Rethink Jamaica's accounting paradigm
THE EDITOR, Sir:
The targeting of growth by the Economic Growth Council should be based, in principle, on some knowledge of the relationship between capital investment and output (gross domestic product) growth in Jamaica. But there are no estimates of capital investment in the current set of national income statistics. This lack of data could be a drawback to the work of the council.
This situation exists because the Statistical Institute of Jamaica compiles only one of the three main national accounts that are recommended by the United Nations. This account is considered to be the most important of the three because of its focus on estimating output growth in the economy. But the other two accounts are also very important. The data they provide are essential for planning and for identifying patterns of income distribution, including the size of the informal sector.
The recently established Economic Growth Council will need a wide range of economic statistics. It is, therefore, time to compile the three main accounts in the system of national accounts to meet this demand.
This work will inevitably take some time to be completed, and it may require a substantial increase in financial and other resources. Foreign expertise will also be needed. Norwegian national income statisticians are among the best in the world, and they should be asked to assist with this project.
A fully articulated national accounting system (incorporating the three main national accounts) is probably the most basic tool of economic management in many countries, developed as well as developing. Jamaica needs such a system of accounts to provide data on the basis of which reliable plans can be formulated to promote growth and development of the country.