Susan Smith, Staff Reporter
Juan Carlos Espinola (right), country representative, UNDP, grabs the attention of Phillip Paulwell (left), minister of Science, Commerce and Technology; John Jackson (second left), financial consultant - Investor's Choice, and Patricia Francis, president of JAMPRO, during World Investment Report Launch 2005 under the theme 'Making Investment in Science and Technology work for Jamaica' at JAMPRO'S office yesterday. - IAN ALLEN/STAFF PHOTOGRAPHER
FOREIGN DIRECT investment (FDI) flows into Jamaica fell by US$71 million last year, according to the World Investment Report 2005.
This fall to US$650 million, was about 10 per cent less than the US$721 million garnered in 2003. The 2003 figure had been US$240 million above the 2002 figure of US$481 million.
Foreign direct investment flows from Jamaica increased from US$74 million in 2002 to US$116 million in 2003, dropping back to US$90 million in 2004.
This pattern is the opposite of what occurred for the overall Latin American and Caribbean region where investment inflows fell from US$50.5 billion in 2002 to US$46.9 billion in 2003, before climbing to US$67.5 billion in 2004.
WEAK SOCIAL FOUNDATION
Reviewing the World Investment report at JAMPRO's World Investment Report Launch 2005 held yesterday at Jamaica Promotions Corporations head office in Kingston, financial consultant John Jackson said the pattern for year 2004 mirrors that a fair amount of the FDI inflows is coming in into the tourism sector.
He cautioned the Government against building infrastructure on a weak social foundation, since the crime problem is still a factor which threatens economic development.
This view was supported by the Global Competitiveness Report 2005-2006, which showed that Jamaica declined in economic competitiveness to an index ranking of 70 from a ranking of 65 the year before. Funded by the World Economic Forum, the Growth Competitiveness index measures elements of the country's macroeconomic environment, the quality of public institutions which underpin the development process, and the level of technological readiness and innovation based on data from nearly 11,000 business leaders polled in 117 economies.
Pointing out that the major drivers of foreign direct investments are knowledge based population and raw material, Mr. Jackson said Jamaica's greatest chance for prosperity is in the knowledge-based investment. "We need to be careful how we manage foreign direct investments," said Mr. Jackson. "Countries such as India, which spends a large amount of money educating its population, are those who have benefited greatest from FDI," he explained.
LOWER INTEREST RATES
Since foreign direct investment plays a major role in economic development, Mr. Jackson advised the Government to maintain the flow of FDI funds and not lose the investments and have to scout around for new ones. Correcting Jamaica's social infrastructure and fiscal obligations to meet its fiscal targets were other major priorities he mentioned, which would encourage more inflows of FDI into the country.
He said although low interest rates could mean money may flow out of the country, achieving lower interest rates in Jamaica will make local real investments more attractive. "High interest rates will cause businesses not to get into more long-term investments," he said.
