This paper quantifies the magnitude and nature of migration flows from the Caribbean and estimates their costs and benefits. The Caribbean countries have lost 10-40 percent of their labor force due to emigration to OECD member countries. The migration rates are particularly striking for the highskilled. Many countries have lost more than 70 percent of their labor force with more than 12 years of completed schooling-among the highest emigration rates in the world. The region is also the world's largest recipient of remittances as a percent of GDP. Remittances constituted about 13 percent of the region's GDP in 2002. Simple welfare calculations suggest that the losses due to high-skill migration (ceteris paribus) outweigh the official remittances to the Caribbean region. The results suggest that there is indeed some evidence for brain drain from the Caribbean.
Mr. A. Salehizadeh, Mr. Peter Berezin, and Mr. Elcior Santana
It is typically assumed that countries in the Caribbean suffer from a lack of output and export diversification. Contrary to this popular perception, we find no evidence that output variability is higher in Caribbean countries than in larger, more diversified, developing economies. In addition, we find no evidence that export earnings are more volatile in the Caribbean economies than elsewhere. In fact, export earnings are quite stable in the Caribbean, reflecting the fact the region is rather unique in that most of its export earnings are generated from service exports, which tend to be considerably less volatile than goods exports.
Jamaica has performed well under the Stand-By Arrangement program. Executive Directors commended that overall macroeconomic performance under the program has been encouraging. Directors welcomed the program aimed at fiscal responsibility legislation and central treasury management, public debt restructuring, financial sector reforms, including the improvement of consolidated supervision and the regulation of nonbanks. They agreed that the sale of Air Jamaica represents an important milestone. Based on overall satisfactory performance of Jamaica on completion of the First Review of the SBA, the IMF approved immediate fund disbursement.
International Monetary Fund. Western Hemisphere Dept.
During the past three decades, Jamaica has shown low economic growth and high public debt, and has faced other social challenges. To help restore competitiveness and improve financial market conditions, the authorities have come up with a comprehensive four-year economic program—2013/14 through 2016/17—that aims to avert immediate crisis risks and create the necessary conditions for sustained growth. The program’s main pillars include structural reforms, fiscal adjustments supported by extensive fiscal reforms, and improved social protection programs.
Economic activity is weak, but showing incipient signs of a recovery. Domestic financial markets remain stable and the growth outlook has improved. Better prospects for agriculture, mining and quarrying, and construction are expected to increase growth. Macroeconomic performance under the program continues to be positive. Jamaica has taken advantage of the favorable market conditions to ease monetary conditions and build international reserves, and continues to demonstrate a strong commitment to the program. The financial sector has weathered well the impact of the debt exchange.
The paper suggests steps to improve the efficiency of the foreign exchange market in Jamaica, and to promote its development. The financial system in Jamaica has undergone significant improvements. The most pressing problem continues to be inadequate liquidity. The results of various approaches and indicators employed to assess the competitiveness of the economy is presented. The paper discusses the social protection programs and assesses the scope to strengthen them. The statistical data on the economic indices of Jamaica are also presented in the paper.
Economic growth variability is low in Jamaica, with deviations driven more by weather than by external conditions. External developments do, however, have large financial implications for Jamaica. Developments in Jamaica can, in turn, have a significant influence in the wider Caribbean. A recent political transition provides an opportunity to reinvigorate reforms but success will require consensus across the political divide. Economic growth has slowed to 1 percent in FY2007/08 (ending in March), although inflation has surged to 18 percent in recent months.
Jamaica has been stuck in a cycle of low growth and high debt dynamics. It has been severely impacted by the global economic slowdown, and finances have deteriorated. Jamaica’s objective of virtually eliminating the overall public sector deficit is appropriate. Embedding the medium-term fiscal consolidation effort in a comprehensive set of fiscal structural reforms is the key. Strengthening regulatory and supervisory frameworks along with legislative and structural reforms will reduce systemic risks to the financial system. The proposed program carries risks but these risks are manageable.
International Monetary Fund. Western Hemisphere Dept.
This 2014 Article IV Consultation highlights that a gradual economic recovery appears to be under way in Jamaica. Growth is estimated at 0.9 percent in FY2013/14, as mining, agriculture, and tourism picked up. Recorded unemployment remains high, but fell from 16 percent to 13.5 percent (in seasonally adjusted terms) from April 2013 to January 2014. Inflation declined to 7.6 percent (year over year) at end-April, as the impact of the ongoing depreciation of the exchange rate was countered by weak domestic demand. Growth is projected to reach almost 1½ percent in 2014–2015, as the negative fiscal impulse comes to an end.
Economic developments and growth of Jamaica are discussed in this paper. Despite the good performance under the program through end-September, mounting spending pressures and delays in some fiscal reforms have required the adoption of corrective measures by the authorities. The authorities concurred with IMF staff that the potential spending overruns reflected weaknesses in expenditure management that needed to be urgently addressed. To offset the expenditure overruns, the government has adopted a number of compensatory measures.