Survival of small economies
published: Wednesday | August 20, 2003

Delroy Chuck

JUST HOW Jamaica, a small economy, plans to survive in a globalised world is definitely the most fundamental issue to engage and focus our minds. The era and challenge of globalisation demand that Jamaica overhauls its economy to find ways and means to create and increase wealth and provide the economic environment for its producers to compete globally. Jamaica cannot continue to live on charity and on the present shameful economic path, with our leaders prancing on the world stage with begging bowls in hand, seeking loans, welcoming remittances, accepting grants and negotiating preferential and needed trade concessions.

Small economies will struggle to survive in the 21st century, so too will big economies, as the world economic bloc will be controlled not by government but by big multinational firms, which trade across national frontiers. Small economies will be the first to suffer, as those that cannot fit into the competitive environment will simply be ousted and forced into the basket of nations perennially surviving on handouts. It is time Jamaica wakes up and understands that the competitive global economy will not suffer fools gladly and preferential trade agreements will be things of the past. No longer will the European markets be safe and secure for our sugar and bananas, we will have to compete with other countries.

FUNDAMENTAL DECISIONS

In truth, Jamaica has to make some fundamental decisions now; otherwise we will decline even further in the years and decades ahead. Realistically, agriculture is dead and those who seek to revive it and to make it the mainstay of our economy have clearly not appreciated what is happening globally. Sugar cultivation simply has no future and it cannot be in our long-term interest to continue pumping billions into it. Sure, if we see sugar as a charitable case and want to help the 40,000 workers earn a living, fine, but let us not try to deceive anyone that sugar can improve the Jamaican economy. Imagine, during the last five or so years, we have spent over $5 billion to revive and keep the sugar industry going, yet the result, 150,000 tons, has been the smallest output in our history.

Sugar must simply become apart of our history. Hampden Factory, recently closed, and many others, should be renovated and restored as historical and tourist attractions. Let us get real - we will never be able to compete with other sugar-producing countries. In the USA, Europe, Brazil, Asia, Africa, Australia, etc., many of the sugar farms are the size of Jamaica, mechanised, scientifically supported, with periodic crop rotation, and producing sugar at less than one-third the costs of production here. At the present time, and for the foreseeable future, it is cheaper to import sugar than to produce it. For the short term, we should divest the sugar farms and factories to the private sector, which will ultimately dismantle them.

What is true of sugar is probably true of other agricultural produce like banana, citrus, vegetables, etc. Our economies of scale simply do not allow us to compete on the world market.

Our only route is to engage in niche marketing and value-added benefits to our primary agricultural products. For example, banana chips may be the way forward for the banana industry; coconut water the main product for coconuts; jerk seasoning and sauces the essential use for our vegetables and spices, etc. In essence, I think we have to use our agricultural lands more sensibly, to produce products that can add value or increase our wealth. Yes, we can continue to engage in agriculture to feed ourselves, which purpose should be encouraged, but don't delude anyone that we can export agricultural produce and compete.

Interestingly, we need to learn from how some of the big multinational companies have changed strategies, products, marketing, and survived. A good example is Nokia, a name familiar to everyone using cellular phones. It was only in 1993 that Nokia decided to give up the production of paper, rubber, television and computer, and concentrated on wireless. Jorma Ollila, chairman and CEO of Nokia, noted: "The year 1993 was a breaking point because we took the essential decision to focus on very few areas, essentially wireless. We took a view that the breaking down of trade barriers, together with the regulatory changes in telecom, changed the picture." See p. A25, Time Magazine, August 18- 25. Now Time notes: "Last year, Nokia had sales of EU30 billion with profits of EU3.4 billion. Its market capitalisation is EU70 billion, and it makes almost all of its money outside Finland."

ESSENTIAL PRODUCTS

What is true of Nokia can be true of Jamaica but where is the leader and his team to convince the Jamaican people that they have to concentrate on a few essential products and give up those that consume instead of create wealth for the country? Whether we like it or not, globalisation is definitely the way forward and we must embrace it instead of lamenting and cursing the challenges that it poses for Jamaica. In truth, globalisation has opened up the world markets for those who can find and create products to export. And, we do not have to look far­- Red Stripe, rum, Ting, patties, sauces, jerk seasoning, to name a few products, are world-beaters but how well are they marketed overseas?

If we see globalisation as a threat and a curse then we will surely sink. We need to embrace it as a challenge and a golden opportunity to market our products. Even for a small economy like Jamaica, we either compete or die.

Delroy Chuck is an attorney-at-law and Opposition Member of Parliament. He can be contacted by e-mail at Delchuck@Hotmail.Com.

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