts. For context, we should remind ourselves of the country's growth performance. The year 1980 is a convenient starting point and it may help if the data were analysed in 10-year periods. See Table 1.

One way of reading the data in Table 1 is to conclude that over the 20 years, 1980 to 1999, growth was an average of 1.35 per cent and 2.32 per cent in each 10-year period with 15 of those years recording growth. By comparison, growth averaged 0.53 per cent and 0.88 per cent in the subsequent 20 years, with also 15 of those years recording growth. The inescapable conclusion is that, while there have been some spectacular growth years, such as 1987, and taking account of the subsequent trends, 2003, our growth performance has been generally weak. Another way of reading the data is to observe that the average rate of growth in each period is remarkedly lower than in the previous period.

The key question to be asked then is: What were the factors which accounted for years like 1987 in which the economy grew at 7.7 per cent, 1990 at 4.9 per cent, and 2003 at 3.7 per cent? Note should also be taken of some years (not shown in the table), when there was relatively strong growth (compared to recent years). These years were 1986 which saw growth of seven per cent, 1990 at 4.9 per cent, 1989 at 4.7 per cent, 1983 at 4.2 per cent, 1992 at 2.8 per cent, and 1995 at 2.5 per cent. What was done during those years, and are we able to do, or should we be doing, those things now?

The factors which account for the foregoing performance are issues to which both political parties must give focused attention as we enter the upcoming election season. I hope this election season will be spared the shallowness of reckless promises and, instead, the leaders of both parties will present rational proposals for reasoned and data-driven debate. The country is tired of reckless promises.

Refocusing measurements of economic growth

Whenever the PIOJ gives its quarterly reports on the economy it typically reports on performance in the areas of agriculture; mining and quarrying; manufacturing; construction; electricity and water supply; transport, storage, and communication; wholesale and retail and the installation and repair of machinery; finance and insurance services; and hotels and restaurants. What is glaringly missing from this list — because they are not measured — are education and training; the creative industries; youth entrepreneurship; health and wellness; and technology innovation. I submit that while there is potential for sustainable growth in the traditional areas, particularly agriculture, manufacturing, and finance and insurance services, growth in the other sectors is not likely to be significant.

John Csiszar in a July 30, 2019 article entitled 'Ten fastest-growing industries to invest in this year', cited a global research firm IBIS World which lists among the fastest growing industries in 2019 sectors such as finance (savings and thrift), the environment, and technology applications, specifically e-commerce and online transactions, in tenth, ninth, and eighth positions respectively, with Internet publishing and broadcasting being in third position and solar power in second. Warfare equipment, which may be hardly relevant to Jamaica, is in third position; but while not relevant to Jamaica is a story on its own.

The findings of Csiszar's 2019 piece are somewhat corroborated by a 2018 (July 9) report in World Finance magazine which lists the five fastest-growing world industries as renewable energy, cybersecurity, biotechnology, virtual reality, and artificial intelligence.

While the specifics of both lists may differ somewhat, the common themes knitting them together are technology and the environment. It is striking that in both lists, and in both themes, we can locate the three areas which I have argued represent potential sustainable growth areas for Jamaica; namely, agriculture (environment), manufacturing (biotechnology and artificial intelligence), finance and insurance services (finance, cybersecurity, e-commence and online transactions).

The Elixir: Higher Education

The strategy which holds the key to sustainable economic growth is education, and specifically higher education. For any country to leverage the advantages for growth in the present and likely future areas of growth, such a country must have a first-rate education system with 80 per cent of the graduates from high school going into tertiary education. In simple terms, it requires highly trained university graduates (who possess degrees in the sciences, mathematics, economics, finance, the environment, etc, backed by adequate exposure to ethics, law, and leadership) to sustainably grow an economy.

The vitality and value of higher education to economic growth is so self-evident that it is almost mind-boggling that successive political administrations in Jamaica have done so little to radically address the deficits in the pre-tertiary sector.

Professor Densil Williams cites this problem recently in a piece entitled 'More prosperity, More poverty', published in The Sunday Gleaner on August 25, 2019. Williams highlights the fact that of the 1.3 million people in the Jamaican workforce, more than 900,000, or about 70 per cent, do not have certification beyond the primary and secondary levels. This means, as Williams explains, that not only will 70 per cent of the workforce be forced to subsist on low-paying wages, but their ability to contribute to economic growth is minimal. Thus when, for example, the PIOJ reports that substantial numbers of people have found employment in the wholesale and retail sector and the installation and repair of machinery sector, it only confirms the shame that is on our education system and on all of us.

How can a country, in a knowledge era (as against the Stone Age), be celebrating the fact that high school graduates have landed jobs to weigh flour or oversee an aisle in a large supermarket?

In part two, to be published tomorrow, September 11, 2019, I will discuss specifically how better educational outcomes affect the economy.

Dr Canute Thompson is chair of the People's National Party's Policy Commission, as well as head of the Caribbean Centre for Educational Planning and lecturer in the School of Education, and co-founder and chief consultant for the Caribbean Leadership Re-Imagination Initiative, at The University of the West Indies, Mona. He is also author of four books and several articles on leadership. Send comments to the Observer or

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