Business

Sectors that drive export and

Wednesday, November 14, 2018

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THE expansion of Jamaica's export market, the implementation of digital technologies to drive exports and the targeted development of human capital to boost the MSME (Medium, Small and Micro Enterprises) sector were the suggestions put forward by researchers from the Mona School of Business and Management (MSBM) to address the decline of key sectors driving export and economic growth in the Jamaican economy.

The occasion was a public forum at the school held recently under the theme Transforming Jamaica's Economic Competiveness.

Dr William Lawrence, director of Professional Services Unit at the MSBM and lead researcher for the study of Jamaica's performance in the Global Competitiveness Survey, discussed the decline and noted that the Global Competitiveness Report 2018 published by the World Economic Forum (WEF) recommended that Jamaica substantially boost its exports in order to achieve meaningful growth of Gross Domestic Product (GDP).

He said an analysis which was conducted by a team at the MSBM, using the Planning Institute of Jamaica's GDP growth data, mapped three export-producing sectors, namely manufacturing, mining and agriculture over the past 35 years. The findings showed that the GDP growth in mining and manufacturing together accounted for 63 per cent of the total GDP variability.

“From 1982 to 2017, mining as a per cent of GDP has fallen from six per cent to two per cent...manufacturing as a per cent of GDP in terms of contribution has fallen from 16 per cent to 8.6 per cent. We are seeing that the sectors that influence growth, to the extent of 63 per cent, are on the decline and if these sectors are declining, we have some decisions to make,” Lawrence said.

He emphasised that Jamaica needed to translate business dynamics into meaningful innovation which, in a country like Jamaica, means implementing digital technologies to drive the export agenda to boost market size and generate GDP growth.

“When you read the report, you will see that for Jamaica, market size in terms of market reach is a perpetual problem, which is arguably a result of the lack of export activity. Trinidad, for example, has a larger market size, because of their higher levels of export activity,” he noted.

Kamau Chionesu, co-researcher and lecturer of economics and business research at the MSBM, said there were major changes in the methodology of the index for the WEF 2018 Report and this was a reflection of the reduction in subjective opinions.

In explaining Jamaica's current position, he said the new index was very different from the previous versions of the Global Competitiveness report and, as such, the data reported prior to 2018 was not comparable.

“The current index represents a structural break with the past in the way it has been conducted,” he said. “So we may see where Jamaica has fallen behind even though we have improved in many areas.”

The researchers concluded that the private and public sectors need to increase their R&D budgets to embrace digital-led innovation and export growth. They also urged more companies to obtain equity capital by listing shares on the Jamaica Stock Exchange.

Following the research presentation was a high-profile panel discussion on how to improve Jamaica's competiveness in the global space, featuring Brian Wynter, governor of the Bank of Jamaica, Howard Mitchell, president of the Private Sector Organisation of Jamaica, Marlene Street Forrest, managing director, Jamaica Stock Exchange, Hugh Johnson of the Small Business Association. and Dr David McBean, executive director, MSBM.

The panellists concluded that targeted human capital development is needed to boost the MSME sector and others with an emphasis on building broad-based digital competences in Jamaica.

They agreed that the Act now tabled with the Government to modernise the Bank of Jamaica will promote price stability and financial system sustainability. The panellists, however, warned that R&D expenditures should not merely create inventions but must truly innovate by taking new products to export markets.

The public forum was hosted by Mona School of Business and Management, in partnership with the Bank of Jamaica, the Private Sector Organisation of Jamaica and the Jamaica Stock Exchange as part of the MSBM's continuing role to advance scholarship by connecting academia and industry to create research-based solutions.

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