Jamaica - The Road to Sustained Growth : Country Economic Memorandum
Jamaica's poor growth performance has a number of well-known explanations, but they need to be supplemented for the latter half of the 1990s, by the loss of competitiveness. The negligible (measured) GDP growth in the 1990s is usually attribut...
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| Format: | Country Economic Memorandum |
| Language: | English en_US |
| Published: |
Washington, DC
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2003/12/2824834/jamaica-road-sustained-growth-country-economic-memorandum http://hdl.handle.net/10986/14666 |
| Summary: | Jamaica's poor growth performance
has a number of well-known explanations, but they need to be
supplemented for the latter half of the 1990s, by the loss
of competitiveness. The negligible (measured) GDP growth in
the 1990s is usually attributed to two factors: an adverse
external climate and the financial crisis that arose from
bank privatization to poorly capitalized investors, and,
financial liberalization, unaccompanied by an appropriate
regulatory strengthening. The poverty headcount however, was
halved between 1992 and 1998, despite negligible measured
GDP growth, which can be largely explained by a conjunction
of several factors particular to the period: underestimated
GDP growth, judging from the growth in consumption of power,
and meat and fish, as well as the rapid growth of currency
usage; inflation, which hurts the poor disproportionately,
fell sharply; the relative price of food declined, owing
largely to trade liberalization and the appreciation in the
real exchange rate; other factors may have been the rise in
real wages, and remittances. But two important
poverty-reducing factors are unlikely to continue to operate
in the future, which means that further reduction of poverty
is likely to depend on achievement of sustained growth. The
report questions Jamaica's self-sustaining and
job-creating growth restoration, and argues that this
requires improving international competitiveness and
productivity, while also addressing short-term exigencies.
The policy options are grouped into three categories - those
necessary to limit the risk of a crisis and its effect, with
a likely immediate impact; those likely to have an impact in
the short-term; and, those likely to have an impact in the
medium and long-term, but on which action is nonetheless
needed now. The report suggests a 'bandwagon'
approach to reforms, with policy actions needed on several
fronts, in order to improve prospects for sustained growth,
including measures that help avoid crises, since crises hurt
the poor and damage growth prospects. Such an approach could
involve: crisis-proofing actions; actions with short-term
impact; and, actions with medium-long-term impact. Given
that policy choices are likely to be difficult, an approach
based on social dialogue and consensus-building is essential
to creating ownership for future reforms by all
stakeholders, and for maintaining and improving social peace. |
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