A GROWTH-INDUCEMENT STRATEGY FOR JAMAICA IN THE SHORT AND MEDIUM TERM

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Table of Contents Chapter Title Page Preface v Acknowledgements viii 1 Introduction 1 2 Summary 4 Part I. Overview 28 3 From the IMF Programme to Private Sector-led Growth within Vision 2030 Jamaica 29 4 Alignment of Growth-Inducement Strategy with Vision 2030 Jamaica 45 Part II. Situational Analysis 50 5 The Jamaican Economy - Economic Performance and Prospects 51 6 Assessment of and Recommendations for the Current 82 Fiscal/Financial Programme Part III. Analytical Framework 96 7 Resolving the Supposed “Puzzle” of Low Growth-Rate and High Investment-Rate in the Jamaican Economy 97 8 Assessment of the Constraints to Economic Growth in Jamaica 112 9 Internal Logistics and Jamaica’s Competitiveness 132 Part IV. Policies and Programmes 144 A. Asset Mobilization 145 B. Eliminating Transfer Tax and Stamp Duty on Selected Financial Instruments 150 C. Jamaica Venture Capital Programme 155 D. Business Process Outsourcing 166 E. Human Resources: Training and Certification 169 F. Strengthening Resilience of the Built and Natural Environment 175 G. Community Renewal Programme 180 H. Proposed West Kingston Commercial Lifestyles Centre 188 I. A Viable Framework for Coordination of Poverty Reduction 191 J. Public Sector Transformation 197 Part V. Panelists’ Contributions to Symposium on the GIS 204 A. State of the Economy 205 B. Community Renewal Programme 209 C. Enhancing National Resilience 214 iv
Preface The Jamaican economy has exhibited a striking and well-documented historical pattern of underperformance in terms of overall growth since the 1970s, despite an evident capacity to generate limited expansion in short spurts based on achievements in particular economic sectors and products. This chronic pattern of underperformance has left in its wake a high level of public debt, unemployment, deterioration in physical infrastructure and in the delivery of social services (such as health, education and the justice system). These inherited conditions underpin significant and persistent levels of poverty as well as the continued existence of marginalized, vulnerable, and volatile communities throughout the country. The issue of how to achieve sustainable economic growth with social equity therefore remains today as a matter of primary concern. It is central to any consideration of policy and action to address the host of economic and social problems that the country now faces. This report presents results of the PIOJ’s analysis of this issue and specific proposals following therefrom for a strategy to induce economic growth in the short and medium term and in the particular context of the economic situation prevailing today. The analytical and strategic foundation of the growth-inducement strategy rests fundamentally on our finding that Jamaica’s weak performance in terms of economic growth can be explained as the direct consequence of specific, identifiable, and quantifiable conditions operating in the economy and through the process of capital investment. In particular, these conditions are: the chronic state of fiscal imbalance underutilization of productive capacity economic waste of capital concentration of capital investment in highly capital-intensive sectors and economic enclaves. These conditions, in turn, are associated with a number of dysfunctional pathologies and systemic constraints, operating as both cause and effect in a complex mutual interaction with the investment process. At the top of this list, as determined by our assessment based on world-wide surveys done by international agencies, are the following factors: crime and violence corruption taxation supply of electricity finance, and macroeconomic instability. v
Page 1 and 2: A GROWTH-INDUCEMENT STRATEGY FOR JA
Page 3: To the many ordinary Jamaicans who
Page 7 and 8: for making a determined start on th
Page 9 and 10: the private sector groups, listed b
Page 11 and 12: Citibank N.A. Jamaica Branch Grace
Page 13 and 14: need for “additional fiscal space
Page 15 and 16: Chapter 2 ________________ Summary
Page 17 and 18: 1.0 The Economic Situation Today 1.
Page 19 and 20: expected to provide an essential an
Page 21 and 22: Table 2.1. The Policy Framework: A
Page 23 and 24: programme of social inclusion that
Page 25 and 26: Strategic Focus Table 2.2. Growth S
Page 27 and 28: 6.0 Short-Term Growth Stimulus 6.1
Page 29 and 30: decline of 2.0 - 2.2 percentage poi
Page 31 and 32: Table 2A.2. NWA Projects To be Fast
Page 33 and 34: Table 2A.5. Community Renewal Proje
Page 35 and 36: Table 2B.3. Impact of Repairing Far
Page 37 and 38: Appendix 2C Methodology of the Grow
Page 39 and 40: Part I _________ Overview 28
Page 41 and 42: 2.0 Vision 2030 Jamaica Before delv
Page 43 and 44: 3.0 May 2010 Security Event and Aft
Page 45 and 46: the longer than anticipated global
Page 47 and 48: Million $ 1,200,000 1,180,000 1,160
Page 49 and 50: Three industries recorded increases
Page 51 and 52: 9.0 Proposals for Growth-Stimulus I
Page 53 and 54: targeted economic and social infras
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partnering with government to disco
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3.0 Growth Inducement Strategy The
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Growth-Inducement Strategy Alignmen
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Part II _________ Situational Analy
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inadequate provision of public infr
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2.0 Macroeconomic Assessment 2.1 In
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Increased global oil consumption wa
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$4,742.0 million and $688.4 million
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Non -Traditional Domestic Exports E
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negative impact of the Jamaica Debt
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ethanol and paint, whereas lower de
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Analysis of preliminary GCT data re
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The number of ship calls to the isl
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industry was, however, estimated to
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4.0 Projected Performance 4.1 Calen
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increased marketing and extension s
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Electricity & Water For FY 2010/11,
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J$ Million 510,000 500,000 490,000
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2011/12). These extreme weather eve
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Summary Chapter 6 ________________
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creates allocative inefficiencies,
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heightened risk aversion of financi
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Table 6.1. Employed Labour Force by
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7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0%
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20.0% 18.0% 16.0% 14.0% 12.0% 10.0%
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4.10.2. However, the extent of the
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Part III ____________ Analytical Fr
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functional relationship between the
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It follows that: (5) s = I/Y = [S -
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However, the existence of measureme
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(d) v* = Y*/K* This is a measure of
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in Chapter 8. The mutual interactio
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Transforming the complex set of str
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Appendix 7A A Methodological Note T
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1.0 Focus of this Assessment Chapte
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The DBI focuses more narrowly on qu
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to ask, is it possible to predict g
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can be made to serve a very useful
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For further elaboration of the cons
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progressive Jamaica-based firms and
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Table 8.2. Jamaica: Doing Business,
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Table 8.4. Global Competitiveness I
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Table 8.5 (continued) Indicator Ran
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Rank* Constraint Table 8.7 Business
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1.0 Summary Chapter 9 _____________
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3.0 The Burdens of LAC’s Logistic
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conditions. These combined with a p
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Figure 9.4. Proportion of Primary A
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6.0 Logistics are Essential for Tou
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7.0 Fundamental Steps Forward for J
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Part IV ________________ Policies a
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Current Status: Cabinet by decision
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e more than compensated for by the
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1.0 Background B __________________
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Commercial Bank loan rates have als
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5.0 Expected Outcomes These measure
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capital, mainly in the form of equi
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oth local and overseas (including t
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Table C.1. Proposed Implementation
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Locally, the Scientific Research Co
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Develop formal and informal links t
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1.0 Background D __________________
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5.0 Recommendations Based on the ma
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2.5 Coexistent with the levels of u
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industry as well as provide funding
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Age Group Table E.2. Unemployed Lab
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indirect losses experienced when th
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Table F.1 (continued) Area Type of
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1.0 Introduction G ________________
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Ineffective Social Intervention Pro
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Table G.1 Priority Initiatives Obje
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Table G.2 Phased Implementation Pla
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H ____________________ Proposed Wes
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3.0 Transparency Guarantees By desi
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and Coordinating Unit (PCMU) was es
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therefore need to have sanctioned o
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Slate of existing programme initiat
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The rationalisation was guided by t
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deliver services in an efficient an
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efurbishing to allow for accommodat
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Part V _______________ Panelists’
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With the benefit of hindsight, some
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ight. Where we as a society fail is
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and exclusion of the majority of th
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the elders, youth, children. What f
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C __________________ Enhancing Nati
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Economic Figure C.1. National resil
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A GROWTH-INDUCEMENT STRATEGY FOR JAMAICA IN THE SHORT AND MEDIUM TERM

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