The Problem with Productivity As Policy

Daniel W. Rasmus writes: I was struck by a recent Caribbean News piece where Caribbean Community (CARICOM) Secretary General Edwin Carrington Tuesday called for a "massive increase in our productivity" to boost the region's competitiveness in the face of the just-concluded Economic Partnership Agreement (EPA) with the European Union (EU) - (read more here).

Why, because a call for productivity in markets that are small and undifferentiated will not result in economic prosperity. When we look at productivity as independent of other measures, it may be a positive metric for improvement, but as the US auto industry has learned,  being efficient at the wrong things is perhaps even worse than being inefficient - more of the wrong cars in the market is a bad thing when you have to take the hit on liquidating those automobiles.

Productivity and innovation need to be tightly linked. What Carrington really needs to focus on in a competitive global economy is creating economic opportunity that takes into account the capabilities of the Caribbean, its uniqueness and how to not only create innovative goods and services, but to think about innovative business models that may make their limited resources more accessible to the world.

When productivity is a policy, and it drives economic growth more than other factors, it can be a problem. The Caribbean, and every other emerging market segment, needs to create policies that encourage innovation because the doing more of the same, especially in comparison to the US and Europe, will not create the kinds of prosperity that governments seek.

Emerging market government have huge influence over commercial development in their regions, more more than the US or the EU exerts on the companies that reside in those regions. Areas like the Caribbean should use policy to effectively drive the innovation dialog, and figure out what differentiated models can bring about new development and growth, even if those models challenge Western views. Innovation isn't limited to goods and services, and can mean new economic models and new governance models as well - and those are all about policies that leave the industrial age anachronism of productivity much lower on the list of things to tackle than looking through a Western industrial policy lens would leave other nations and regions to believe.