Nearshoring: Leveraging Jamaica’s Competitive
How does Jamaica deepen its involvement in global value chains which according to the InterAmerican Development Bank (IDB) account for more than 50% of global trade?
Jamaica’s Global Logistics Hub Initiative is designed to leverage Jamaica’s competitive advantages to enable Jamaica to become a platform for global value chains. Jamaica is positioned for the following three things:
1. Connectivity- the infrastructure that links Jamaica internally and to the world.
2. Flows — the goods, services, people, data and money that move around Jamaica and from Jamaica to the world.
3. The management of both flows and connectivity — the business of coordinating how goods and services move around Jamaica and from Jamaica to the world using infrastructure.
The Logistics Hub Initiative
A nation’s development and prosperity are increasingly joined to its connectedness to the rest of the world. In today’s world of globalization it is not sufficient to simply have market access, the ability to turn that access into market presence is a necessity. Logistics is critical link between market access and market presence. Logistics is the connector, ‘the glue;’ it is the service that runs through the entire manufacturing value chain that allows the whole global production system to function. The Government of Jamaica (GOJ) has embarked on a strategic initiative to transform the Jamaican economy into a logistics centred one and with it establish Jamaica a Global Logistics Hub.
The Jamaica Global Logistics Hub Initiative is a development model and growth strategy designed to re-position Jamaica as a platform to attract a variety of business along the global manufacturing and service delivery supply and value chain. The ultimate goal of the Initiative is to further integrate Jamaica into the global supply and value chains.
What Jamaica represents is a centralized location in the Americas where logistics and related activities can all be clustered on one island. Jamaica will become a platform for the use of digital technology to plan the design, production, packaging and distribution of goods; financial services; a strategic depot for the storage of natural resources, ship and airplane repair, legal services, tourism and so on.
This snapshot of Jamaica’s Logistics Hub is a brief catalogue of some of the assets that Jamaica already has and in many ways seeks to optimize for greater national economic development and job creation. The examples cited are not an exhaustive list but are illustrative of the depth and breadth of Jamaica’s Hub assets. Each of these assets have economic value in and of themselves, however, in a Logistics Centred Economy these assets interact creating synergies of new economic benefits.
Nearshoring
The the InterAmerican Development Bank (IDB) identified that as part of the USD $78 billion in nearshoring opportunities that exist in Latin America and Caribbean (LAC) region, Jamaica has a $USD 138 million opportunity in increasing goods exports alone. Jamaica’s SEZ Regime is a well-positioned policy mechanism aimed at facilitating Jamaica attracting some of this value to our shores. However, it is important to note that as well positioned, policy-wise, as the the SEZ Regime is, it cannot do it alone nor was it designed to do it alone. This is a case of ‘all hands on deck’ with all sectors of the economy seeking to tap into and maximize the USD $138 million nearshoring opportunity.
Basic Business Models
Nearshoring either saves time, money or both. But how? Put another way, what business model should I use?
Let me introduce you to the POP Framework. What is POP you might ask? It stands for Production, Outsourcing and Postponement:
Production — manufacturing, assembly, fabrication
Outsourcing — global services sector (BPO, ITO, KPO), contract manufacturing
Postponement — warehousing, distribution, shipping, logistics services
POP, which I will go into more detail in another post, highlights basic business models that singularly or in combination be used to attract global value chains to Jamaica that seek out connectivity, flows or the management of connectivity and flows.
