By Kay Menzies
GDP, or Gross Domestic Product, is the total value of goods produced and services provided in a country during one year.
In other words, GDP is a measurement of the economy’s growth. Last year, Belize had GDP growth of 0.7%. The accompanying analysis spoke to the factors of performance that led to this low growth: increased shrimp exports, increased overnight tourism, increased construction, decreases in citrus, sugar, bananas and oil production, and so on.
When we look at the GDP report however, we should ask a few more questions regarding what that growth means and how it can improve. For example, even though the Statistical Institute of Belize issued a press release in February correctly cautioning that GDP growth has no direct correlation with unemployment rate, we still need to ask where new jobs will come from when the economy is growing very little or not at all.
Keeping in mind that the September Labour Force Survey gave an official unemployment figure of 14.2% or approximately 21,000 people, how can an economy growing at only 0.7% create jobs for that many unemployed? Bear in mind that the Government of Belize already hires almost 15,000 people at a total annual wage bill -footed by taxpayers- of just over $332 million, so it cannot create 21,000 more jobs within its own ranks. This leaves the private sector to do the needful, but how best to do it?
One quick way to create sustainable jobs is to encourage foreign investors to bring new money and business activity into the economy.
A perfect example of this is labour-intensive Business Process Outsourcing firms such as call centres, which hire a large number of people in round-the-clock shifts to provide services for clients from other countries.
In order to attract such businesses, we must have a competitive edge in comparison to other countries also trying to attract such investors for the same reason.
Are our labour costs competitive? Does our education system instill the required skills? What about utility costs? How easy is it to setup and launch a business?
Investors ask these and many other questions when deciding which country is the one most likely to meet their needs.
Another way to reduce unemployment is to encourage small business growth and business start ups by local investors.
Small businesses are the backbone of many economies, and their growth in both numbers and size also contributes to overall economic growth. A business that starts off with one employee and grows to five in the first year may not look like it’s creating major impact, but imagine the impact of a few hundred such businesses. Small businesses are very fragile, however, and need a healthy ecosystem in which to start and grow.
Such health manifests itself in a minimized bureaucracy, as well as relatively low financing costs and costs of operations, and of course a solid customer base.
Many of the problems that both foreign and local investors face in Belize are applicable throughout the economy.
Every business faces similar challenges. The local one may opt to fly below the radar, preferring to stay small and invisible in order to avoid measures it deems punitive to growth. The foreign one will simply leave for more welcoming jurisdictions.
Either way, we will only accelerate Belize’s economic growth when we begin to look at investment and business growth as a critical part of that effort.
It is time we adopted an attitude wherein we work to keep each and every legitimate investor, just as we should work to keep each and every customer coming back to our businesses.
As Belizeans who love our country, we have to work together to create an environment that in turn allows for the creation of jobs through economic growth.
We must redirect our efforts toward making sure that investors’ needs are met, whether they are local or foreign.
If those investors with their new hires start to put out products and services, particularly for export, this is GDP growth created. This is the win-win situation we ought to be looking for as we review the data. This is how we achieve growth in excess of 0.7%.