Editorial | Tourism and growth

THE GOVERNMENT’S reaching for advice on how Jamaica can make tourism deliver more to the wider society is an obviously positive development.

But while The Gleaner welcomes the move, we hope that the proposed study won’t be conducted in a silo, or merely around the margins, identifying goods and services that Jamaican hotels, restaurants and other tourism-related businesses could, potentially, purchase more of local products. Or what incentives the Government might give to smaller players.

The Government, the technocrats and analysts in the tourism ministry don’t need consultants to tell them these things. Where Jamaica is more likely to need advice – and fresh thinking – is in how to create efficiencies in other sectors of the economy, including the capacity to produce at scale, so that it is economical for all participants in the tourism sector to buy more at home – and possibly in the Caribbean Community (CARICOM).

This is the route to the backward and forward linkages – as the concept used to be referred to – between tourism and the rest of the economy, for which policymakers have hankered for decades.

Put differently, finding ways that make it sensible – and profitable – for Jamaica’s tourism businesses to source more of their needs from local firms ought to be among the pillars of an industrial policy that breaks the loops which keep the island’s economy locked into low technology, little innovation, low value-added, low productivity, low growth, and, therefore, low wages.

All of this is summed up in Jamaica’s average growth rate of under one per cent annually for the past half century, including the last dozen years when the island boasted macroeconomic stability and historically low unemployment. The lesson is clear: while sustained macroeconomic stability is critical to sustainable growth, it is not of itself a growth strategy.

SOUND AND RESILIENT PILLAR OF THE ECONOMY

Tourism, however, has proven itself to be a sound and resilient pillar of the economy which ought to be built on, and from which more can be extracted.

The Government projects that the island will host 4.9 million visitors this year, a 14 per increase compared to 2024. Nearly seven in 10 visitors are stop-overs, meaning they stay in hotels or other facilities, rather than arrive as short-stay passengers on cruise ships. In 2024, the island grossed an estimated US$4.3 billion from the sector. The target for 2025 is US$5.2 billion, a jump of 21 per cent.

According to Government estimates, 40 per cent (some analysts believe this to be an overestimate) of tourism earnings is retained by the domestic economy. It goes to paying wages, in some cases taxes, and purchasing goods and services and so on. On the flipside, by the Government’s estimate, 60 cents of every dollar earned by tourism go abroad to cover the cost of bringing the visitors to the island, paying for imported food and goods, to service debt and in repatriated profits. The Government, however, says that the retention is too low, arguing in an invitation to consultants to bid to study the issue that the “underperformance has been attributed to persistent leakages in tourism earnings and insufficient integration of the local population in ways that meaningfully enhance their economic welfare”.

These have been longstanding complaints about tourism, which is the island’s major earner of foreign exchange. Indeed, in the face of wrangles over the structure of the industry, with its emphasis on all-inclusive hotels, it is the sector that has flourished most over the last three decades as the economy has flipped from one led by commodities to being dominated by service.

TURN IN THE ECONOMY

This 180 degree turn of the economy (with the collapse of uncompetitive manufacturing and commodity agriculture that lists its preferential markets) has also exacerbated the weak linkages between tourism and the rest of the economy, despite Government efforts at encouraging greater integration. There are no domestic manufacturing or agricultural sectors to seriously service tourism.

“There is now a critical opportunity to assess whether the existing approach is sufficient, or if a strong policy thrust of strategic reorientation is required to achieve more inclusive and transformative outcomes, particularly for small and medium tourism enterprises and underserved communities,” the tender document said.

A ‘strategic reorientation’ is indeed necessary, but not for tourism only. For the entire economy. That is, if the fundamental aim – which it should be – is for substantially more of the gross earnings from tourism to stay in Jamaica.

Strategic reorientation, therefore, must be about a sustainable growth strategy of which tourism is a subset.

For instance, a lower cost of energy is good for tourism. It is also vital to any competitive resuscitation of manufacturing which might find markets in the tourism sector.

A not insignificant chunk of Jamaica’s US$1.4 billion food import bill is for feeding tourists. Experts say that between a fifth and a quarter of food imports could be substituted with domestic production. But achieving this will require modernising agriculture, with large-scale, efficient farms and predictable production.

This requires research and innovation which feeds into education and training and the employment of technology. Forks and hoes tilling half-acre plots won’t cut it.

The larger point is, real transformation won’t happen in mini silos.