PIOJ Growth-Inducement Strategy - Planning Institute of Jamaica

It is clear to us at the PIOJ that crime reduction, the renewal of vulnerable communities
across the island, and fiscal consolidation, form the essential platform for economic
revitalization and broad-based growth and development. They are essential modern
public goods, not modern public sector goods. This distinction is important because
public goods and public bads are inescapable, are collectively consumed, and require
collective production for their efficient contribution to national development.
This is where the private sector needs to step up a bit. Too often the discussions about
economic reform are dominated by the illogical ideology of good private sector and bad
government. There is no robust empirical validation of this position internationally
anywhere. In fact, in my own study of privatization and economic efficiency, which has
since been selected as among the top 50 works worldwide over time in public policy on
the topic, I prove that the environment within which an enterprise operates is far more
important to its efficient performance than whether it is a public versus private firm. And
frankly, since the classic necessary conditions for firm efficiency do not exist in Jamaica
– i.e. simultaneous capital market and goods market competition - there is good reason to
believe, and frankly sufficient evidence of the fact, that private firms are not necessarily
systemically efficient in Jamaica.
Fiscal consolidation and public sector rationalization will benefit our economy by
reducing the misallocation of economic resources, lowering the cost of capital and taxprice
of government, crowding in the private sector and private economy, and raising
household wealth and workers permanent income. These achievements combine to
create a most important public good.
So too are the economy-wide and collective benefits of crime reduction, community
renewal, tax reform, and broad-based development. These reflect the conciliant
aspirational goals of Jamaicans and are reflected in Vision 2030 Jamaica. As a result,
the pursuit and achievement of Vision 2030 Jamaica, whose national vision statement is
“Jamaica, the place of choice to live, work, raise families, and do business” is a critical
national public good that all of us, including the private sector, must invest in and
collectively produce if Jamaica is to achieve its fullest potential.
The private sector’s response to the fiscal consolidation effort has been insubstantial to
date and I should use this occasion to remind you that entrepreneurship and private
sector development are much like surfing: no risk-taking, no reward, and staying on the
beach, while safe, never gives you worthwhile returns.
While the government has its role in creating the “public good” of a sound macroeconomy
and an enabling business environment, so too the private sector has a role to
play in creating broad-based growth and development by:
engaging in activities that build productivity and innovation in industries, instead
of behaviour that seeks to secure preferential treatment for one group at the
expense of others
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