PIOJ Growth-Inducement Strategy - Planning Institute of Jamaica

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The fact of the matter is that the biggest incentive for growth, and one that has no sunset provision, is for Government to commission itself to the efficient production of its core functions. This best minimizes the transactions cost of private-sector business activities and is growth inducing. As Professor Donald Harris has elegantly showed in a recent study on the Jamaican economy, fiscal consolidation aimed at dealing with the prevailing chronic state of fiscal imbalance is probably the most important of early steps in this important process. Having declared this, I would be foolish to ignore the large body of international evidence that, and I quote from a May of this year study by the World Bank, “shows that while activist government economic policies in developing countries have historically failed to achieve their stated objectives, in all successful economies the state has always played an important role in facilitating structural change and helping the private sector sustain it across time.” So the issue is as much about the quality of government participation in the economy as it is about its size. Therefore, once the “public good” of government efficiently producing its core functions and having budgetary practices that assure the public of transparency guarantee is adequately addressed, the issue then becomes: how government can rationalize its selective support for modern economic growth and development. The general view, based on continuously updated empirical international evidence, is that growth-friendly government policies beyond core activities is focused on addressing market imperfections that arise because of the collective consumption and productive nature of activities that are often essential to industry modernization and dynamic competitiveness. Translating, successful government interventions under globalization and rapid technological change occur in situations where the policies are aimed at facilitating private agents in industrial upgrading and diversification of industry, and in exploiting market opportunities. They are aimed at assisting industries overcome information and coordination problems, including better matching risk-bearing capacity to access to financing and coordinating access to new markets, addressing externality/spillover effects, and improving industry soft and hard infrastructure, including modernizing property. Note, they don’t take equity share in firms or industry, nor engage in risk diversification, grant credit or return on investment (ROI) guarantees, offer pricing subsidies through tariff or non-tariff barriers, etc. Instead, their focus is on increasing the technical efficiency and competitiveness of firms and industries. 39
9.0 Proposals for Growth-Stimulus Initiatives Within this context, the Economic Competitiveness Unit at the PIOJ has identified a couple of areas that could bear immediate fruits in terms of the revitalization of economic activities and sustainable growth in the economy. First and foremost, it is the PIOJ’s judgment that the biggest growth and development ROI for public expenditures and effort are in the areas of: Fiscal consolidation Crime and violence reduction and community revitalization. Fiscal consolidation greatly reduces the chronic uncertainty over the impact of public finances on the private economy. If the consolidation is smartly rationalized and executed, it will have immediate growth-enhancing influences. Crime and violence are cited as the number one reason hindering business activities in Jamaica and may cost the economy between 5% -7% in output growth yearly. The Community Renewal Programme could serve as a dual stimulant to the economy by, on the supply side, reducing security and extortion costs to firms, and facilitating a lengthening in the use of their capital base (i.e. run second and third shifts), and on the demand side, increasing aggregate demand through its shovel-ready infrastructure projects. Beyond these two recommendations, government should also study the following initiatives: (1) Incentives for the Short Term Tradable Tax Credits for start-ups in emerging industries and capital market funding Tax break for companies employing new workers, which would be capped at a prespecified amount. A fraction of incremental revenue due to GOJ would be utilized to fund this initiative. Business Incubator Network – Access to affordable rent (e.g. Downtown Kingston), shared internet, shared corporate services with technical oversight provided (GOJ/IDP funding). Organic and Greenhouse Farming - using Constituency Development Funds and IDP Grants. Web-based employment bank, which matches persons on the basis of skill-sets and not previous positions held (GOJ). 40
Page 1 and 2: i A GROWTH-INDUCEMENT STRATEGY FOR
Page 3 and 4: To the many ordinary Jamaicans who
Page 5 and 6: Preface The Jamaican economy has ex
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: April July October January April Ju
Page 49: Three industries recorded increases
Page 53 and 54: targeted economic and social infras
Page 55 and 56: partnering with government to disco
Page 57 and 58: 3.0 Growth Inducement Strategy The
Page 59 and 60: Growth-Inducement Strategy Alignmen
Page 61 and 62: 50 Part II _________ Situational An
Page 63 and 64: inadequate provision of public infr
Page 65 and 66: 2.0 Macroeconomic Assessment 2.1 In
Page 67 and 68: Increased global oil consumption wa
Page 69 and 70: $4,742.0 million and $688.4 million
Page 71 and 72: Non -Traditional Domestic Exports E
Page 73 and 74: negative impact of the Jamaica Debt
Page 75 and 76: ethanol and paint, whereas lower de
Page 77 and 78: Analysis of preliminary GCT data re
Page 79 and 80: The number of ship calls to the isl
Page 81 and 82: industry was, however, estimated to
Page 83 and 84: 4.0 Projected Performance 4.1 Calen
Page 85 and 86: increased marketing and extension s
Page 87 and 88: Electricity & Water For FY 2010/11,
Page 89 and 90: J$ Million Figure 5.1. Private Sect
Page 91 and 92: 2011/12). These extreme weather eve
Page 93 and 94: Chapter 6 ________________ Assessme
Page 95 and 96: creates allocative inefficiencies,
Page 97 and 98: Million $ Per cent Jun-10 Mar-10 De
Page 99 and 100: Table 6.1. Employed Labour Force by
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J$ million Mar-10 Dec-09 Sep-09 Jun
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FIGURE 7: GROSS NATIONAL SAVINGS RA
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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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Chapter 8 ____________________ Asse
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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) Rank Indicato
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Rank* Constraint Table 8.7 Business
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Chapter 9 ___________________ Inter
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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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B ____________________ Eliminating
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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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D ____________________ Business Pro
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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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Table E.2. Unemployed Labour Force
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indirect losses experienced when th
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Table F.1 (continued) Area Type of
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G ____________________ Community Re
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Figure G.1 Community Renewal Progra
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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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Figure I.1. Functions of National P
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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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Figure C.1. National resilience is
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PIOJ Growth-Inducement Strategy - Planning Institute of Jamaica

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