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Debt-propelled economic model no longer sustainable
Tuesday, October 13, 2009
For a long time this newspaper has advocated that Jamaica must adopt a policy of export-led growth. In our view, we have finally come to the end of the road of what some have called Jamaica's debt-propelled economy.
The consequences of our failure to engage in an export push to diversify our economy when the world economy was strong should now be clear for all to see. There will, of course, be severe challenges in implementing such an export push in the midst of the worst international financial and economic crisis since the great depression, when even the exports of the so-called Asian Tigers have suffered from falling global demand.
Nevertheless, we maintain that a country which had a current account deficit of over 20 per cent of GDP in 2008, and that doesn't produce a drop of oil, has no choice. It is only through growing our exports of goods and services in the international market that we can grow our economy fast enough to escape our current debt trap.
We therefore believe that the Jamaica Chamber of Commerce's first National Economic Forum, which takes place today and tomorrow, is extremely timely. Newly re-elected Chamber president Mr Milton Samuda is not exaggerating when he describes the forum as "an imperative at a time when the nation needs to find urgent new solutions to help the country out of one of the most serious economic crises it has ever faced".
Quite rightly, Mr Samuda believes that the Chamber is "duty bound to facilitate a solutions-based forum" to tackle the two areas of greatest concern, namely the 'Fiscal Debt Challenge' covered today, and 'Export-led Growth', to be covered tomorrow. This focus on solutions needs to be shared not just by the Government and the wider private sector, but the unions, civil society and even the general public. Our preferred forum for such a solutions-based approach remains the still undeveloped social partnership.
-The Chamber forum has an impressive line-up, having engaged two internationally recognised speakers to address these two pressing issues. Today's speaker, Mr Alexander Livshits, is a director for international and special projects at the world's biggest aluminium producer UC Rusal. As a former minister of finance of the Russian Federation, he has direct experience to share about Russia's domestic debt default in 1998.
The other speaker, Professor Emeritus Donald Harris at Stanford University, will speak on moving from what he calls a "debt-propelled economy" to a strategy of export-led growth. Local presenters include Prime Minister Bruce Golding, Dr Omar Davies, and Dr Peter John Gordon.
Professor Harris, like many others, was part of an attempt to shift Jamaica to a policy of export-led growth in the mid-1990s, for which we are still waiting. Nevertheless, we are encouraged by yesterday's launch, by Bank of Nova Scotia president and CEO Mr Bruce Bowen, of a $500-million Productive Sector Growth Fund at an interest rate of under 10 per cent. To truly make a difference in these difficult times, however, we will need many more, and even bigger, such initiatives.
http://www.jamaicaobserver.com/edito...USTAINABLE.asp
Tuesday, October 13, 2009
For a long time this newspaper has advocated that Jamaica must adopt a policy of export-led growth. In our view, we have finally come to the end of the road of what some have called Jamaica's debt-propelled economy.
The consequences of our failure to engage in an export push to diversify our economy when the world economy was strong should now be clear for all to see. There will, of course, be severe challenges in implementing such an export push in the midst of the worst international financial and economic crisis since the great depression, when even the exports of the so-called Asian Tigers have suffered from falling global demand.
Nevertheless, we maintain that a country which had a current account deficit of over 20 per cent of GDP in 2008, and that doesn't produce a drop of oil, has no choice. It is only through growing our exports of goods and services in the international market that we can grow our economy fast enough to escape our current debt trap.
We therefore believe that the Jamaica Chamber of Commerce's first National Economic Forum, which takes place today and tomorrow, is extremely timely. Newly re-elected Chamber president Mr Milton Samuda is not exaggerating when he describes the forum as "an imperative at a time when the nation needs to find urgent new solutions to help the country out of one of the most serious economic crises it has ever faced".
Quite rightly, Mr Samuda believes that the Chamber is "duty bound to facilitate a solutions-based forum" to tackle the two areas of greatest concern, namely the 'Fiscal Debt Challenge' covered today, and 'Export-led Growth', to be covered tomorrow. This focus on solutions needs to be shared not just by the Government and the wider private sector, but the unions, civil society and even the general public. Our preferred forum for such a solutions-based approach remains the still undeveloped social partnership.
-The Chamber forum has an impressive line-up, having engaged two internationally recognised speakers to address these two pressing issues. Today's speaker, Mr Alexander Livshits, is a director for international and special projects at the world's biggest aluminium producer UC Rusal. As a former minister of finance of the Russian Federation, he has direct experience to share about Russia's domestic debt default in 1998.
The other speaker, Professor Emeritus Donald Harris at Stanford University, will speak on moving from what he calls a "debt-propelled economy" to a strategy of export-led growth. Local presenters include Prime Minister Bruce Golding, Dr Omar Davies, and Dr Peter John Gordon.
Professor Harris, like many others, was part of an attempt to shift Jamaica to a policy of export-led growth in the mid-1990s, for which we are still waiting. Nevertheless, we are encouraged by yesterday's launch, by Bank of Nova Scotia president and CEO Mr Bruce Bowen, of a $500-million Productive Sector Growth Fund at an interest rate of under 10 per cent. To truly make a difference in these difficult times, however, we will need many more, and even bigger, such initiatives.
http://www.jamaicaobserver.com/edito...USTAINABLE.asp