PIOJ Growth-Inducement Strategy - Planning Institute of Jamaica

Table 2.1. The Policy Framework:
A Mapping of Gap Indicators, Contributing Factors and Corrective Strategies
Gap Indicators Contributing Factors Corrective Strategies
Fiscal Gap (“Debt Lack of adequate fiscal governance. Fiscal consolidation and governance reform; fiscal
Overhang” )
expenditure control; broad-based tax reform.
Capacity
Utilization Gap
(“Underutilization
of Productive
Capacity”)
Capital
Efficiency Gap
(“Economic Waste
of Capital”)
Sectoral
Efficiency Gap
(“Unbalanced
Sectoral Structure
of Production”)
Source: Compiled by the PIOJ
(1) Supply-side: Deficiencies and
distortions in the existing structure of
economic incentives (risks, rewards, costs,
externalities) that drive entrepreneurial
decision-making; poor business
environment, including the effects of
crime; internal management, resigned
preferences and rational myopia on the part
of entrepreneurs.
(2) Demand-side: Weakness in
international competitiveness; resigned
preferences and rational myopia on the part
of domestic consumers/workers; global
demand conditions.
(1) Excessive construction costs due
to poor quality of construction work, costs
of providing security on site, kickbacks of
various sorts from contractors to off-site
agents, excessive post-construction costs of
repair and maintenance due to abnormal
“wear and tear” (whether from neglect or
actual use), and cost of security
(“protection”) for current operation.
(2) Reduced productivity of private
capital due to inadequate and/or poor
quality public capital (infrastructure,
transport).
(3) Reduced productivity of both
private and public capital due to excessive
vulnerability to natural hazards (low
resilience of the built and natural
environments).
High rate of investment in capital intensive
sectors accounting for a small share of
GDP or of employment (Bauxite &
Alumina; Transport, Storage &
Communications) and sectors with low
domestic linkages (Tourism). Related to
the structure of incentives (e.g. tax
incentives for export enclaves) or
government priorities (incentives for
private investment in infrastructure to
achieve divestment objectives).
Improving the business environment; broad-based tax reform,
including elimination of “nuisance taxes”; asset mobilization;
entrepreneurial development, business management and
innovation (development bank- and venture-capital financing,
business networks, clusters); social inclusion (crime
reduction, community development and empowerment for
self-agency, rural-urban development); fiscal expenditure reprioritization
towards core services (infrastructure, transport
& logistics, energy, finance, communications, and security);
education, training and certification of the labour force;
research and development; macroeconomic stability.
Improving the business environment; fiscal expenditure reprioritization;
infrastructure investments to improve the
resilience of the built and natural environments; improvement
of government contracting, procurement and project
management.
Incentive reform, including tax reform; improving domestic
linkages\; promotion of the business-network model;
development of a logistics hub; build-out of regional ICT
centres
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