Underdevelopment in Jamaica: An Institutionalist Perspective
Elliott, Dawn R., Harvey, John T., Journal of Economic Issues
Despite constant postwar efforts to decipher the development process, it appears that little practical progress has been made. Many theories have been proposed (some leading directly to policy), but very few countries have succeeded in breaking the bonds of underdevelopment. This characterization fits Latin American and Caribbean (LAC) countries especially well.
In LAC countries, the prescription most aggressively pursued has been industrialization. The assumption underlying this approach is that a declining sectoral share of agriculture and agricultural employment will lead to rising per capita income. For the most part, significant structural transformation was achieved, and today it is not uncommon to find LAC nations exhibiting high degrees of industrialization and a labor force that is divorced from the agricultural sector. In Jamaica, for example, between 1930 and 1990, the share of agricultural employment fell from an average of 60 percent to 11 percent, a decline that proceeded over 125 years in many of the currently developed nations. Yet, the expectation of consequent high wages and full employment has proved unfulfilled.
Two kinds of explanations have emerged from this frustration: those based on free market principles and those focused on specific social, historical, or political phenomena as the culprit. Using Jamaica as our subject, we take a somewhat different approach. Our argument is that the island's lack of development is a reflection of powerful institutional forces acting to shift economic activity away from democratic problem solving and toward invidious distinction and conspicuous consumption. We further argue that to understand these issues, the framework adopted must be a holistic one. When seen as a whole, it becomes very clear that Jamaica's development problems will never be solved by policies that ignore the fundamental underlying problem: the vast inequities in power arising from Jamaica's political, social, and economic history. Addressing unemployment and improving technology are certainly concerns for LAC countries, but until the purpose of the economies is to serve the average citizen, rather than the elites, the prescribed treatments will only change the symptoms, not the disease.
The paper will proceed as follows. In the next section, we briefly summarize the relevant economic theories. Following that, a schematic of the Jamaican economy is presented, and its elements and linkages are explained. Herein lies the core of the paper: a diagram to illustrate the central developmental problems of Jamaica and to demonstrate why other analyses have fallen short. A short conclusion follows.
Approaches to Jamaican Development
The dominant, neoclassical view of economic development sees progress as predicated on private property and as a social umbrella that protects wealth accumulation through the political and legal institutions of the nation. Gerald Scully  is clear in his statement that
politically open societies, which bind themselves to the rule of law, to private property, and to market allocation of resources, grow at three times the rate and are two and a half times as efficient as societies in which these freedoms are circumscribed or proscribed [Scully 1988, 661].
The implied causation between economic progress and pro-market, pro-private property-based institutions is due in large part to their perception of Western European development. Not only is such an interpretation of the industrial and commercial revolutions open to debate, but the circumstances of pre-development Jamaica are hardly akin to those of eighteenth and nineteenth century Europe. It is little wonder that privatization and austerity plans have met with so little success.
In contrast, the structuralist paradigm recognizes the fact that the experience of developing economies is different from that of the currently developed ones. However, even the import substitution, industrialization policies typical of the LAC structuralist era implicitly viewed development as a function of capital accumulation within an environment supportive of private property. …