Jamaica
News - Real Estate - Finance (June 15, 2004)
Message to the
diaspora
Douglas Orane is fond of saying
Jamaica has an indigenous market of five million people; 2.5 million here on the
rock and 2.5 million living abroad. Having set itself an ambitious target of 50
per cent of its earnings to be in foreign exchange by 2005, his company Grace
Kennedy aggressively goes after the extended portion of the "home"
market. Victoria Mutual Building Society, boldly proclaiming "Let's stay in
touch" scours the great metropolis of the world in search of business.
These companies and others like them are to be commended for appealing not only
to the patriotism but the good business sense of Jamaicans living overseas.
From June 16-17, close to 500 people will
gather in Jamaica for the diaspora conference. Organised under the theme,
"Jamaican Diaspora: Unleashing the Potential", the conference will
seek ways to catalyse the process of overseas-based Jamaicans buying Jamaican,
investing in Jamaica and returning to live and work in Jamaica.
We have a good thing going. Despite the obvious
problems being experienced by the country, Jamaicans living in the United
States, Canada and England have not thrown the proverbial stone behind their
backs. Very few countries have this level of patriotism among their migrant
population.
Some prominent business people, intellectuals
and lately government officials, believe we can further exploit this "good
fortune" by adopting a policy of developing skills for export. They are
wrong. Through some literature research he did for an assignment, Tarik Munroe,
a bright Masters Degree student of mine, exposes the fallacy of the current
thinking that says the benefits of exporting labour outweighs the cost to the
country.
Neo-classical economic theory subscribes to the
"balanced growth" concept on the subject of transferring labour
between countries. Both sending and receiving countries anticipate benefits. For
receiving countries, the principal benefit is access to relatively low-wage
labour for hard-to-fill jobs. For sending countries, the benefits are perceived
to be the three Rs: recruitment, remittances and returns. That is, recruiters
would provide jobs for people ostensibly unemployed or underemployed, migrants
would remit income while abroad and migrants with newly-acquired skills would
return to the sending country.
The notion of balanced growth is based on the
premise that the transfer of labour helps the emigration area to catch up with
the immigration area. In time, as economic equilibrium between rich and poor
regions is achieved, the process becomes self-stopping.
The theory is sounds nice - but, unfortunately,
the benefits don't often accrue to the sending country. First, overseas
recruitment tends to target better-educated, risk-taking, motivated individuals
who are missed by and are hard to replace in the sending country. Second,
remittances tend to be used non-productively for consumption or investment in
non-income generating assets such as houses.
Finally, migrants do not return, choosing
instead to settle in the receiving country - or, if they return, do so at a
stage when they are no longer in their productive years.
Those who support the export of talent often cite
India as a success story in this regard. A study of the effects of India's brain
drain by Mihir Desai of Harvard University reveals that 0.1 per cent of India's
population living in the United States earned the equivalent of 10 per cent of
India's national income. This is an amazing testimony of what can be achieved by
a relatively poor country exporting skills. But often overlooked is the finding
that when all factors are taken into consideration, the net fiscal cost to India
of losing these prime human resources was 0.24 - 0.58 per cent of GDP in 2002.
It seems safe to conclude that the only way
the exporting country can break even or come out ahead of the labour export game
is if at some stage in the future a fair proportion of the skills, retrofitted
and enhanced, are returned and put to productive use. What can we do to counter
the cycle of underdevelopment that losing so many of our best people to
migration breeds?
In 1997, the Thai government through its National
Science and Technology Agency, launched a $2.2 billion project called
"Reverse the Brain Drain". Cuba exports thousands of doctors all over
the world (11,000 to Venezuela alone) and yet has been able to maintain the
third highest ratio of doctors to population. But the bulk of the money paid by
receiving countries goes directly to the government of Cuba, thereby ensuring
its desperately needed hard currency which it reinvests in education and other
sectors of the economy. In Taiwan, workers shipped overseas must deposit 30 per
cent of their wages in a government-controlled account, which is not available
to the worker until termination of the contract. This gives the government the
leverage to encourage the workers to return.
Richard Bernal, head of Caricom's Regional
Negotiating Machinery (RNM), has been urging the international community to
incorporate rules to regulate labour mobility in international trade agreements.
This is one avenue through which to bring balance to the skills transfer
equation without limiting individual freedom.
The situation has grown desperate and in the
current unregulated, free-for-all human trade there are grave risks to poor
countries and their citizens who are desperate to find opportunities. Note the
current debacle with the imminent and premature return of hundreds of Caribbean
teachers from New York to face an uncertain future.
Mr Michael Manley, the late prime minister of
Jamaica, recognised (maybe belatedly) that the brain drain was occurring to the
detriment of the country. During the 1977-1980 period, over 8,000 of the
country's most highly-trained citizens emigrated. As he was wont to do, Manley
estimated that the education of these people cost the nation $168.5 million or
$20,000 per person. During the same period, US aid to Jamaica totalled $116.3
million.
Since then the flow of "foreign aid"
from that source has reduced to a trickle. With the prevailing policy of
indiscriminately deporting social misfits, if we were talking about export of
sugar cane and not people, we would say they keep the juice and send us back the
trash. Hopefully, those attending the Jamaican Diaspora Conference will spend
some time discussing how we get ourselves out of the quagmire.
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