Crime’s negative impact on Jamaica’s economic development

CRIME AND lack of security have led the island to miss annual development targets under its Vision 2030 plan aimed at giving the island developed country status in under a generation.

“No area related to security, justice or governance met or exceeded the 2015-16 target,” said Elizabeth Emanuel, programme director, Vision 2030 Jamaica Secretariat, at the Planning Institute of Jamaica’s (PIOJ) quarterly press briefing in New Kingston on Wednesday.

The secretariat tracks the progress of the country in four broad goals in order to compare movements annually and also with the 2007 baseline year. The goals are that Jamaicans are empowered to achieve their fullest potential; the Jamaican society is secure, cohesive and just, Jamaica’s economy is prosperous, and Jamaica has a healthy, natural environment.

Goal two, that the Jamaican society is secure, cohesive and just and goal four, that Jamaica has a healthy, natural environment, are areas of greatest concern for the country, Emanuel said.

“Notwithstanding, indicators such as the control of corruption index, voice and accountability index, and category one crimes per 100,000 are showing some movement towards the target,” she said.

The greatest gains for the country related to goal three, progress under the macroeconomy. Under that goal, 46 per cent of the targets were either met for 2016-17 or moving towards meeting the targets.

“The greatest gains related to annual inflation, debt to GDP (gross domestic product), nominal GDP per capita, and the health of the tourism, energy, agricultural sectors. Targets were either met or found gains moving towards the target,” Emanuel said.

Crime holding back growth

Crime and other supply-side constraints are holding back growth in Jamaica and, by extension, Vision 2030, said director general of the PIOJ, Dr Wayne Henry.

“Crime affects social stability as well as discouraging domestic and international investment. At the firm level, it introduces uncertainty and inefficiency in the production process, as it imposes a cost on firms as well as limits the production time,” Henry told stakeholders at the quarterly press briefing.

The Inter-American Development Bank conducted a 2014 study which estimated that crime-related costs for Jamaica amounted to 4.0 per cent of GDP. Comparatively, agriculture contributes some 6.0 per cent of GDP.

Growth constraints

Other growth constraints include human capital development such as lack of training, skill mismatching, export of skilled labour and underemployment. Another constraint is the uncompetitive business environment.

“These constraints create increased costs and uncertainty in the business environment and adversely impacts the country’s competitiveness,” Henry said.

The PIOJ revised downwards its forecast for the growth for the current fiscal year to between 1.5 and 2.5 per cent.

Rains earlier in the year, which hurt agriculture and also contributed to the late start of production at the Alpart refinery, led to its downward forecast, said the PIOJ. Earlier this year, the state agency projected 2.0 to 3.0 per cent growth for the fiscal year.

Henry added that the country should remain focused and disciplined in order to realise greater levels of economic growth. Concurrently, the PIOJ revealed that the country grew by an estimated 0.9 per cent for the September quarter 2017.

During the quarter, the island received an uptick in visitor arrivals due to diversions caused by storm activity in other Caribbean destinations.

The total number of employed persons as at July 2017 stood at 1.2 million, an increase of 29,000. According to Henry, it remains the highest employment ever for a single month in the island in a decade. This employment represents a return to levels found in 2008 at some 1.17 million. Subsequently, those levels dipped due to the recession.