ICT and the Jamaican Economy: Challenges and Growth Strategies

Introduction: Jamaica in the Global Digital Economy

Advances in information and communication technology (ICT) have led to significant changes in the economies of developing nations, forcing them to conduct business in the global marketplace. ICT development has produced an integrated marketplace in which businesses that previously had no access to international trade can now engage on a global level. However, in order to receive the benefits this new technology offers, developing nations must have the infrastructure and social structures in place to allow their populations to take advantage of it.

Manufacturing is a growing sector in Jamaica, but resource-based production remains the mainstay of the economy. As resource-based economic pursuits continue to dwindle, the Jamaican economy must undergo substantial changes if it wishes to compete internationally. The development and acceptance of ICT within the business community and among the general population is an important step in this process.

Moving from a resource economy to an information economy is filled with challenges. There are economic, social, and policy considerations that must all work in concert to allow the transition to take place smoothly. This research explores each of these major areas and the data available in order to devise a set of recommendations for the continued development of ICT in Jamaica. It focuses on the participation of small and medium enterprises, as these entities are the driving force of the Jamaican economy.

The arrival of new technologies — such as broadband providing fast communication, ease of access to computers and the Internet, and changes in the collection and management of information — have broken down geographic, social, and economic barriers, setting the stage for countries to operate in a global environment. Jamaica, as a developing country, has no choice but to participate in this global economy. These changes in the international environment will continue to reorient the economy toward a knowledge-based model, and as such, major policy initiatives must be designed to take advantage of the opportunities presented by this global village.

According to an E-Readiness report prepared for Jamaica's Central Information Technology Office, the principal strategy for achieving growth and employment is investment in the ICT sector, which has been designated the principal industry for generating thousands of jobs over the near term. It is considered the route to improving productivity and efficiency, better targeting and delivery of services, and extending the benefits of development programs to citizens island-wide.

Jamaica has been experiencing economic difficulties for several years. The country faces balance-of-payment problems coupled with high public debt, relatively high interest rates, a declining local currency, and a high inflation rate. The ICT industry is targeted as the principal engine for growth and is expected to generate a significant number of new jobs. The major policy initiatives are geared toward creating a stable economic environment.

To realize the benefits of these initiatives, there needs to be a careful assessment of the global competitive environment and the state of ICT readiness in the country. The readiness to embrace ICT is contingent upon a number of factors, including competition within the sector, an adequate policy and regulatory framework, investment facilitation initiatives, macroeconomic and social stability, and the fostering of an entrepreneurial culture.

It must be made abundantly clear that technology by itself will not bring about development — it should instead be viewed as an enabler. In a knowledge economy, both material goods and human capital are important for benefit realization. It is the embrace and proper application of knowledge to the material world, with worthwhile objectives, that will lead to social advancement and economic development. Initiatives such as the introduction of the smart card in the transportation system, new toll roads, electronic meter reading, and an electronic voting system are likely to improve productivity. These, coupled with the pending rollout of additional broadband services and plans for all public-sector companies to begin accepting payments by way of e-commerce (termed e-Government), represent a significant leap toward improved productivity.

The benefits of science and technology are translated into quantitative and qualitative variables and indicators such as social and economic conditions, access to ICT, and the extent of organizational learning. The status of the ICT environment, as well as the social and economic dynamics surrounding it, will ultimately determine the success or failure of these new initiatives.

Hypothesis and Research Objectives

The financing and promotion of the ICT industry — or the lack thereof — is critical to Jamaica's growth. Indications are that Jamaica's financial system has increasingly become an inefficient intermediary of funds, which is creating problems for the financing of the ICT industry. It is in this area that venture capital financing could play a significant role, and policymakers ought to examine the legal framework to determine how a true venture capital market can be encouraged. The government should examine new models for creating innovation within the ICT sector and explore ways in which it can generate a more vibrant venture capital funding industry. Arrangements should be examined between local banks, development banks, the Export/Import Bank, and other funding agencies to design financial instruments, venture capital products, and small business loans that will stimulate innovation in the sector.

So far, most of the funding in the sector has come from either the government or large foreign-owned telecommunications companies. However, greater participation by local private companies is urgently required to maximize economic benefits. The purpose of this study is therefore to assess the current state of technological readiness in Jamaica and to establish the initiatives the country must undertake in order to benefit from new technological trends. It supports the hypothesis that in order for ICT use to grow in Jamaica sufficiently to boost the economy, education and infrastructure are the primary challenges that need to be addressed.

The research will not only support the stimulation of venture capital financing but will assess the various resources currently available. It examines the infrastructure, as well as social, economic, political, and current resources. The objective is to assess the current status and needs of ICT usage in Jamaica, to address ways to fill in the gaps so that ICT use will continue to grow, and ultimately to provide solutions to the problems associated with ICT growth and its role in boosting the Jamaican economy.