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Beyond the IMF — Solutions for growth
BY ALANDO N TERRELONGE
Thursday, April 18, 2013
FOR the last 40 years, Jamaica has continued to suffer from a low growth rate, which averages approximately of 0.8 per cent per annum. The national debt now stands at $1.7 trillion, about 140 per cent of our GDP, which has effectively forced us to return to the International Monetary Fund (IMF) for financial assistance. The tragic state of our economy is further compounded by a high energy bill, declining productivity, and an import bill that is unsustainable. In fact, more than 60 per cent of the annual budget is painfully diverted to repay interest associated with our growing debt.
Successive governments have found it impossible to attain sustained levels of growth and unemployment levels continue to climb nationally.
Youth unemployment, in particular, was estimated as high as 32.2 per cent, as at July 2012. This merits much concern, as it is they who will inevitably have to shoulder Jamaica's towering debt burden in the future. Consequently, credible solutions must be found to ensure that Jamaica will not persistently run to the IMF every four or five years.
In keeping with its motto "more than just politics", Generation 2000 (G2K) recently hosted a forum at the University of the West Indies, Mona, aptly titled, "Beyond The IMF — Solutions For Growth". The guest speakers were renowned banker and financial advisor Aubyn Hill, and distinguished lecturer and economist Dr Andre Haughton. Both men addressed a mixed audience of young professionals and university students on alternative solutions for growth, beyond the IMF.
A KNOWLEDGE-BASED ECONOMY
In his presentation entitled, A Knowledge-based Economy, Aubyn Hill premised growth on effective leadership and proper management. He emphasised that a simple idea, managed well, can turn into wealth. Managed poorly, however, the wealth created or that which exists naturally, will dwindle away to nothing. Hill stated that the political and economic imperative to foster growth has eluded Jamaica since our Independence, as there has been a lack of proper management and leadership on both sides of the political divide.
He noted that even after the IMF and the new NDX, there is still a massive deficit which can only be erased if we are able to grow the economy rapidly. Without any significant growth in the economy Jamaica's next option would be either debt forgiveness or a miracle.
While recognising that one cannot expect the Government by itself to grow the economy, he expressed that it was the role of Government to be the facilitator of economic growth. The primary solution posited by Hill was the reorganisation of the management structure of the Cabinet.
In criticising the present Cabinet structure, Hill remarked that given its large size and the propensity for duplication of ministerial functions across ministries, the Cabinet is not structured for growth. He recommended the Korean model where a super Ministry of Knowledge Economy exists, comprising the functions of several growth sectors such as mining, energy, and industry. The Korean model was lauded for its efficiency as it merges varying ministries calculated to spur economic growth.
Hill suggested that with a budget of $73 billion, the education ministry should be converted into a growth industry. With the advantage of being an English-speaking country, he advised those present that, upon completion of their tertiary education, they should be stamped "fixed for export", and challenged them to make Jamaica the education capital of the Caribbean. When this happens, he said, we will begin to see returns on our investment in education, as already Jamaica has a positive cache of trained nurses and actuaries who are much sought after internationally.
SOCIAL ENTERPRISE AND THE SOCIAL ENTREPRENEUR
While acknowledging that the IMF deal is a necessity, Dr Haughton posited that it is not sufficient. He commented that if Jamaica does not take advantage of opportunities to grow the economy, then we would most certainly return to the IMF in a few years. Haughton highlighted that entrepreneurship and management went hand in hand, and that it was imperative that we push productivity levels in Jamaica.
According to Haughton, social entrepreneurship entails individuals coming together to use ideas creatively to generate wealth. It stems from the need to successfully serve communities by creating solutions to remedy immediate social problems. He stated that individuals and communities must begin thinking outside the box, as the Government alone cannot create economic growth. Communities, he noted, should move beyond the culture of handouts and establish viable social safety net programmes to foster growth.
Haughton emphasised that Jamaica's economy was stuck in a 1960s state of mind, and that we must use the concept of "people power" to generate market ideas for growth. He highlighted poor management and inefficiency as major factors which have prevented growth, and noted that we lacked the requisite infrastructure needed to move Vision 2030 beyond the paper on which it is written. For Jamaica to move forward, he warned, we must understand the importance of using human capital to enable wealth, not the Government.
Jamaica has, however, been unable to truly capitalise on its human capital. As Haughton observed, Jamaicans are too concerned with green and orange. Consequently, there has been no significant push to develop proper infrastructure and propel the nation forward because of politics; backward policies; and a culture of handouts. This, he stated, made it difficult to do business in Jamaica, augmented crime and bolstered the underground economy (eg lottery scamming), which thrive where the primary economy failed.
That Jamaica now stands on the edge of a fiscal cliff is indisputable. The disbursement of funds from the IMF will not provide the panacea needed for sustained economic growth. Leading businessmen, such as Richard Byles and Don Wehby, have expressed that the IMF will not solve our problems. The experts all agree that we must think out of the box to generate ideas for growth, as it cannot be left to politicians to grow the economy.
For its part, the G2K must be lauded for taking the initiative to convene such an opportune forum to encourage the discussion of finding practicable solutions for growth beyond the IMF. Youth organisations such as the G2K must persistently let their voices be heard, as ultimately it will be left to them to change, maintain or adopt policies in the future that will determine whether or not Jamaica persistently runs to the IMF.
Alando N Terrelonge is a partner in the law firm Bailey Terrelonge Allen
Read more: http://www.jamaicaobserver.com/colum...#ixzz2QqZplYPV
BY ALANDO N TERRELONGE
Thursday, April 18, 2013
FOR the last 40 years, Jamaica has continued to suffer from a low growth rate, which averages approximately of 0.8 per cent per annum. The national debt now stands at $1.7 trillion, about 140 per cent of our GDP, which has effectively forced us to return to the International Monetary Fund (IMF) for financial assistance. The tragic state of our economy is further compounded by a high energy bill, declining productivity, and an import bill that is unsustainable. In fact, more than 60 per cent of the annual budget is painfully diverted to repay interest associated with our growing debt.
Successive governments have found it impossible to attain sustained levels of growth and unemployment levels continue to climb nationally.
Youth unemployment, in particular, was estimated as high as 32.2 per cent, as at July 2012. This merits much concern, as it is they who will inevitably have to shoulder Jamaica's towering debt burden in the future. Consequently, credible solutions must be found to ensure that Jamaica will not persistently run to the IMF every four or five years.
In keeping with its motto "more than just politics", Generation 2000 (G2K) recently hosted a forum at the University of the West Indies, Mona, aptly titled, "Beyond The IMF — Solutions For Growth". The guest speakers were renowned banker and financial advisor Aubyn Hill, and distinguished lecturer and economist Dr Andre Haughton. Both men addressed a mixed audience of young professionals and university students on alternative solutions for growth, beyond the IMF.
A KNOWLEDGE-BASED ECONOMY
In his presentation entitled, A Knowledge-based Economy, Aubyn Hill premised growth on effective leadership and proper management. He emphasised that a simple idea, managed well, can turn into wealth. Managed poorly, however, the wealth created or that which exists naturally, will dwindle away to nothing. Hill stated that the political and economic imperative to foster growth has eluded Jamaica since our Independence, as there has been a lack of proper management and leadership on both sides of the political divide.
He noted that even after the IMF and the new NDX, there is still a massive deficit which can only be erased if we are able to grow the economy rapidly. Without any significant growth in the economy Jamaica's next option would be either debt forgiveness or a miracle.
While recognising that one cannot expect the Government by itself to grow the economy, he expressed that it was the role of Government to be the facilitator of economic growth. The primary solution posited by Hill was the reorganisation of the management structure of the Cabinet.
In criticising the present Cabinet structure, Hill remarked that given its large size and the propensity for duplication of ministerial functions across ministries, the Cabinet is not structured for growth. He recommended the Korean model where a super Ministry of Knowledge Economy exists, comprising the functions of several growth sectors such as mining, energy, and industry. The Korean model was lauded for its efficiency as it merges varying ministries calculated to spur economic growth.
Hill suggested that with a budget of $73 billion, the education ministry should be converted into a growth industry. With the advantage of being an English-speaking country, he advised those present that, upon completion of their tertiary education, they should be stamped "fixed for export", and challenged them to make Jamaica the education capital of the Caribbean. When this happens, he said, we will begin to see returns on our investment in education, as already Jamaica has a positive cache of trained nurses and actuaries who are much sought after internationally.
SOCIAL ENTERPRISE AND THE SOCIAL ENTREPRENEUR
While acknowledging that the IMF deal is a necessity, Dr Haughton posited that it is not sufficient. He commented that if Jamaica does not take advantage of opportunities to grow the economy, then we would most certainly return to the IMF in a few years. Haughton highlighted that entrepreneurship and management went hand in hand, and that it was imperative that we push productivity levels in Jamaica.
According to Haughton, social entrepreneurship entails individuals coming together to use ideas creatively to generate wealth. It stems from the need to successfully serve communities by creating solutions to remedy immediate social problems. He stated that individuals and communities must begin thinking outside the box, as the Government alone cannot create economic growth. Communities, he noted, should move beyond the culture of handouts and establish viable social safety net programmes to foster growth.
Haughton emphasised that Jamaica's economy was stuck in a 1960s state of mind, and that we must use the concept of "people power" to generate market ideas for growth. He highlighted poor management and inefficiency as major factors which have prevented growth, and noted that we lacked the requisite infrastructure needed to move Vision 2030 beyond the paper on which it is written. For Jamaica to move forward, he warned, we must understand the importance of using human capital to enable wealth, not the Government.
Jamaica has, however, been unable to truly capitalise on its human capital. As Haughton observed, Jamaicans are too concerned with green and orange. Consequently, there has been no significant push to develop proper infrastructure and propel the nation forward because of politics; backward policies; and a culture of handouts. This, he stated, made it difficult to do business in Jamaica, augmented crime and bolstered the underground economy (eg lottery scamming), which thrive where the primary economy failed.
That Jamaica now stands on the edge of a fiscal cliff is indisputable. The disbursement of funds from the IMF will not provide the panacea needed for sustained economic growth. Leading businessmen, such as Richard Byles and Don Wehby, have expressed that the IMF will not solve our problems. The experts all agree that we must think out of the box to generate ideas for growth, as it cannot be left to politicians to grow the economy.
For its part, the G2K must be lauded for taking the initiative to convene such an opportune forum to encourage the discussion of finding practicable solutions for growth beyond the IMF. Youth organisations such as the G2K must persistently let their voices be heard, as ultimately it will be left to them to change, maintain or adopt policies in the future that will determine whether or not Jamaica persistently runs to the IMF.
Alando N Terrelonge is a partner in the law firm Bailey Terrelonge Allen
Read more: http://www.jamaicaobserver.com/colum...#ixzz2QqZplYPV