· Good morning, most Honorable Prime Minister Portia Simpson Miller, Honorable Minister of Finance Peter Phillips, Honorable Minister of Industry, Investment and Commerce Anthony Hylton, ministers, business executives, partners and colleagues.
· Let me start by thanking Jamaica’s leadership for organizing the Jamaica Investment Forum 2015 and inviting me to speak today on the competitiveness and growth agenda.
Background and context
· Transforming a country’s economy requires a long-term vision, but also pragmatic steps and bold actions.
· Jamaica has taken the first step with its National Development Plan, “Vision 2030 Jamaica,” and has put itself on a positive trajectory.
· This plan include key reforms to stimulate private investment and growth, including achieving macroeconomic stability, improving the business environment, and ensuring that the structures of its industries are internationally competitive.
· This is part of a historic moment in Jamaica.
· To quote Minister Hylton: “Jamaica is putting its house in order.”
· These actions have already produced positive results:
o The Jamaican economy is expected to grow at 2-3 percent over the medium term, clearly seizing a unique opportunity to escape the trap of high debt and low growth.
o In World Bank Group’s most recent Doing Business report, Jamaica had the Caribbean's highest ranking on the ease of doing business and made the sharpest year-over-year improvement.
o Jamaica recorded $567 million in FDI in 2014 -- a five-year high.
· And the country is embarking on an exciting initiative that has the potential to position Jamaica as a logistics hub in the Caribbean, and could generate significant growth.
· The Logistics Hub Initiative (LHI) capitalizes on the country’s position along busy trade routes between the Panama Canal and Miami, and has the potential to not only attract investment, but create jobs and retain the country’s young talent.
Connecting Jamaica’s economy to the global economy
· The main reason we are gathered here today is because we recognize that offshore investment in the Jamaican economy has the potential to drive economic growth and diversification.
· Countries grow because they produce better goods and services or find better ways to produce those goods and services.
· Foreign investment helps this all happen.
· Throughout Jamaica’s growth process, an important step will be to connect the domestic economy with the international private sector.
· This means increasing the country’s participation in global value chains (or GVCs) -- production processes that cross borders, from conception, to inputs, to distribution to the final consumer.
· Integrating with global value chains helps creat jobs and bring capital and new technologies.
· It also creates incentives for broadening and upgrading workers’ skills. This would allow countries such as Jamaica to specialize in specific tasks, while compelling Jamaican firms to meet high standards of quality, timelines, and efficiency.
· But the benefits are not automatic, and here is where our technical focus on global value chains can help.
· In the World Bank Group’s Trade and Competitiveness Global Practice, our experts know that success in economic development lies in innovation at the level of small and medium-sized enterprises.
· It lies in ensuring that exporting firms – whether large Jamaican companies or large offshore companies – work together to strengthen the country’s smaller firms and their ability to manufacture in Jamaica.
· We also know that one of the most important government responsibilities in helping a country benefit from GVCs is predictability in regulatory actions.
· Frequent changes in regulations can create uncertainty in domestic and foreign investment returns.
· It is also important to implement reforms – not stop after creating a plan.
· Ultimately, success in connecting the domestic sector to FDI and reaping the benefits of GVCs depends on many factors.
· One is building human capital through access to strong education and training.
· Another factor is developing linkages between the domestic and international economy.
· To do this, many countries have developed very effective programs that better connect domestic suppliers with foreign FDI.
· Countries also need to develop international and domestic connectivity.
· Investment promotion is critical for all emerging markets, and especially for smaller economies such as Jamaica.
· In particular, governments must continuously demonstrate their commitment to improving their countries’ business environment.
· They must make efficient and transparent regulations and embark on competitiveness strategies that include industry-specific and firm-level innovations efforts.
World Bank Group support to Jamaica
· The World Bank Group, and in particular the Trade and Competitiveness Global Practice that I lead, is committed to assisting Jamaica to become a more competitive player in the global economy.
· I am accompanied here by colleagues, including IFC resident representative Rajeev Gopal and acting World Bank representative Kathy Lalazarian, who are ready to support Jamaica directly in encouraging private sector investment.
· And, in fact, just as Jamaica’s reforms have put it on a hopeful path, our institution’s internal reforms mean that we can be a better partner in those efforts.
· In our global practice we have brought together experts in both private sector development and trade policy, and our approach includes practitioners in investment and in logistics.
· With this new approach, our teams span more disciplines and are more nimble.
· We respond to clients with integrated solutions that are coordinated at many levels. They might include economy-wide proposals, such as trade policy changes, but also sector-specific advice and firm-level interventions.
· We have expertise in many specific areas relevant to Jamaica and to your businesses here – including logistics, manufacturing, and tourism, to name a few.
· We also work across regions, as we are doing with our participation in the Caribbean Growth Forum, helping countries identify competitiveness strategies and reforms.
· In Jamaica, the World Bank Group’s work is defined by a Country Partnership Strategy (CPS) that is guided by the priorities of Vision 2030 Jamaica.
· This strategy proposes a lending program of $510 million over four years focused on strengthening both the public and private sectors while improving social safety nets and the conditions of the most vulnerable.
· A recently-approved, $75 million Development Policy Loan is part of that program and will help Jamaica continue to make reforms that improve its investment climate and competitiveness, as well as its public financial management.
· In July 2014, the World Bank approved the “Foundation for Competitiveness and Growth Project,” a US$50 million loan that provides support for investment climate reforms, strategic investments, and SMEs.
· This project has rallied investment from the IFC and guarantees from MIGA, the World Bank Group’s insurance arm. It is helping to complete the chain of development from growing SMEs to building special economic zones to increasing trade.
· In addition, the Logistics Hub Initiative, also supported by the World Bank Group, has aligned public and private players around significant investments in ports, airports, and other transportation infrastructure.
· The LHI has a lot of promise:
o It will increase the connectivity of the country, reducing the time and costs to access markets for Jamaica’s domestic exporters, and enhance competitiveness.
o It could help the country attract enhanced skills and develop new business opportunities.
· Of course, it also has risks.
o There will certainly be competition amid the changing regional shipping dynamics.
o Other countries throughout the Caribbean and Central America could try to compete as shipping and services hubs bases on similar geography and skills advantages.
o To keep its advantage, Jamaica will need to ensure that its infrastructure services operate at a high level of productivity and quality.
· To ensure that the LHI and Jamaica’s competitiveness and growth agenda succeeds, it is important to keep trade costs low.
· Jamaica has made recent improvements in this area, but still has some distance to go.
· We are here to help, especially in key areas, such as improving transparency in trade and simplifying border control processes and coordination at the border.
· Let me finish by reiterating the World Bank Group’s commitment to supporting Jamaica in implementing its national development plan.
· In particular, we support its trade and investment policy strategies that are pushing the country along on its current path of recovery and long-term growth.
· Thank you very much for your attention.