What are the main findings of this year’s report?
As it relates to innovation and sophistication, Jamaica is ranked 61 overall. This is divided into basic sophistication where the country is ranked 57th; and innovation, where Jamaica is ranked 70.
The 2016 GCR has highlighted that monetary policy has not been enough, and insufficient competitiveness has been a constraint to reigniting growth worldwide. Following the global financial crisis of 2008, many governments have opted to use interest-rate policy to jump-start growth, but this has been futile in some instances due to low or negative real interest rates. In some cases, borrowing for productive processes remains weak. Some small middle-income countries do not have the capacity to perform quantitative easing.
In this fourth industrial revolutionary era, technological advancement and innovation continue to be the main drivers to increase development. The report also outlined that a decline in the openness of some countries is further having a negative impact on growth. It highlights that a more open economy that is participating in international trade creates avenues to better absorb technology necessary to innovate because firms are exposed to competition and new ideas and benefits from technological transfer. Similarly, firms can benefit from larger foreign markets. The World Economic Forum believes that non-tariff barriers to trade are increasing in recent times, which may limit the reciprocal benefits associated with increase free trade. According to the report, economies in all income groups have become less open since 2007. the Latin America and the Caribbean region have fallen, and some countries’ economies may encounter recessions. The major commodity exporting countries, including Brazil, Venezuela, Colombia, Ecuador, and Argentina are witnessing a fall in the value of their exports due to the end of the commodity super-cycle. According to the World Economic Forum, the subsequent fall in global trade has also hit demand for manufacturing exports, further reducing the value of exports across most of the region. The result of these negative terms of trade shock has been a large trade deficit, producing current account deficits and government budget deficits. Despite the relative depreciation of the region’s floating currencies against the US dollar, exports have not recovered. This makes evident the magnitude of the competitiveness challenges in the region, where productivity has been falling, on average, during the last 20 years.
According to the report, the top performing country in the region remains Chile (33rd), increasing two places in the rankings, followed by Panama (42nd), with an improvement of eight positions. Costa Rica falls slightly to 54th rank, and Mexico (51st) improves by six positions. The overall range of scores in Latin America and the Caribbean remains large, with the worst-ranked in 130th place and the best-ranked in 33rd place. Within pillars, the largest regional gaps remain in the macroeconomic environment, reflecting the magnitude of the commodity and investment shock on commodity-exporting countries, and size of domestic markets. We also observe an increased dispersion within the institutions pillar, driven by the ethics and corruption sub-pillars and recent scandals in the region.