JAMAICA has made remarkable economic progress over the past decade, undertaking the arduous task of reshaping its macro-fiscal position. A mere glance back to 2011 conjures memories of a nation teetering on the precipice of economic collapse. The situation was dire, and an economic meltdown loomed large.

International capital markets had lost confidence in Jamaica’s economy, severing our access to critical financing that was desperately needed. The country’s debt stock relative to the size of its economy (debt-to-GDP ratio) had ballooned to over 140 per cent, far exceeding the global benchmark of 60 per cent.

Our foreign reserves were dangerously low, amounting to only six weeks’ worth of imports, while the traditional rule of thumb called for reserves equivalent to 12 weeks of imports. Years of persistent fiscal deficits, public enterprise borrowing, and insufficient foreign exchange generation led to rapid debt accumulation, crowded out private credit, and stifled growth. Low growth, in turn, further weakened the fiscal situation and raised social pressures as standards of living stagnated.

A series of fiscal reforms, debt restructuring, and prudent financial management, undertaken by the Portia Simpson-Miller Administration between 2012-2015, paved the way for recovery. These efforts not only restored the confidence of international investors but also set the stage for macro-fiscal stability. The continuity of these policies by the Andrew Holness-Administration has allowed the country to enjoy a stable macro-fiscal position today. Our debt-to-GDP ratio is trending below 80 per cent, revenues are surpassing expectations, and our foreign reserves stand at a healthy level of roughly US$4 billion. Unemployment rates are at their lowest in multiple decades.

While the macroeconomic indicators may paint a rosy picture, the harsh reality is that the benefits of this hard-fought macroeconomic stability have not translated into meaningful and tangible improvements in the lives and livelihoods of average Jamaicans. Those who boast about economic stability, when confronted with the truth of the hardship Jamaicans face, must appreciate that macro-fiscal stability is good but not sufficient. We must transition from fiscal stability to economic transformation. Fundamental to this is recognising that the economy remains ensnared in a tripartite dilemma of low-tech, low-wage, and low-growth challenges.

Low tech: A Technological Paradox

Jamaica’s economy has struggled to break free from its low-tech shackles. The absence of technological innovation and a weak emphasis on research and development have left the nation trailing behind its global counterparts. This deficiency hampers productivity and competitiveness, stifling the potential for high-value industries to flourish. The global economy is increasingly driven by technology, and Jamaica’s failure to adapt to this reality has resulted in missed opportunities for growth. Recognising the pivotal role of technology, innovation and research in driving economic advancement, the Government should establish a national research and development council bringing together individuals from the state, academia, the private sector, and trade unions to formulate and oversee a national research and development strategy, drawing on available technical capacity and experience across the country. To encourage greater investments in research, the Government should expedite tax write-offs for research and development expenditures. Our technological transformation must be built on solid research.

Technology must be central in boosting labour productivity to achieve greater economic output. Across the public sector, the Government should enhance efficiency and productivity through greater adoption of technology and digital practices. The Government must also invest heavily in education and training programmes that foster digital literacy and technological skills. Encouraging partnerships between universities, research institutions, and the private sector can drive innovation and help Jamaica transition to a more tech-savvy economy.

Low wage: A Struggle for Prosperity

Low wages have plagued Jamaica’s workforce for years, making it challenging for citizens to enjoy a decent standard of living. Thousands of individuals in the country’s labour force earn minimum wage or less, perpetuating income inequality. To break free from the cycle of low-wage labour, Jamaica must focus on labour market reforms, wage growth, and skills development. The Government can play a pivotal role in maintaining a decent minimum wage to a level that provides a liveable income while simultaneously incentivising businesses to invest in their employees. Moreover, targeted vocational training programmes must be pursued to upskill workers with the competencies for higher-paying jobs, reducing the prevalence of low-wage employment. Business process outsourcing jobs are not the kind of value-added jobs that we are should be pursuing.

Low growth: Breaking the Chains

A stagnant economy is often the result of a lack of diversification and excessive reliance on very few industries. To achieve sustained economic growth, Jamaica must diversify its economy by nurturing other sectors such as agriculture, manufacturing, and renewable energy. We must pursue export-led growth, with agriculture and manufacturing being central to this effort. This is how we will become a globally competitive economy. Agriculture, for example, can be modernised through sustainable farming practices and increased exports of high-value crops. Manufacturing can be revitalised by improving infrastructure and enhancing special economic zones to attract investors.

While tourism remains a cornerstone of the economy, Jamaica should diversify its tourist offerings, emphasising eco-tourism, cultural tourism, and wellness tourism to allow a wide cross-section of stakeholders in the industries to get a piece of the pie. Moreover, addressing issues related to bureaucracy, corruption, and a cumbersome regulatory environment is crucial. Streamlining processes and creating a more business-friendly climate can attract both domestic and foreign investment, fostering economic growth.

While Jamaica’s macroeconomic stability is commendable, it is merely the first step on the path to meaningful economic transformation. Addressing the trinity of challenges outlined will unlock Jamaica’s true potential.

Cleveland Tomlinson is the People’s National Party junior shadow spokesman for finance and planning. He is completing post-graduate studies in the Department of Economics at UWI, Mona.