IDB COUNTRY STRATEGY WITH JAMAICA 2013–2014
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Jamaica is a small open economy, with a relatively narrow export base, and high dependence on
inflows from remittances and tourism, each one typically accounting for about 15% of gross domestic product (GDP). External trade in goods and services amounts to over 75% of GDP, with mineral fuels (specifically energy) accounting for the bulk of total imports.
Jamaica’s capital account has been open since the early 1990s and the country has attracted relatively high levels of foreign direct investments (FDI).
Jamaica has a long history of low economic growth and high public debt. Over the last 20
years, its economy grew on average less than 1% per year, significantly below the average for Latin American countries and the Caribbean (3.8% and 2.0% respectively).
inflows from remittances and tourism, each one typically accounting for about 15% of gross domestic product (GDP). External trade in goods and services amounts to over 75% of GDP, with mineral fuels (specifically energy) accounting for the bulk of total imports.
Jamaica’s capital account has been open since the early 1990s and the country has attracted relatively high levels of foreign direct investments (FDI).
Jamaica has a long history of low economic growth and high public debt. Over the last 20
years, its economy grew on average less than 1% per year, significantly below the average for Latin American countries and the Caribbean (3.8% and 2.0% respectively).
Different factors have been identified as constraints to growth. Importantly, the high level of debt is a major constraint as it crowds out private investment and diverts scarce resources from investment and social services to debt service. The high demand of the Government of Jamaica (GoJ) for financing, combined with credit information asymmetries and inefficiencies in the legal and regulatory framework result in high interest rates for commercial borrowers.
A second major factor is the tax system, which combines high tax rates with a substantial number of exemptions and waivers, resulting in distortions and rent-seeking behavior. The above factors are not conducive to promoting a high growth environment led by the private sector. Other related issues include the high cost of energy, crime and informality. High energy rates and inefficient consumption negatively affect the local industry and significantly increases the cost of government operations.
The patterns and a high incidence of crime and violence in Jamaica over recent years have sparked concerns at the local, national and international levels as the country ranks first in murder rates in the Caribbean.
The high and increasing level of informality, including informal governance structures in inner city communities, poses a threat to formal governance structures and compromises the democratic process of the country.
These challenges result in a high economic cost, and lead to the exclusion of segments of the population.more
A second major factor is the tax system, which combines high tax rates with a substantial number of exemptions and waivers, resulting in distortions and rent-seeking behavior. The above factors are not conducive to promoting a high growth environment led by the private sector. Other related issues include the high cost of energy, crime and informality. High energy rates and inefficient consumption negatively affect the local industry and significantly increases the cost of government operations.
The patterns and a high incidence of crime and violence in Jamaica over recent years have sparked concerns at the local, national and international levels as the country ranks first in murder rates in the Caribbean.
The high and increasing level of informality, including informal governance structures in inner city communities, poses a threat to formal governance structures and compromises the democratic process of the country.
These challenges result in a high economic cost, and lead to the exclusion of segments of the population.more
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