PIOJ Growth-Inducement Strategy - Planning Institute of Jamaica

Chapter 8
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Assessment of the Constraints
to Economic Growth in Jamaica
Donald J. Harris
Professor Emeritus of Economics, Stanford University
1.0 Focus of this Assessment
The issue of growth constraints in Jamaica is a long-standing subject of analysis and
public discussion. It has crucial relevance both in the context of a well-known history of
slow growth since the 1970s and in the immediate context of an economy undergoing a
deep recession. Many reports have been written, old and new, and the list of constraints
emerging from these reports is long, which begs the question of where to start in dealing
with them on a practical level. There are important questions of cause and effect that
have not been adequately addressed in the existing analyses. Actual policy responses
have been mostly lacking in comprehensiveness and continuity, and implementation of
policy has been a recurring problem. However, there are also significant achievements
that need to be properly documented and studied for the lessons they offer for the conduct
of effective policy.
The assessment presented here has a more limited focus and practical goal. It seeks to
draw on available published reports to identify and rank prevailing constraints that are
commonly recognized and, on this basis, to construct a practical menu of targeted areas
for needed action in a medium-term policy framework. 40
As a small open economy, the capacity of Jamaica-based firms to penetrate and compete
in export markets, as well as against imports in the local market, is the key to economic
survival and growth. It is therefore necessary to focus sharply on those constraints, and
their specific underlying features, that limit Jamaica’s competitive standing in relation to
the rest of the world economy. There exists a number of readily available recent reports,
based on survey data, that can be used for this purpose. They form the main sources for
this assessment.
The assessment is organized around an analytically useful distinction between supplyside
and demand-side constraints. This approach has the distinct advantage that it leads
to:
(1) a clear understanding of the need and scope for a differentiated mix of strategic
interventions consisting of the following key elements:
40 Based on data available at time of writing, October 23, 2010.
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