Sunday, October 25, 2015

If Jamaicans are to excel...

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One of the things we often forget is that development of a company or a country is primarily for the purpose of advancing the lives of people, and not just measuring numerical indicators. Although companies are developed primarily to improve their returns, they should ultimately have a positive effect on the lives of shareholders. Similarly, countries should be developed to improve the lives of their citizens.

This, I believe, explains the failure of many managers and governments, in that they tend to forget that their customers are people and not financial statements or fiscal accounts, which are merely ways of measuring development, but not the purpose of development.

So while the primary objective of a manager is to meet corporate objectives, this can only be done successfully if employees are productive, and employees can only be productive if they are happy with their environment. Further, if one is successfully providing financial returns but there is no return to shareholders through dividends or capital appreciation, then the share price will suffer.

Similarly, if a government institutes policies that are geared towards meeting numerical targets, but not towards improving the lives of its people, that government will fall out of favour.

I think that this is one of the primary failures that I have seen with many people, at a corporate level, and also fiscal policies over the years in Jamaica. They have failed to keep their eyes on the goal of human development as the ultimate objective of everything they do. This also translates to a societal problem, as over the decades we have developed so many products for profit only and have forgotten about the people in the middle. This is why today many of the foods and practices we have become accustomed to create health and other societal issues.

Excelling overseas

This lack of focus on the ultimate beneficiary of policy causes us to develop policies and systems that focus on financial returns, which ultimately hurt the progress of the people. This is why many Jamaicans, for example, go overseas and excel, when they find it difficult to do so in Jamaica. It is not because they suddenly develop new skills when they migrate, but rather the environment they are placed in allows them to exploit their full potential.

So when we talk about the need for private sector (and particularly SME) growth, we must understand that businesses will only grow if the operating environment facilitates that growth. This is the main reason why we have not seen greater SME growth in Jamaica, even though we have comparative advantages that we can develop.

One of the things that comes to mind readily is the way we have designed the procurement rules, which happens not only in Jamaica, as I have spoken to many people in the region with the same problem. Unfortunately, the way our rules are designed actually reduces the productivity of public sector workers significantly and creates costs greater than those we are trying to avoid, both directly and also in terms of social costs. The objective of the rules is supposedly to eliminate corruption and improve value, but because the rules were designed without the ultimate objective of efficiency and productivity in mind, they have actually had the opposite effect of costing more. Of course, the ultimate effect is negative on taxpayers and citizens generally in terms of the cost of living.

Another failing that comes to mind is the way we design policies, with a focus more on fiscal revenues, rather than focusing on creating an environment to make the bureaucracy and tax environment better for businesses and citizens. It is because of this focus why -- over the many years that I have been following the budget -- we have always been increasing taxes, even though over that same period the cost of living has been increasing while GDP growth and productivity have been lagging.

I believe that when we implement public sector transformation, the focus should be not simply on cutting expenditure, but on creating a more efficient public sector. In other words, the success of transformation should not be just meeting the wage target as a percentage of GDP, but rather on improving the service delivered to the public.

Why, you may ask, is it so important to focus on the human element? Simply because in today's world competitiveness is a direct result of innovation conceived in the human mind. Sadly, businesses and people spend much of their time trying to resolve bureaucracy issues or interacting with the government bureaucracy and so have less time than their competitors to spend on innovation. This explains why under the Global Competitiveness Report we are unable to transition to an Innovation Driven economy, which is when real value is added.

Of course, this means ensuring that institutions such as the police force and the court system respect human rights and are efficient.

So if we want to transform our economy it means we must focus on improving the lives of our people, and finally get the news that the world no longer exists in the industrial era where capital and land created competitive advantages. We now live in the information era where people create the competitive edge, and so if we do not create an environment where our people can develop better than in other societies, then we will forever be laggards.

Caricom dilemma

Each time I travel within this region, I realise why Caricom will never achieve the purpose intended. This is travel. It is much easier to travel to North America, or in some cases to Europe, than it is to travel within the region. Not to mention the fact that it is more expensive to travel within Caricom than to North America in some instances. As if that is not enough, it takes much longer for Caricom citizens to be processed through immigration than visitors from outside CARICOM, because we allocate fewer immigration counters to Caricom citizens, resulting in longer lines.

The fact is that unless we can better accommodate the movement of people and goods within Caricom, then it will continue to be primarily of academic rather than practical application.

7 comments:

Colin Aleong said...

Dennis, as a highly educated, observant, and well informed writer with a deep attachment to Jamaica, you write very articulated, progressive, and thought out articles on Jamaica and the issue and challenges of economic growth.

Jamaica is caught in a debt trap and its economy has not grown since 1990. Approximately 20% of government revenue goes to service debt. It has had to have repeated bailouts, and by working with the IMF, it is forced to implement austerity policies and programs, and the IMF frowns on social spending under such circumstances. The country needs debt relief if it is ever to get out of the debt trap, but it is not eligible for debt forgiveness. So creditors hold the upper hand. And it becomes a no-win situation when there is no economic growth and many Jamaican emigrate to seek a better life, i.e. no population growth. Greece can learn some hard lessons from Jamaica.

Despite all the progress and improvements that Jamaica has made in climbing global index scales in many areas and even in the areas of global innovation index, it is the debt and non growth that holds it back. All the ideas and possible solutions I mentioned in the last blog may mean or make little difference.

Jamaica is a beautiful country and I would one day like to revisit the island. Its people are a natural resource but many see no way out or future, and so they emigrate. However, because of your love for the country, you should continue addressing the issue and bringing attention to readers. One day everything may change.

John @ teamsportbanners said...

I'm very happy that you think that I do. Your remark is really good.

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