A new publication entitled, “Nurturing Institutions for a Resilient Caribbean” was recently launched in Jamaica. Strong interest in the subject and the lively discussion that ensued at the launch event highlights the importance of institutions for Jamaica’s future development. In this context, a chapter of the publication focused on Jamaica offers insights regarding four key institutional areas considered by the book (download here).
1. Political Institutions: The Foundation Is Strong but Cracks Are Visible
Jamaica has enjoyed a stable parliamentary democracy based on the British Westminster political system for over 50 years. Times of politically motivated violence are a matter of the past, and the country has displayed relatively peaceful transitions of power and free and fair elections.
Despite this strong democratic tradition, voter apathy is on the rise, as evidenced by low and declining voter turnout. In addition, inherent in the Westminster system is the concentration of considerable power in the prime minister. This makes it essential that other institutions—such as the judiciary and civil society—operate efficiently and ensure appropriate checks and balances.
2. Social Sector: Accessible but Quality Is a Huge Concern
Access to health and education services has become almost universal even though quality and equity concerns persist. The continuing fiscal consolidation, coupled with free public health, poses a special challenge as Jamaica’s expenditure for health continues to be among of the lowest in the region.
In the social sector, there are significant challenges regarding the quality of public education and health. Although Jamaica uses an institutionalized performance evaluation system for teachers, teacher performance measures should rely more heavily on objective performance of their students. Furthermore, the legislation for licensing of teachers has been pending for several years and the very important early childhood education sector remains weakly regulated and is dominated by private sector providers of varying quality. In the health sector, Jamaica faces a serious shortage of health workers, many of whom move to the private sector or abroad for higher salaries and better working conditions. Higher expenditures would be appropriate for the health sector, possibly through a redirection of expenditures from less productive areas.
3. Economic Institutions: Setting the Stage for Stability and Faster Growth
Jamaica’s long history of volatile economic performance, fiscal and debt crises, and slow progress with poverty reduction and development can be linked to institutional and capacity deficits. Since embarking on deep economic reforms in 2013, the country has made major strides in terms of reforms of key economic institutions, including those related to fiscal policy and public financial management, as well as regarding monetary policy and exchange rate management. In particular, tax reforms have boosted revenues, and the adoption of fiscal and debt rules have driven rapid debt reduction and improved budgeting practices. Similarly, the implementation of inflation targeting, and efforts to strengthen the independence and transparency of the Bank of Jamaica (BOJ) will help to insulate it from undue political influence, and support prudent policy-making, exchange rate flexibility, price stability, and improved credit and market conditions in the future.
Looking forward, if properly designed and implemented (read more here), the recently-announced effort to develop an independent fiscal council would complement existing fiscal rules and improve budget formulation, transparency, and accountability. Similarly, the completion of legislative reforms to modernize the BOJ, and further improvements in its capacity would support effective monetary policy formulation and execution. Progress to date with fiscal and monetary institutions must also be matched with efforts to transform the structure of the public sector, including to reduce the wage bill, and to leverage technology to reduce costs and improve efficiency and service delivery.
4. Rule of Law Institutions: A Critical Pillar to Reduce the Incidence of Crime and Violence and Achieve Sustainable Economic Growth
The high violent crime rates result in multiple challenges for rule of law institutions that affect the country’s development. Despite this challenging context, Jamaica performs above Latin American countries in the strength of property rights, a key area for business development and attracting foreign investment. Furthermore, Jamaica has been able to guarantee the protection of fundamental rights like freedom of opinion and expression or the freedom of arbitrary interference with privacy. In addition, the Jamaican judiciary and legal systems, which are based on English common law and practice, are largely independent as guaranteed in the constitution. Finally, efforts are on-going in important areas, including the establishment of a National Child Diversion Policy and improvements in access to justice, among others.
In spite of this progress, Jamaica is among those countries that spend the least on justice administration, at around 0.06 percent of gross domestic product (GDP). Conversely, Jamaica has the highest percentage of crime-related police expenditures at almost 2.04 percent of GDP. It will be critical for the country to increase the expenditure on the overburdened justice system. In terms of the police service, the Jamaica Constabulary Force (JCF), it will be critical for the government to address the issues related to efficiency, trust, high attrition and turnover of police officers, excessive use of force, and poor accountability, which have translated into poor outcomes. Addressing the institutional weaknesses that hinder land registration like the difficulties in developing land, proving ownership, and even taxing property, are key factors that undermine property rights and the rule of law.
Institutions evolve slowly. Today’s institutions have been shaped to an important extent by history and incremental changes over extended periods. Jamaica is an interesting case, as it has succeeded in making tremendous progress towards the reform of key institutions—particularly those linked to macroeconomic policies – over a very short period. Looking forward, in order to further accelerate development and ensure that growth is balanced and inclusive, this effort must be matched with a renewed focus on the reform of other institutions operating in areas where Jamaica’s performance lags behind peer countries—many of which have made considerable progress recent decades. In this context, key institutions identified in the book are also highlighted as priorities for Jamaica’s National Development Plan – Decision 2030, and under the current 2015-2018 Medium Term Socio-Economic Policy Framework. In this context, some of the fiscal space that has been generated by successful debt reduction should be directed towards strengthening institutions and capacity in the health and justice sectors, among other key priority areas.
Featured Image: (From left) Diether Beuermann, IDB Economics Senior Specialist and co-author; Dr. Wayne Henry, Director General of the Planning Institute of Jamaica; Therese Turner-Jones, General Manager for the IDB’s Caribbean Country Department; Professor Trevor Munroe, Executive Director of Jamaica’s National Integrity Action; Moises Schwartz, IDB Economics Senior Specialist and co-author; and Sir. Hilary Beckles, Vice-Chancellor of the University of the West Indies, at the panel discussion and book launch on Monday, December 10 at the IDB Offices in Kingston.
Camila Mejia Giraldo is a Modernization of the State Specialist at the Innovation for Citizen Services Division of the Inter-American Development Bank (IDB). She has focused on the design and implementation of public sector reform, civil registry, identification, citizen security and justice programs. Before this position, she worked in the Labor Markets and Social Security Division of the IDB, where she focused on the fiscal sustainability of the pension system in Jamaica and in labor market insertion programs for vulnerable populations in the North East of Brazil. Camila also worked in the OECD Development center where she did research on informality and gender, pension systems and non-contributory pension schemes in Latin America and the Caribbean.
Henry Mooney is Lead Economist and a member of the management team for the IDB’s country office in Jamaica. He previously worked in investment banking, and with international financial institutions including the International Monetary Fund and World Bank, where he served as mission chief and team leader or team member for technical assistance (sovereign debt issuance and management, market development, and public financial management), and worked on economic adjustment and reform programs and surveillance in dozens of countries in Africa, Asia and the Pacific, Central Asia, and Latin America and the Caribbean. He has authored or contributed to a number of publications in related areas. He undertook his graduate studies at the London School of Economics, University of London, and Harvard University.
Juan Pedro Schmid is a Lead Economist in the Caribbean Country Department of the Inter-American Development Bank (IDB). Since joining the IDB, Juan Pedro has worked in different capacities, including as a country economist for Jamaica and for Barbados, and as regional macroeconomist. His work has covered a broad range of areas, including macroeconomic monitoring, preparation of country strategies, lending operations, coordination of departmental macroeconomic work, and programming and research on a broad range of topics. Before joining the IDB, he worked for three years as an Economist at the World Bank’s Economic Policy and Debt Department on debt relief operations, technical assistance missions, and advisory services across different regions, including Africa, Asia, and Oceania. He holds a M.A. from the University of Zurich and a Ph.D. from the Federal Institute of Technology, both in economics.