While pointing to a number of indicators contributing to Jamaica’s financial programme now on a positive footing, business magnate Jeffrey Hall warned that Jamaican authorities cannot afford to become complacent, but should look to the Dominican Republic as a case study for economic growth.

The keynote speaker at the Institute of Chartered Accountants of Jamaica 2023 Business Conference, Hall, in his delivery on the topic ‘Preparing Businesses for the Changing World’, said that while Jamaica has thrown off the label of being a “basket case economy”, the country now faces a new problem.

“The problem, though, is that we’re no longer on the list of messed up places. To understand our options as to how to prepare for your future, we need to put ourselves on the list of sensibly run countries and see how we look,” Hall, the vice-chairman and CEO of Pan Jam Group Limited, said.

Moving to recommend how the Jamaican economy could make advancements, Hall said that he would not provide a solution involving incremental steps nor one that involves comparing Jamaica to Singapore, as is usually the case. Instead, he highlighted the Dominican Republic as a “useful comparison” to model the country’s growth trajectory.

“Like us, they are a democracy, they don’t have oil, [and] they get hit by hurricanes every couple of years,” he stated.

“When I started doing business there 20 years ago, the per capita GDP [gross domestic product] of the Dominican Republic was [US]$2,399…and it was 32 per cent below Jamaica, which was then at [US]$3,557. So put simply, despite all the problems that I mentioned about Jamaica pre-JDX (Jamaica Debt Exchange) and NDX (National Debt Exchange), we were richer than them,” Hall added.

By contrast, the Dominican Republic’s GDP per capita now stands at US$8,732 as against US$5,400 for Jamaica.

“That means that they are 61 per cent richer than we are. They consume 32 per cent more power per capita. They have more than twice as more cars per capita. They just opened a new subway system in their city…and they have a longer life expectancy than we do,” Hall outlined.

Referring to a recent studies carried out by the International Monetary Fund (IMF), the Pan Jam Group CEO indicated that the Dominican Republic is poised to become an advanced economy in the next 40 years. Another study from the World Bank also pointed out that the Spanish-speaking country is on its way to becoming a high-income county by 2035.

“Over the last half-century, the Dominican Republic has transformed, first from a primarily agricultural-based to a more manufacturing-oriented economy supported by the growth of free trade zones, and subsequently to a services-driven economy bolstered by the country’s tourism potential and the expansion of the financial system,” the IMF report detailed.

It further pointed out that the country has the sixth-highest per capita GDP in Latin America, surpassing the spending power of Brazil and Mexico. Additionally, it said the country boasts a diverse economy with productive activities in agriculture, manufacturing and services.

While Hall does not recommend a step-by-step approach in following the example of the Dominican Republic, he, however, argued that it is important to understand “the fundamentals” that supported the country’s growth. On this note, he pointed out further that the single-largest contributor to the country’s growth in GDP per capita has been from foreign direct investments (FDI) into the services industry.

According to the United Nations Conference on Trade and Development World Investment Report 2023, the Dominican Republic saw FDI inflows of US$4.01 billion. Jamaica, on the other hand, received US$360 million in FDI.

“They were generating 300 per cent more FDI last year per capita than we were. This is what we need to be discussing with those charged with governance,” Hall asserted, noting that approximately 54 per cent of FDI into the Dominican Republic was for the support of business of services.

“The story of the DR is a story about the intentional rapid shift in the structure of the economy through investments in agriculture…manufacturing and then on to services,” he continued.

While pointing out that GDP comprises consumption, government spending, exports, and investments, the businessman explained that most Jamaicans have focused on exports — primarily of agricultural products — as a driver of growth, reminiscing on the foreign exports lost in importation.

However, he shared that when looking at countries of comparable size as Jamaica, those with GDP largely driven by agriculture tend to be poorer than or as poor as Jamaica. Conversely, countries of a comparable size as Jamaica that focused on their comparative and competitive advantages had a larger GDP per capita.

In this regard, Hall recommended that the Jamaican authorities should consider looking at the sectors and industries in which we are “winning” in order to determine where foreign direct investment is most needed. Among those he listed: tourism, logistics and maritime services, nearshore business process outsourcing, infrastructure and transport, and financial services.

“We can all name the global investors in these sectors. These service sectors dominate our GDP and they’re driving the growth we have had and we can foresee; and the investment in buildings, in people, in systems and the technology that supports these sectors make the difference,” he stated.