Enact Business Friendly Regulations That Invest in The Local Economy
There is always a push for emerging markets like Jamaica to adopt more “business friendly” regulations to adopt more foreign investment. However, what often happens is that a foreign country will put up some money with no real benefit to the local economy. This is because the country with the money will use its own people to build out these projects, use up local resources and then leave when it’s done.
Allison Peart, managing and tax partner at consulting firm Ernst & Young, Jamaica, came out forcefully against the current system of tax waivers that the government has granted foreign businesses operating in Jamaica, arguing that the country is losing billions of dollars because such incentives are not tied to employment generation and production.
Example to Look at: Brazil
Brazil has made leaps and bounds as an emerging nation, and is quickly becoming an economy to be reckoned with.
The Growth Acceleration Plan is an umbrella term for thousands of infrastructure projects across the country. The program started in 2007 with an initial $4.2 billion investment. The main goal is to improve the poor infrastructure that has created a pattern of social exclusion, and thereby expand economic potential in traditionally neglected areas. The poor are more likely to live in areas with bad roads, poor public transportation, few available jobs, limited or no access to credit, and no mail or commercial delivery services. To maximize the program’s impact, the government hires the people that live in those neighborhoods to perform the work. This simultaneously creates employment in the short term in areas where unemployment is disproportionately high, while making changes that should help spur long-term economic growth.
Brazil is also quite protective of its local economy. For example, consumer electronics companies who do not set up operations in the country are subject to additional taxes on its goods. This helps to prevent foreign companies from coming into the country without investing into the local economy.