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If only we were birds ...
Published: Monday | October 18, 2010 0 Comments and 0 Reactions
Morrison
Deika Morrison, Contributor Birds, as you know, fly away from bad seasonal weather. It is called migration and they do it every winter, returning home when the environment is more hospitable to their survival. There are times that Jamaica, the country, and Jamaicans, the people, would like to have the option to fly away and return - like between June 1 to November 30 every year.
What trauma! Hurricane season means mentally and physically preparing for hurricanes, living through them or severe weather, drying out after the flooding, cleaning up the debris, counting and recovering from personal and business losses, trying to rebuild infrastructure and getting back to business and normal life. It's a vicious cycle. Build, mash up, rebuild.
Recently, Jamaican officials were in Washington talking to the (IMF) about how the country might refinance reconstruction in light of the damage suffered from Tropical Storm Nicole, in the context of the conditionalities of Jamaica's loan agreement with the fund and the Government's limited ability to borrow.
Here are the three ways to find money to pay for something without borrowing. First, reallocate expenditure from other areas. Second, increase tax revenue intake either though collection and/or policy. Third, earn more money from exports.
Limited spending flexibility
Let us ignore the reallocation of expenditure, since Governments have limited spending flexibility with serious competing demands for education, health care and other critical social needs. On a global level, it was recently reported that the IMF expressed concern about jobless growth worldwide and fear of an explosion of social unrest. Surely, reallocation from social stability measures are not the preferred option. What about the second option - tax revenues? Ignore effective taxation levels for a bit and let us focus on practicalities. During and after a disaster, consumption is depressed - unless it is for essentials, and less shopping means less general consumption tax (GCT). Production ceases temporarily and less products to sell means less GCT. As transportation and repair costs increase, companies make less profit which means less income tax.
It is just arithmetic.
That leaves us with the third option - exports. According to the IMF's October 2010 World Economic Outlook, "Sustained, healthy recovery rests on two rebalancing acts: internal rebalancing, with a strengthening of private demand in advanced economies allowing for fiscal consolidation; and external rebalancing, with an increase in net exports in deficit economies, such as the United States, and a decrease in net exports in surplus economies, notably emerging Asia."
Assuming they mean all deficit economies, their answer for Jamaica should be to increase net exports. Yes, of course, brilliant. The IMF is absolutely right.
On second thought, we have to reap crops and make goods to export, right?
Yes, things shut down temporarily but we are resilient and can bounce back, especially with quick targeted interventions. When destroyed, equipment need repair and replacement, companies are challenged to keep costs low so that exports are competitive. Even if there are crops to reap and businesses can produce, these farms and companies do not operate in a vacuum - they need electricity and water that may not be available and employees who may not be able to come to work. Assuming there are goods, how do they get to the ports to export when the roads leading to the ports and the ports themselves are damaged? Of course, if Jamaica had the money, all that equipment and infrastructure could be fixed very quickly and we would get back to producing and exporting. Perhaps this is why multilaterals, in their wisdom, invented grants and special financing windows at concessionary lending rates.
Exports' pivotal role
No doubt, exports play a pivotal role in our prospects for economic survival and prosperity. So why not invest in developing a sustainable export sector? We have to produce anyway for local needs - so it is not like it is optional. Solutions for increased production and export require tailoring to the realities of our socioeconomic realities and geographic location. Most important, the development and implementation of these solutions are completely within the capability of the public and private sectors working together with the IMF - who is calling for increased exports. Then Jamaica can earn some money, create some jobs, spend what little it already has on social stability and keep increased taxation at bay. On October 8, at the opening session of the IMF-World Bank Annual Meetings, IMF Managing Director Dominique Strauss-Kahn so rightly stated, "If you want to restore confidence in an uncertain world, you need to work together. If you want to put people back to work, you need to work together. If you want to build a better and safer world for our children and grandchildren, you need to work together."
Here is another benefit. Since we all know how Jamaica likes to lead internationally, Jamaica's solution for a sustainable export sector would have applicability to other countries who suffer every year like we do. The caption box shows 21 hurricane-prone countries with a combined GDP exceeding US$15. 205 trillion in 2009 - an estimated 26 per cent of the entire world's GDP which, collectively, contribute even more given the multiplier effects of trade.The ripple effect of these solutions is even greater, since every country suffers the same kind of severe weather challenges every year - many without warning of a set season. Indeed, Jamaica could become a model for how to get back on track quickly after a disaster.
In the final analysis, we are humans and can never fly like birds, and certainly cannot carry our nests - aka Jamaica - with us. According to PBS, the non-profit public broadcasting television service, "Sometimes a bird species' very survival depends on its ability to learn fast." We would be well advised to do the same.
Deika Morrison is managing director of MdkAdvisory &Consulting Ltd. She is also compiling a catalogue of products made in Jamaica and support services. See jamaicacatalogue.com
Country2008 GDP2009 GDP %ChangeAntigua and Barbuda1.2031.118-7%The Bahamas7.3097.3771%Barbados3.9883.895-2%Belize1.3591.352-1%Costa Rica29.84129.318-2%CubaN/AN/AN/ADominica0.3640.362-1%Dominican Republic45.51646.7143%El Salvador22.10721.101-5%Grenada0.6780.615-9%Guatemala39.14837.661-4%Haiti6.5726.5600%Honduras13.92514.2682%Jamaica13 .52712.640-7%Mexico1089.878874.810-20%Nicaragua6.2486.149-2%St Kitts and Nevis0.5700.557-2%St Lucia0.9960.973-2%St Vincent and The Grenadines0.5740.571-1%Trinidad and Tobago27.17919.626-28%United States14369.07514119.050-2%
Total GDP For Hurricane-Prone Countries 15204.717World GDP 57843.376
Source: International Monetary Fund, World Economic Outlook Database, October 2010
All Gross Domestic Product (GDP) figures are current prices in USD Billions
Source For Dominique Strauss-Kahn quote: http://www.imf.org/external/np/speeches/2010/100810.htm A New Globalization For A New World. Opening address to IMF-World Bank Annual Meetings. October 8, 2010
Published: Monday | October 18, 2010 0 Comments and 0 Reactions
Morrison
Deika Morrison, Contributor Birds, as you know, fly away from bad seasonal weather. It is called migration and they do it every winter, returning home when the environment is more hospitable to their survival. There are times that Jamaica, the country, and Jamaicans, the people, would like to have the option to fly away and return - like between June 1 to November 30 every year.
What trauma! Hurricane season means mentally and physically preparing for hurricanes, living through them or severe weather, drying out after the flooding, cleaning up the debris, counting and recovering from personal and business losses, trying to rebuild infrastructure and getting back to business and normal life. It's a vicious cycle. Build, mash up, rebuild.
Recently, Jamaican officials were in Washington talking to the (IMF) about how the country might refinance reconstruction in light of the damage suffered from Tropical Storm Nicole, in the context of the conditionalities of Jamaica's loan agreement with the fund and the Government's limited ability to borrow.
Here are the three ways to find money to pay for something without borrowing. First, reallocate expenditure from other areas. Second, increase tax revenue intake either though collection and/or policy. Third, earn more money from exports.
Limited spending flexibility
Let us ignore the reallocation of expenditure, since Governments have limited spending flexibility with serious competing demands for education, health care and other critical social needs. On a global level, it was recently reported that the IMF expressed concern about jobless growth worldwide and fear of an explosion of social unrest. Surely, reallocation from social stability measures are not the preferred option. What about the second option - tax revenues? Ignore effective taxation levels for a bit and let us focus on practicalities. During and after a disaster, consumption is depressed - unless it is for essentials, and less shopping means less general consumption tax (GCT). Production ceases temporarily and less products to sell means less GCT. As transportation and repair costs increase, companies make less profit which means less income tax.
It is just arithmetic.
That leaves us with the third option - exports. According to the IMF's October 2010 World Economic Outlook, "Sustained, healthy recovery rests on two rebalancing acts: internal rebalancing, with a strengthening of private demand in advanced economies allowing for fiscal consolidation; and external rebalancing, with an increase in net exports in deficit economies, such as the United States, and a decrease in net exports in surplus economies, notably emerging Asia."
Assuming they mean all deficit economies, their answer for Jamaica should be to increase net exports. Yes, of course, brilliant. The IMF is absolutely right.
On second thought, we have to reap crops and make goods to export, right?
Yes, things shut down temporarily but we are resilient and can bounce back, especially with quick targeted interventions. When destroyed, equipment need repair and replacement, companies are challenged to keep costs low so that exports are competitive. Even if there are crops to reap and businesses can produce, these farms and companies do not operate in a vacuum - they need electricity and water that may not be available and employees who may not be able to come to work. Assuming there are goods, how do they get to the ports to export when the roads leading to the ports and the ports themselves are damaged? Of course, if Jamaica had the money, all that equipment and infrastructure could be fixed very quickly and we would get back to producing and exporting. Perhaps this is why multilaterals, in their wisdom, invented grants and special financing windows at concessionary lending rates.
Exports' pivotal role
No doubt, exports play a pivotal role in our prospects for economic survival and prosperity. So why not invest in developing a sustainable export sector? We have to produce anyway for local needs - so it is not like it is optional. Solutions for increased production and export require tailoring to the realities of our socioeconomic realities and geographic location. Most important, the development and implementation of these solutions are completely within the capability of the public and private sectors working together with the IMF - who is calling for increased exports. Then Jamaica can earn some money, create some jobs, spend what little it already has on social stability and keep increased taxation at bay. On October 8, at the opening session of the IMF-World Bank Annual Meetings, IMF Managing Director Dominique Strauss-Kahn so rightly stated, "If you want to restore confidence in an uncertain world, you need to work together. If you want to put people back to work, you need to work together. If you want to build a better and safer world for our children and grandchildren, you need to work together."
Here is another benefit. Since we all know how Jamaica likes to lead internationally, Jamaica's solution for a sustainable export sector would have applicability to other countries who suffer every year like we do. The caption box shows 21 hurricane-prone countries with a combined GDP exceeding US$15. 205 trillion in 2009 - an estimated 26 per cent of the entire world's GDP which, collectively, contribute even more given the multiplier effects of trade.The ripple effect of these solutions is even greater, since every country suffers the same kind of severe weather challenges every year - many without warning of a set season. Indeed, Jamaica could become a model for how to get back on track quickly after a disaster.
In the final analysis, we are humans and can never fly like birds, and certainly cannot carry our nests - aka Jamaica - with us. According to PBS, the non-profit public broadcasting television service, "Sometimes a bird species' very survival depends on its ability to learn fast." We would be well advised to do the same.
Deika Morrison is managing director of MdkAdvisory &Consulting Ltd. She is also compiling a catalogue of products made in Jamaica and support services. See jamaicacatalogue.com
Country2008 GDP2009 GDP %ChangeAntigua and Barbuda1.2031.118-7%The Bahamas7.3097.3771%Barbados3.9883.895-2%Belize1.3591.352-1%Costa Rica29.84129.318-2%CubaN/AN/AN/ADominica0.3640.362-1%Dominican Republic45.51646.7143%El Salvador22.10721.101-5%Grenada0.6780.615-9%Guatemala39.14837.661-4%Haiti6.5726.5600%Honduras13.92514.2682%Jamaica13 .52712.640-7%Mexico1089.878874.810-20%Nicaragua6.2486.149-2%St Kitts and Nevis0.5700.557-2%St Lucia0.9960.973-2%St Vincent and The Grenadines0.5740.571-1%Trinidad and Tobago27.17919.626-28%United States14369.07514119.050-2%
Total GDP For Hurricane-Prone Countries 15204.717World GDP 57843.376
Source: International Monetary Fund, World Economic Outlook Database, October 2010
All Gross Domestic Product (GDP) figures are current prices in USD Billions
Source For Dominique Strauss-Kahn quote: http://www.imf.org/external/np/speeches/2010/100810.htm A New Globalization For A New World. Opening address to IMF-World Bank Annual Meetings. October 8, 2010
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