Improving Jamaica's Competitiveness: Some Suggestions

The Global Competitiveness Report makes for uncomfortable reading: Jamaica’s competitiveness position has slipped from 63 (in 2006) to 101 (in 2011). Although the number of countries ranked in 2006 moved from 117 to 142 in 2011, Jamaica’s competitiveness position has deteriorated. This decline is manifested in the weak economic growth and, in some cases, negative growth that the economy has experienced over the last four decades and even more-so over the last five years. If Jamaica does not reverse the negative trend in its competitiveness, its citizens will forever remain poor and its grand vision of being a developed country by 2030 will not be realized. However, to reverse the trend, there has to be a clear understanding of what competitiveness means.

What is competitiveness?

Almost all commentators on public policy have called for an improvement in Jamaica’s competitiveness position to help the economy achieve meaningfullevels of economic growth and development. However, they disagree on what competitiveness means. To the economist, competitiveness narrows down to critical macro-economic variables such as a stable exchange rate, low interest rates and low inflation. To the private sector, competitiveness is generally confused with competition. For them, competitiveness means winning market share from your competitors and reporting higher profitability over the previous year.  However, if we are to develop policies to help to reverse the negative trend in Jamaica’s competitiveness position, there has to be some commonality regarding what is meant by the concept. As a starting point, it is important to note that Paul Krugman and Michael Porter, two renowned commentators on the subject, quipped: for competitiveness, everything matters. This is a profound statement. It shows that economic competitiveness cannot be narrowed down to any single variable. Krugman and Porter are suggesting that the schools, the church, the roads, the family unit, the policies on competition, the institutions on property rights etcetera, all help to drive economic competitiveness. However, one may say that this is idealistic and we cannot  have a clear understanding  of the concept since too many variables are involved. 

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