Jamaica’s productivity declined 21 per cent to rank fourth lowest among 13 Anglophone Caribbean nations between 1990-2007 according to just released International Monetary Fund (IMF) data sorted the Business Observer.

Over the same period Trinidad &Tobago (T&T)–which trailed Jamaica in 1990–doubled its productivity and now leads the region followed by Bahamas and Barbados according to the IMF in its Regional Economic Outlook–Western Hemisphere, ‘Heating up in the South, Cooler in the North’ released last week.

The productivity ranking which compares output over a unit of input such as labour or capital (up to 2007) saw Guyana trailing at 0.12, Dominica at 0.24, St Vincent and Grenadines at 0.29, Jamaica and Suriname at 0.33, Grenada at 0.42, St Lucia at 0.46, Belize at 0.47, St Kitts at 0.48, Barbados at 0.65, Bahamas at 0.66 and T&T at 0.78.

Productivity is an important measure of efficiency and is used by the private and public sector as one means of achieving growth. Between 1990 and 2007 Jamaica dropped two positions from sixth to fourth from the bottom of the anglophone Caribbean.

The IMF said that the region is actually half as productive as the US which offers vast scope for growth. It however cautioned that Jamaica and select countries would comparatively benefit to a lesser degree due to its tourism dependent economy.

“Output could be doubled if the region manages to raise productivity to US levels, with the Eastern Caribbean Currency Union (Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, St Lucia, and St Vincent and the Grenadines) and the Commodity-Exporting Caribbean Countries (Guyana, Suriname and T&T) benefiting somewhat more than the Other Caribbean Countries (Bahamas, Barbados, Belize, and Jamaica),” stated the IMF report. “Output would also increase if capital per worker were to reach US levels, although the gain would be far less spectacular. This suggests that although a further boost in investment could enhance output, the main effort should be focused toward raising productivity.”

The IMF also noted that in subsequent decades, productivity growth declined noticeably, “perhaps” reflecting inadequate infrastructure and absence of complementary skill factors to capital. “This lower productivity growth has led to a marked decline in output growth despite investment remaining relatively robust, as suggested by the large contribution of capital accumulation. This also suggests that instead of the amount invested, the type (and productivity) of investment should be at the forefront,” stated the IMF.

The Report added: “Boosting competitiveness and growth over the medium term remains a key policy challenge. For the whole region, improving productivity will require sustained structural reforms, including enhancing the role of the tourism sector. Labour markets will need to be more flexible to allow the region to better react to external shocks”.

Economist Dr Peter John Gordon said in June that low productivity within countries of Latin America and the Caribbean (LAC) is caused primarily by a misallocation of resources, market failures and poor economic policies rather than worker inefficiencies. Gordon, a research fellow at the Sir Arthur Lewis Institute of Social and Economic Studies, made the remarks during a presentation at the Jamaica Employers’ Federation. Gordon noted that among the most problematic causes of the low productivity of firms in Latin America and the Caribbean (LAC) is the fact that they have little incentive to grow. Gordon noted that larger firms attract higher taxes and are often overlooked by policies that promote nascent industries or firms over existing, productive enterprises. He said smaller firms tend to be less productive than larger ones and therefore by reducing the share of small firms to medium-sized or larger ones, LAC countries can increase its productivity levels.