STRONG, inclusive and sustainable economic growth has eluded us over the past decades. Policymakers must be deeply disturbed as to why we are stuck into economic torpor. Currently, the aggregate demand is affected negatively due to cutbacks in capital expenditure and social expenditure to satisfy the primary surplus target, 7.5 per cent of GDP, approximately US$1.1b, while simultaneously there is a dearth of private sector investments to fill the gap. As a result, our GDP has been crimped from growing, causing angst among Jamaicans.

Amid the passing of the IMF tests and the rapid ascension to 58th position, according to Doing Business Report, the country continues to be mired in high debt-to-GDP ratio and persistent high unemployment among youths. Perusing other major reports, Jamaica ranks as follows: the Global Competitiveness 86th, Transparency Index 85th, and the Global Innovation Index 82nd.

The country’s focus is to be on a path of science, technology, engineering and math which aptly aligns with global outlook. Recently, Jamaica has transitioned to an efficiency economy from a factor economy. Indeed, our next long-term goal is to transmute our country into an innovative economy, to be among the advanced economies, so as to improve our economy and GDP per capita. Although complex and critical, policymakers need to commence the creation of an environment, through reforms and fiscal incentives, which nurtures and enables the human factor behind business and innovation. The big question: “Can innovation be the alchemy of the economy?”

Simply defined, innovation is the process of introducing new ideas, devices and methods. Historically, humans have always been improving life through innovation. From the discovery of fire to electricity, to the Internet and beyond, new thinking is fundamental to social progress and economic growth. Based on a World Bank report on the taxonomy of the drivers and success factors required to propel global economy, innovation must be present and must play a central role.

In November 2014, the World Bank featured a team of four Jamaican innovators showcasing their mobile application product, known as Crimebot, an epic display of creativity. This is an affirmation that Jamaica is endowed with exceptionally talented people who are capable of starting a positive epidemic, an innovation revolution. Indeed, we have done it already in music, sports and education. The biggest challenge, really, is how to impel the creative energies of the unemployed and underemployed youth into areas of innovation. Within this context, the national priority is to craft strategy to motivate and transform these youths into global scientists and engineers at First World standard.

It is claimed that a few Jamaicans are currently employed as ICT specialists in the Silicon Valley, USA. Let us focus on the Information Computer Technology sector which provides an environment in which to innovate because of our endowed creativity. The global animation industry values approximately US$220 billion, growing annually at nine per cent. Of significance, this project strategically aligned with the Government of Jamaica’s National Development Plan — Vision 2030. If managed successfully, the animation industry can spawn employment and entrepreneurial opportunities for young people. Encouragingly the World Bank has lent US$20m for youth employment in the digital and animation industries. Leading international animation companies asserts there is a demand gap of about 30,000 animators in the outsourcing of animation production; possibly about 5,000 can be sourced in the Caribbean. Jamaica has a comparative advantage in both the digital and creative industries vis-à-vis other global competitors because of its proximity to major markets, primarily USA, and the potentially new market of Cuba. This virtual economy offers new opportunities for unemployed and underemployed youth in Jamaica through innovation.

Global innovation needs global talent. To be successful in business today, when capital, goods, talent, and knowledge move quickly around the world, we need to treat global markets as a single market, building global value chains that integrate the world’s best resources. By doing this, local innovation is promoted and used globally, making local innovation truly valuable in the global ecosystem. Huawei, a telecommunication behemoth, has put this theory into practice by integrating the world’s top resources of 16 R&D centres in resource-rich locations, 28 joint-innovation centres, and more than 40 professional competency centres. The company’s aim is to change its global value chain into a larger global innovation platform that enables customers worldwide to access innovations from all over the world.

Our educational institutions, especially universities, have a critical role to play through research and development in the area of innovation. At a recent seminar hosted by the Institute of Chartered Accountants of Jamaica in November 2014, the junior minister in science, technology, energy and mining, Julian Robinson, asserted that special focus is placed on the ICT sector especially animation development. Incidentally, the ICT sector is the fastest-growing sector in Jamaica. In his speech, he declared that the University of the West Indies and HEART/NTA are leading the charge in animation development; surprisingly, the University of Technology, Jamaica (UTech) was not mentioned. It is quite unfortunate to learn that UTech is not included in this national thrust to develop and transform the information and communication sector. Unquestionably, UTech should be included in this mission. Importantly, education is a fundamental element in innovation; access to both basic and vocational education is central to talent development. We need to invest more in education by building the human infrastructure to drive innovation and economic growth. According to OCED, Science Technology Industry Outlook, R&D expenditure to drive innovation is estimated to be 1.6 per cent of the GDP. Interestingly, how much money does Jamaica spend on research and development as a percentage of GDP?

In a world of unpredictability, doubts and mysteries, tethering our minds only to conventional means of paring our budget deficit and current account deficit will not provide us with the desired economic growth to achieve job creation. Radical business models are emerging from unexpected parts of the world and altering global markets in industry after industry. Across agriculture, tourism, manufacturing, energy, health care, transportation, education, technology, disruption is constantly underway. In this period of austerity, there is an inclination to focus intensely on efficiency innovation, aim at reducing labour cost while ignoring the potential benefits of market development innovation, aim at developing new markets, increasing profitability and creating jobs. Importantly, we need to create a competitive innovation portfolio, a delicate balance between efficiency innovation and market development innovation. Innovation, irrespective of the scale, is the key ingredient for businesses to survive the next wave of mega-change.

It is axiomatic that to compete effectively in this dynamic world, a panoptic revision of our business models is a sine qua non for success. Additionally, our educational institutions, public sector and private sector must be responsive to playing a pivotal role in shaping a culture of innovation similar to what prevails in USA, Europe and Asia.

Can innovation be the alchemy of our economy?

James McNish is a lecturer at the University of Technology, Jamaica. Comments: jamcnish@utech.edu.jm