Jamaica, and the rest of the Caribbean, could be under-reporting growth figures, due to how the Gross Domestic Product (GDP) is calculated.
This is the view of State Minister for Foreign Affairs and Foreign Trade, Hon. Arnoldo Brown, who has called on business interests and academics in the region to advocate for changes in how the GDP is used as a measurement of economic growth.
Mr. Brown, who was speaking at the 4th Management Consulting Business Symposium hosted by the Caribbean Export Development Agency on Tuesday (June 19) at the Ritz Carlton Hotel in Montego Bay, cited a World Bank report, which indicated that for years, growth in Jamaica has been underestimated.
He said the Bank is of the view that Jamaica has been growing, “not by the anemic one per cent or half-a-per cent, but by close to six per cent per annum."
According to Mr. Brown, GDP, as calculated, does not adequately capture the services sector, including tourism on which many economies in the region depend.
“GDP doesn’t (adequately) take account of the services sector. GDP measurement is still heavily reliant on trade in goods, and even though they say services…is like an appendix, it is not taken seriously. If we are unable to accurately and precisely measure the demand for our services, then, we cannot gauge policy to facilitate the growth in those particular areas,” he told the forum.
Mr. Brown noted further that while it is said that the Caribbeaneconomies are largely service-driven, little or no data exists to verify these claims due to the modality of GDP.
“One of the issues that we have to address is to get the empirical data to support or to disprove this. Solving this issue is critical, not only to the delivery of the services that we are seeking to offer, it is also important to market penetration. If services are what we are going to rely on to be competitive, we must be able to measure it empirically,” he stated.
“We, in the region, must lead in recalibrating how GDP is measured, and to actually develop a new measurement modality that takes account of the size of the services sector in our respective countries,” he stated.
GDP is defined as the market value of all final goods and services produced domestically in a single year, and is the single most important measure of macroeconomic performance.
Turning to other matters, Mr. Brown urged the regional business grouping to move with haste to forge linkages with the Caribbean Diaspora in Europe as enormous business potential exists there.
“Use these connections to open up business opportunities. We know for a fact that the Caribbean has a significant Diaspora in Europe. We have to engage them to advocate on the issue of free movement for professionals in this particular area, as well as to make connections for business opportunities,” he stated.
Mr. Brown argued that “if we make strategic alliances and partnership…that will allow us to get around to some degree, the barrier of a visa. We have to use everything that is in our power (including our Diaspora), who are at points of influence in those countries, to advocate for a revision of policies that inhibit trade."
The Caribbean Export Development Agency aims to foster an enabling environment for trade and investment within the region through regional integration, cooperation and advocacy initiatives. These are designed to position the region more effectively in the world economy.
By Garfield L. Angus, JIS Reporter