IN a market-driven economy, we believe, investment is the responsibility of the local private sector, fully supported by public sector investment.

Private investment emanates from the local private sector or from foreign investment. In Jamaica, many of the major economic activities have been initiated and executed by foreign direct investment, eg the bauxite/alumina industry. In other instances, foreign investors lead and local investors follow or partner, and in the tourism industry local investors at times lead the investment process.

Just before Independence, there was a rush of capital out of Jamaica because the perception of risk was that things would fall apart after British colonial rule.

In the 1970s, there was massive capital flight because investors claimed that they feared expropriation without compensation. It was never going to happen and did not happen, but this was the perception of risk.

In the 1980s, capital flight continued unabated, raising the question of whether local investors had less of a propensity to invest their profits in Jamaica than foreign investors. It certainly was the case that capital flight triumphed over patriotism. The perception of risk was tied to the scarcity of foreign exchange and the serial devaluations.

In the 1990s into the early 2000s, high interest rates decapitalised the borrowers and enriched the lenders in riskless financial instruments and government paper. The perception of risk was that the public debt, fiscal deficit, tax burden and high interest rates made it impossible to invest in real (not financial) assets and productive economic activities. Meanwhile, there have been massive foreign investments in tourism.

Since Mr Audley Shaw’s new economic policy, debt has been reduced, the fiscal deficit is on course to manageable levels, international reserves are more than adequate, inflation is stable, the exchange rate is stable, remittances have held up, tourism arrivals have kept up, violent crime is down and interest rates have been drastically reduced. Yet, there is little real investment by local investors.

We note that while there has been noticeable Chinese investment in the sugar industry and Trinidadian investment in rum and Air Jamaica, Government of Jamaica debt offerings have been oversubscribed.

We must ask what is the reason for the paucity of investment from local sources?

Local investors like to claim that they are uncertain how long the current economic policy will continue and question whether the present economic fundamentals will remain. They clamour for lower taxes, waivers, incentives and lower interest rates.

Some are justifiable, but for many they are just lame excuses. Government will never be able to do enough to get the local private sector to invest in productive activity.

We think that our local investors are caught in a psychology of doubt. Triggered by the trauma of the high interest rates and FINSAC, some may have lost the habit of investing in anything that involves any risk. And they have been habituated to rolling over their idle money in financial instruments with high rates and virtually no risk, thus destroying their spirit of entrepreneurism and making them averse to taking risk.

But it’s time to wake up. There are no riskless investments and no government can provide a riskless business environment. The choice is to take risks or watch foreign investors gobble up the opportunities. Timidity won’t do.