Monday, November 07, 2016

Analysis of Jamaica’s competitiveness and development challenges (Part 2)



Last week, I ended by speaking on the point that if we are to see true economic and social development in Jamaica, this can only come through increasing our competitiveness as a country. The only way for us to do that is to target the categories of Efficiency Enhancers and Innovation in the Global Competitiveness Report (GCR) ranking, as our improvement has been in the category of Basic Infrastructure primarily.

In other words, what we have been doing over the past four years is creating capacity (such as through institutions and infrastructure development) and macroeconomic and fiscal stability.

This has caused us to see improved confidence and thus increased investments and a return to growth. (It is reported that in the September 2016 quarter, year over year growth was 2.3 per cent annualised. This, however, reflects the bounce back from the drought that affected agriculture and so a more normalised growth may be under two per cent — still a significant development.)

So if we look back at the areas of Basic Infrastructure, we would have seen significant five-year improvement in the pillars of Macroeconomic Environment (17 per cent improvement) and Health & Primary Education (38 per cent).

However, when it comes to our Institutions and Infrastructure, we have only seen five-year improvements of eight per cent and three per cent respectively. A further analysis shows that of these four basic infrastructure pillars, only Health & Primary Education is in the top 50 rankings, with Macroeconomic Environment at 112, Institutions at 73, and Infrastructure at 77.

So even though our overall improvement has come from the basic infrastructure category primarily, the fact is that the improvement does not mean that we are where we should be as our institutions and infrastructure primarily remain serious impediments to development. In fact, the recent occurrences in the “X6 court case” and the unacceptable situation at the Firearm Licensing Authority prove that our institutions remain a problem.

In the area of Efficiency Enhancers, we even have a more serious issue, as in the pillars of Higher Education & Training, Technological Readiness, and Market Size, we have seen five-year declines of 13 per cent, five per cent, and 17 per cent respectively, and rankings of 90, 77, and 119. These are pillars that are essential for improved competitiveness and are therefore a serious concern, and they must be targeted if we are to improve our international competitiveness to create sustainable growth and development.

In fact, the area of Higher Education is of primary concern, as there is no rich country that has a relatively undereducated labour force. I was just this week having a conversation with someone about the future of driverless cars and robots doing most of the menial tasks which Jamaica embraces as job creation. Our labour laws, for example, have helped to impoverish our labour force by creating greater informality in the labour force and lowering productivity. This has all been done with good intentions (and to get votes), but it has had a distortionary effect on the labour market and created less value.

Under Efficiency Enhancers we have seen five-year improvements in the pillars of Goods Market Efficiency, Labour Market Efficiency, and Financial Market Development of 11 per cent, 10 per cent, and 16 per cent respectively. However, the rankings for Goods Market Efficiency (61) and Labour Market Efficiency (60) are still out of the top 50 countries, and show that much work needs to be done, primarily from the regulatory side to improve.

The Innovation and Sophistication category shows five-year improvement in both pillars of Business Sophistication and innovation of 14 per cent and nine per cent respectively. This, in my view, reflects the natural improvement in the private sector, which controls the movement in these pillars. The problem with these is that they are both out of the top 50 countries, at 57 and 70 respectively. Even though they are not where we want them to be in the rankings, my own view is that if we were to create a friendlier and less inhibiting environment, through better regulations and lower entry barriers, we could see a more significant improvement in the Innovation category.

The table shows us the lowest ranked areas from the 2016/17 GCR report (over 100). What it shows us is that the challenges we face for competitiveness, which negatively affects our economic and social development, is primarily because of crime and justice, fiscal management, and government policy.

We all know about the deficiencies in the justice system, and the crime challenges, but as an example, the approach of tax policy in past years has been to raise the taxes every year on people who are compliant, largely ignoring the non-compliant and the fact that higher tax rates drive capital away from the country. The recent successes of the Employment Tax Credit and moves by Tax Administration Jamaica at compliance and ease of paying taxes, show that lower tax rates and easier tax systems do increase compliance and collections.

There is a lot more that could be done in terms of a detailed analysis of Jamaica’s lack of competitiveness, and hence lack of development, but space does not permit. Suffice it to say that what we must do is not just celebrate the headlines but take a strategic and surgical approach, to look at what are the factors that prevent us from achieving the growth and development we need — and then implement policies specifically to improve those areas.

This is the only way for us to get to where we need to be as a country to ensure prosperity for all Jamaicans.

9 comments:

Colin Aleong said...

Are there also other factors at play here?

If other countries previously higher in the ranking have had some new issues or problems after the last ranking causing them to be ranked lower, then countries previously lower, even if their conditions have not changed significantly, or remain relatively static, move up and replace them in ranking.

And vice versa, a country could find itself in a lower ranking if some countries below them in the previous index improved significantly in the index measurements, while little changed significantly for them to maintain or sustain their previous ranking.

In-depth and wide ranging comprehensive analysis usually provides answers. Otherwise, one only has assumptions to go by.

Arjun Simkhada said...

Trekking in Nepal…Family Adventure style
The towering Himalayas are, to many travellers’ minds, the chief reason for visiting Nepal. The country tumbles steeply down from the 800km stretch of the Himalayan battlements that forms its northern border, and can claim no fewer than eight of the world’s ten highest peaks – including, of course, Everest, the highest of them all. The mountains are more than just physically astonishing, however. The cultures of highland-dwelling Nepalese peoples are rich and fascinating, and the relaxed, companionable spirit of trekking life is an attraction in itself. The Himalayas have long exerted a powerful spiritual pull, too. In Hindu mythology, the mountains are where gods go to contemplate, while the Sherpas and other mountain peoples hold certain peaks to be the very embodiment of deities.
Most visitors to mountain areas stick to a few well-established trekking routes. They have good reasons for doing so: the classic trails of the Everest region with its famous trails like Everest Base camp trek and the 3 high passes are both mind blowing ventures and highly popular in the world. And Annapurna regions are so popular because they offer close-up views of the very highest peaks; this includes Annapurna 1 & 2, fishtail peak and Ganesh Himal trek. Famous treks like the Ghorepani Poon Hill Trek, Annapurna Base camp trek & the Annapurna Circuit trek are some of the most famous on earth. Dramatic scenery and fascinating local cultures are most known in this area. Lodges on the main trails – some as sophisticated as ski chalets, these days – make it possible to go without carrying a lot of gear or learning Nepali, and without spending too much money, either. While trekking, you’ll likely eat and sleep for $20–30 a day. For those who put a high priority on getting away from it all, there are plenty of less-developed routes, of course, and simply going out of season or taking a side-route off the main trail makes a huge difference.
The Helambu and Langtang regions are less striking but conveniently close to Kathmandu, attracting a little fewer than ten percent of trekkers. The Langtang valley trek & the Ganja-La pass are known trails in this area. This leaves vast areas of eastern and far western Nepal relatively untrodden by visitors. To hike in these areas you’ll need either to get set for camping and carry your own supplies, and live like a local, or pay to join an organized trek with tents and accept the compromises that go along with that.
With a good operator, you can anywhere in the wild. A Great Himalayan Trail now runs the length of highland Nepal – though it will be for some time, if ever, before such a route will be serviced by lodges.
Treks in remote far eastern and far western Nepal are mostly restricted to two kinds of globe trotters, both adventurous in their own way. The majority come on organized camping treks with agencies – in fact, this is obligatory for those areas that require a permit. The minority are independent trekkers prepared either to carry tents and food or negotiate with porters, or to seek food and lodging in local homes and basic lodges. Some great camping outdoors include the Manaslu circuit Trek, Upper Mustang trek the Dhaulagiri circuit, Rara lake trek and the great Kangchenjunga trek, both north and south.

Sappa Lama Gomso said...


One of the best selling Trekking in Nepal,
and Local Trekking Company in Nepal and
Reliable Trekking Agency in Nepal.

Sappa Lama Gomso said...


the route of Trekking area annpurna Region as
Ghorepani Poon Hill trek,
Annapurna Base Camp Trek and
Annapurna Circuit Trek in Nepal.

Sappa Lama Gomso said...


Part of Annapurna Region Trekking Route as
Annapurna Tilicho Lake Trek,
Annapurna Khayer Lake and
Annapurna Nar Phu Valley Trek in Nepal.

Sappa Lama Gomso said...


The Langtang Region trekking route as
Langtang Valley Trek,
Langtang Gosaikunda Trek and
Helambu Circuit Trek in Nepal.

Sappa Lama Gomso said...


The Popular Trekking route in world as
everest Panorama Trek,
Everest Base Camp Trek and
Everest three high passes trek in Nepal.

Sappa Lama Gomso said...


The restricted and Special Trekking route as
Upper Mustang Trek,
Manaslu Circuit Trek and
Manaslu Tsum Valley Trek in Nepal.

Sappa Lama Gomso said...


Top Trekking Peak Climbing as
Island Peak Climbing,
Mera Peak Climbing and
Lobuche Peak Climbing in Nepal.