Jamaica’s Connection Corridor

Jamaica’s Connection Corridor


Export and prosper.” The popular adage is an explicit indication of what Jamaica must do to remain economically relevant. There is no escaping this fact. The long-term sustainability of Jamaica’s development trajectory is directly related to its export capacity and ability to earn foreign exchange, particularly within the context of a small state.

Jamaica’s Connection CorridorThe argument concerning the role of exports as one of the main deterministic factors of economic growth is not new. It is widely accepted that there is an inextricable link between a country’s development and their level of exports. Undoubtedly, the vision of sustained economic growth and a country’s repositioning in the global economic landscape must be underpinned by a definitive understanding that this cannot be achieved without first supporting the manufacturing sector and its ability to drive exports. A thorough investigation would reveal that the economic successes of many developed countries are largely as a result of an innovative manufacturing base, which certainly serves as the primary catalyst for growth and the benchmark for other industries.

Likewise, the impetus of the industrialization strategy in the post-World War II era was largely reinforced by the general policy conclusion that developing countries must diversify their exports into manufacturing as intensely and rapidly as possible.

So where does Jamaica fit in this scenario? For us to start the transformation of becoming an export led economy, we must start producing. No sector does more to generate broad-scale economic growth and ultimately higher living standards than manufacturing. It is the nucleus of the Jamaican economy-driving force for job creation, growth and increased balance of trade position, as well as creating the connection corridor to exports. The most recent statistics indicate that manufacturing contributes approximately 8.6 per cent to Jamaica’s GDP and employs almost 73,000 individuals, which translates to 6.5 per cent of the total labour force and contributes JM$30 billion in taxes. Total manufacturing exports amount to US$680 million.

Jamaica’s Connection CorridorOne of the most important demonstrators of manufacturing significance is its multiplier effect. A sectoral multiplier effect tells us which industries give the economy the biggest bang for the buck, literally. Every dollar of output in a given sector generates a certain level of economic activity across the society that leads to a direct and indirect need for employment and other resources within other facets of the society. Manufacturing has many substantial links with other sectors throughout the economy and as a result, its output stimulates more economic activity when compared to other sectors. As manufacturing output grows, it requires additional inputs from utilities and suppliers, creates job as well as investment opportunities in all sectors that use its products such as transportation, retail and construction. It also spurs growth in services such as finance and marketing.

The consensus? Manufacturing is a big deal. Innovative manufacturing, exports and economic growth are closely aligned. If the Jamaican economy is to flourish, these sectors cannot be ignored or sidelined, and the product composition of the export basket must undergo a major change, in a direction where manufacturing is given priority of place and exports are strategic.

However, a simple glance at the numerous products used in Jamaica will reveal a proliferation of imports and how far as a nation we need to go. Among the insidious impacts are a haemorrhaging of the already fragile budgets of the nation, drain on international reserves and vulnerability to the interplay of power relations in the global metropole. In light of this reality, strategic and practical initiatives are necessary and manufacturing offers one of the highest potential for value added development and import substitution, in synergy with other goals.

Jamaica’s Connection CorridorThe evidence is clear. If as a country we are serious about facilitating the improvement of Jamaica’s exports and ultimately our participation in the global economy, the manufacturing industry must be nurtured and supported. The challenges that threaten to impede the sector’s viability must be confronted including crime, increasing cost of doing business, entrance of subsidized products into the market and access to affordable credit. Policies critical to the survival and growth of the manufacturing sector must be implemented and support must be given to products that are made in Jamaica, to propel the country forward.

Policies must also be transparent, predictable and fair. Moreover, there is a need to use more relevant and adapted metrics to better align public and private stakeholders at the national level. Manufactures are also challenged to refocus, innovate and expand. Do not become complacent. Offer products with higher value added and embrace product differentiation so as to ensure longevity. There are great opportunities if businesses can anticipate the needs of customers and focus on the new wave of products that meet these needs.

Jamaica’s export capacity and economic viability depend on you. A recent study conducted by Dr. William Lawrence of the University of the West Indies articulates that approximately 40 per cent of the change in GDP for Jamaica is attributed to changes in the performance of the manufacturing sector. What this means is that a one (1) per cent up or down movement in real GDP growth in the manufacturing sector, results in a 40 per cent up or down movement in national real GDP growth. It then follows the notion that “if manufacturing sneeze, Jamaica catch cold” and no doubt gives credence to the argument that investment in the manufacturing sector is the gateway to Jamaica’s connection corridor.