Statistics, Development and Human Rights
Session I-Pa 6a
Measuring Human Development in Invisible
Economies: Challenges Posed by the Large
Informal and Remittance Sectors in the
Caribbean
Elsie LE FRANC
Andrew DOWNES
Montreux, 4. – 8. 9. 2000
Statistics, Development and Human Rights
Measuring Human Development in Invisible Economies:
Challenges Posed by the Large Informal and Remittance
Sectors in the Caribbean
Elsie LE FRANC
Professorial Research Fellow, Sir Arthur Lewis Institute of Social and Economic Research,
University of the West Indies
Cave Hill
Bridgetown, Barbados
T. + 246 417 4477 F. + 246 424 7291
elefranc@uwichill.edu.bb
Andrew DOWNES
University Director and Professor, Sir Arthur Lewis Institute of Social and Economic Research,
University of the West Indies
Cave Hill
Bridgetown, Barbados
T. + 246 417 4476 F. + 246 424 7291
serch@caribsurf.com
ABSTRACT
Measuring Human Development in Invisible Economies: Challenges Posed by the Large
Informal and Remittance Sectors in the Caribbean
There is increasing concern in many Caribbean countries that many of the aggregate
indicators of social and human development are insufficiently accurate and realistic. Possible
explanations of the problem include high levels of selective underreporting, the existence of a large
remittance economy and a significant informal (including illegal) sector with inadequately and
insufficiently recorded information, and real deficiencies in the quality of the societies’ social
institutions. This paper will explore the problem by looking at one of the measures designed to
identify the proportion of the population unable to obtain basic conditions of life, and without the
resources to gain access to those basic conditions. To this end it will examine the data generated
since 1990 by the World Bank–inspired poverty assessment surveys. Special focus will be on
Jamaica as it is the only Caribbean country which has conducted annual Surveys of Living
Conditions since 1989. In the Caribbean, data collection difficulties have meant that poverty
assessments have been almost entirely been based on consumption data. In the aggregate and
survey data available, the apparent anomalies and apparent contradictions are troubling, and raise
questions about the accuracy and validity of the consumption-based poverty assessments. It is not
clear for example, why general declines in GDP per capita and real GDP growth, and fluctuating
or falling national mean consumption levels should be accompanied by sharply falling levels of
poverty. This paper will examine some of these relationships and suggest that considerably more
information and analysis of the household economy, intra-household resource distribution patterns,
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Statistics, Development and Human Rights
the economic meaning of some of the consumption expenditures, and the role of income and other
resource transfers are needed if this measure of human development is to be more useful and
realistic.
RESUME
Mesure du développement humain dans les économies invisibles : défis posés par les vastes
secteurs informel et de transferts dans les Caraïbes
On observe une inquiétude croissante dans de nombreux pays caribéens liée au fait que de
nombreux indicateurs d’ensemble du développement humain et social sont insuffisamment précis et
réalistes. Parmi les explications possibles de ce problème, citons des niveaux importants de sousinformation sélective, l’existence d’une vaste économie d’envoi d’argent et d’un secteur informel
(et notamment illégal) important avec des données consignées de manière inadéquate et lacunaire,
et de réelles déficiences dans la qualité des organismes sociaux de la société. Ce document explore
le problème en examinant les mesures destinées à identifier la proportion de la population
incapable d’accéder à des conditions de vie de base et ne disposant pas des ressources requises
pour accéder à ces conditions de base. Il analyse à cette fin les données générées depuis 1990 par
les études sur la pauvreté menées sous la houlette de la Banque mondiale. Une attention
particulière est accordée dans ce cadre à la Jamaïque, qui est le seul pays des Caraïbes à avoir
mené des études annuelles sur les conditions de vie depuis 1989. Dans les Caraïbes, les difficultés
de collecte de données ont eu pour conséquence que les études sur la pauvreté reposent presque
totalement sur les données de consommation. Dans les données d’ensemble et les études
disponibles, les anomalies apparentes et les contradictions apparentes sont troublantes et soulèvent
des questions quant à la précision et à la validité des études sur la pauvreté basées sur la
consommation. Ainsi, on ne sait pas avec certitude pourquoi la baisse générale du PNB par tête
d’habitant et la croissance réelle du PNB, et la fluctuation ou la baisse du niveau de consommation
moyen national, s’accompagneraient d’une forte diminution des niveaux de pauvreté. Ce document
examine certaines de ces relations et suggère que davantage d’informations et une analyse plus
fouillée de l’économie des ménages, des modes de distribution des ressources à l’intérieur des
ménages, de l’importance économique de certaines des dépenses de consommation et du rôle des
revenus et autres transferts de ressources, sont indispensables pour que cette mesure du
développement humain soit plus utile et plus réaliste.
1. Introduction
Since the introduction of the United Development Programme’s Human Development Report
in 1990, there has been a growing concern with the issue of human development. The UNDP has
defined the concept of human development as a “process of widening people’s choice as well as the
level of achieved well-being”. The earlier work by Sen (1989), the basic needs approaches of the
1970s [ILO, 1976], and the concerns to link growth with equity [Chenery et al, 1974] and being
about “Adjustment with a Human Face” [UNICEF, 1987] have all helped to shape the current
development approaches that seek to link economic and social development in a “virtuous circle”,
and to fuse the “rights-based” approach to social improvement with a capacity-building one.
Sen (1989) had argued that development ought to be viewed as capability expansion and
freedom. Rather than being viewed as a purely economic phenomenon, development should be
evaluated from the perspective of enriching human life. He therefore introduced three important
concepts:
•
Entitlements (good health and education);
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Statistics, Development and Human Rights
•
•
Capabilities which are generated by entitlements, and can and should provide individuals
with the freedom to choose between different ways of living; and
Functionings – these refer to the ‘doings and beings’ that constitute the nature of the
individual’s existence in society
Human development would then entail the maximisation of the entitlements and the
development of the capabilities that would in turn allow the freedom to achieve various functioning
combinations.
The shift in attention away from purely economistic conceptualisations of development has
also been driven by the search for explanations of the high failure rates of many development
assistance programmes. Among researchers, policy analysts, and some of the major donor agencies
there is now much concern about the social and institutional aspects of development [Woolcock
1998], and the possible importance of building up social capital and socially “enabling”
environments [Human Development Report 1999]. There is now much focus on the possible role of
low social and institutional capabilities and capacities in the developing societies [World Bank
Development Report 1997]. Whereas early economic analysts would use per capita income as a
measure of the development of a country, today, analysts increasingly seek to incorporate other
measures of social and economic change, and to insist that not only should economic development
generate social development, but economic development may not occur unless there is also social
development.
The most recent definition of human development by UNDP [1999] therefore has the
following elements:
•
•
•
•
•
•
•
•
•
Basic health and education
Opportunities for being productive and having secure livelihoods
Adequate nutrition
Access to information
Political, social and economic freedoms – especially the freedom to choose jobs
and livelihoods
Safe physical environment
Freedom from violence and physical threats
Adequate shelter
A sense of community
Within this framework, human development measures in general, and poverty reduction or
eradication measures in particular should have the objective of improving the economic and social
well-being of individuals in a society. In other words, just as increased education and healthier
population may be expected to result in a rise in productivity, and therefore in economic growth,
poverty reduction should also be expected to reduce the wastage of valuable human resources,
increase the potential market for goods and services, and help to promote the climate of social
stability deemed necessary for sustained economic growth.
Poverty reduction or eradication is central to the concept of human development. Poverty is
regarded as deprivation of the material requirements for minimally acceptable fulfillment of basic
human needs (food, health, education, shelter, etc). It also represents the absence of some basic
capabilities to function adequately in a society. It can also be regarded as a condition of
disempowerment and extreme vulnerability brought about by “social, political and economies
inequalities that deny access to the means of social power to some segments of society” [Douglass,
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Statistics, Development and Human Rights
1998, p 3]. Understanding human development therefore requires an understanding of the socioeconomic structure and operations of a country.
In this paper, an analysis of human development in a small developing country, namely
Jamaica, is undertaken. Jamaica is a Caribbean country which has been characterised by a high
level of emigration and the growth of an informal sector. These two features have given rise to
‘invisible economies’ and their full impact on the human development process has been difficult to
assess and measure. For example, emigration provides local residents with remittances which are
not directly captured in official economic reporting. This source of income can be an important
element in household expenditure decisions. Furthermore, the informal labour market can provide
additional income which can have a positive impact on household expenditure.
The structure of the paper is as follows: in section 2, a discussion of the measurement of
human development is undertaken. An examination of the measurement of poverty in Jamaica is
also presented. In section 3, an analysis of socio-economic trends in Jamaica over the period 198998 is undertaken. The analysis is based on data obtained from the Surveys of Living Conditions
conducted in Jamaica since 1989. The role of the invisible and undetected sectors resulting from
emigration and the informal sector is analyzed within the context of human development in
Jamaica.
2. The Measurement of Human Development
The exponential growth in the concern with human and social development – its features and
requisites – has expectedly stimulated a phenomenal rise in the attempts to develop measures and
indicators that can accurately portray and map the levels of and changes in these aspects of the
development process. More specifically, the central place currently occupied by poverty reduction
and alleviation objectives in almost all the development assistance programmes being introduced
and implemented in most developing countries has given fresh impetus to the efforts to define and
measure poverty and socio-economic marginalisation.
The measurement of a multi-dimensional and dynamic process such as human development
has been a challenge to social and economic statisticians. In order to determine changes in human
development over time and across countries, analysts have sought to construct a simple aggregate or
summary statistic to capture the elements which constitute human development. Current measures
have emerged as result of the dissatisfaction with previous aggregate measures. Per capita GDP has
long been, and continues to be used as a measure of the economic welfare of the citizens of a
country. However, efficiency of this measure of economic welfare is limited by its exclusion of
•
•
•
Susbistence production due to the dependence of national accounting concepts on market
transactions
Informal sector activities; and
Unpaid household services
In addition, some components of the national economic aggregate are difficult to measure –
for example, consumption expenditure. These difficulties have turned attention to more inclusive
measures, such as the Basic Needs Index [ILO 1976, IFAD 1993], the Physical Quality of Life
Index [Morris et al 1979], and the Human Development and Human Poverty Indices [Human
Development Report 1997]. The Human Development and Poverty Indices seek to measure the
level of human development relative to other countries, but in each case there are concentrated
efforts to increase the number of social variables measured – such as health, education, and
longevity, and the degree and extent of the deprivation in these areas.
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Statistics, Development and Human Rights
These measures represent a significant improvement over previous ones. They are however
frequently limited by the choice of components, the weights ascribed to particular components, the
methods of estimation used, and the aggregation rules employed. These problems are further
compounded by the inaccuracy or poor quality of some of the aggregate data being utilised, and the
non-availability of reliable data on many income and non-income achievements of large segments
of a population.
In this paper, we will explore some of the problems of measuring human development by
looking at one of the measures – namely the poverty index – that has been specifically designed to
identify the proportion of the population that has been unable to obtain the basic conditions of life,
or the resources to gain access to those basic conditions. The two related questions will be
•
•
Does the measure really indicate human development levels; and
Can it be assumed that any reductions in the poverty levels observed mean improvements
in social and human development?
These questions acquire particular meaning and significance in light of the definitions of
human development referred to earlier, and the role that poverty reduction is increasingly expected
to play in the development process. Put another way: to what extent might the improvements in
social well-being that may be so indicated linked with or stimulate human capital development and
/or the opportunities for being productive and having secure livelihoods?
3. The Poverty Index – The Jamaican Experience
In the Latin American and Caribbean region, the specific case of Jamaica has been selected
because so far it is one of the few countries in which annual Surveys of Living Conditions have
been successfully conducted since 1989. Initially inspired and sponsored by the World Bank, and
subsequently supported by the government, these surveys have developed, tested and applied
specific poverty assessment instruments, and have also systematically collected data on a range of
social and economic variables. There is now a rich data set that can permit some trend analyses, as
well as assist the processes of policy formulation and evaluation.
The poverty measures utilised are entirely based on reported consumption expenditures at the
household level. The principal reason for this is the long-standing and well-documented difficulty in
obtaining reliable data on income and earnings [World Bank, 1994]. Since consumption expenditure
data are more easily obtained, can be smoothed over income cycles, and should reflect the inputs
from different and/or varying income sources, the use of these data has come to be the preferred
option. The difficulty of obtaining accurate income data is not peculiar to Jamaica, and the use of
consumption data has acquired a fair degree of legitimacy and acceptance in official and academic
circles. Given its relatively long experience with the development of this measure the Jamaican
experience could therefore provide useful information about the accuracy and validity of
consumption-based poverty assessments.
The problem is a complex one, and as Strobel [1996] has observed, “poverty of conditions of
existence is not simply a matter of unequal income”; nor for that matter, of unequal consumption
levels. This paper will not be concerned with the larger issues such as whether or not the focus
ought to be on relative versus absolute poverty; nor will it address the problems related to sociocultural variations in definition and meaning or the larger issue of how to measure and incorporate
the question of social exclusion.
The very specific focus will be on the problem of utilising a consumption measure in societies
where the assumed linkages between the labour market structure, dynamics and participation,
earnings and income, and consumption patterns and behaviours may either not exist, or be in the
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Statistics, Development and Human Rights
forms usually expected. It has been shown that equivalencies in the value or meaning of particular
consumption levels, or between identified levels of income and consumption cannot be assumed,
and need to be established. Ideally, there really ought to be an „examination of the relationships
between the scale of poverty of conditions of existence… and the income or standard of living
scales.“ [Strobel 1996:177].
A better understanding of how particular income levels and occupational activities can and do
sustain particular types and levels of consumption, and how these affect the meaning and levels of
poverty might be expected to give better direction to the development of appropriate policy
interventions.
In this paper it will be argued that given some of the social and economic realities in the
Jamaican society, the current consumption-based poverty indices are in danger of misrepresenting
the real levels, direction and character of human development, of providing inaccurate impressions
of the policy impacts of poverty reduction initiatives, and therefore of misinforming the policy
development and formulation processes.
The Poverty Measure
In Jamaica, individual poverty is measured. The Poverty line is composed of a basket of food
and non-food items. The food component is determined on the basis of the recommended minimum
nutritional requirements for a reference family of five. Dietary surveys are used to determine the
representative consumption patterns of household in the two poorest quintiles. In this way the ‘food
poor’ are counted. A second standard is the general poverty line that is arrived at by adding to the
cost of the food basket, an amount representing the cost of basic non-food items such as clothing,
footwear, transportation, health care, education, and other personal expenses. The mean expenditure
of the bottom two quintiles is used to determine this second line. This is the line used in the analysis
in this paper.
4. Socio-economic Trends in Jamaica – 1989-1998
Some of the principal socio-economic indicators as well as the changing poverty levels over
the 1989-98 period are presented in Table 1. Several points need to be highlighted:
1. There has been a fairly consistent downward trend in the pattern of economic growth.
2. The unemployment rates have nevertheless not changed significantly, and have
persistently ranged between 15-17%
3. In spite of the downward slide of the economy, the poverty levels have nevertheless been
cut in half over the period.
The most unexpected association is that between of falling poverty levels and a declining
economy. Indeed, it is interesting to note that the poverty levels in 1990, 1995 and 1996 are almost
identical – even though the growth performance in each of those years are widely different. It is also
intriguing that there appears to be very little relationship between employment and poverty.. In
Table 1 it may also be seen that the same level of unemployment (eg 15%) is associated with
widely different levels of poverty: 45% of the population in 1991 as compared with only 15.9% in
1998. Turning to the Human Development Index – while the changes in the methods of calculation
prevent time-based comparisons - it is interesting to note that the values assigned have fallen over
the same period in which the poverty levels have decreased.
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Statistics, Development and Human Rights
Table 1 - Jamaica: poverty, and selected macroeconomic indicators
Year
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
Pop. Below
Poverty line
30.5
28.4
44.6
33.9
24.4
22.8
27.5
26.1
19.9
15.9
Un-employment Rate - %
17.7
15.3
15.4
15.8
16.2
15.4
16.2
16.0
16.5
15.5
Growth Rate
%
6.8
5.5
0.7
1.5
1.7
1.0
0.7
-1.4
-2.1
-0.7
Inflation
Rate %
14.4
22.0
51.1
77.3
22.1
34.7
19.9
26.4
9.7
8.7
HDI
0.722
0.736
…
0.749
0.702
0.736
0.735
…
…
…
Sources: Jamaica Surveys of Living Conditions, 1990-98. Planning Institute of Jamaica
Central Bank of Barbados: Annual Statistical Digest, 1999
Human Development Report, 1990-99. UNDP
Correlation and bivariate regression analyses have been used (given the short time series) to
examine the relationship between the poverty ratio and macroeconomic variables (see Appendix 2).
The conclusions that can be reached support those made above:
1. Economic growth has been associated with increases in the poverty index (i.e., a positive
correlation coefficient over the 1998-99 period).
2. Changes in the unemployment rate are uncorrelated with changes in the poverty ratio.
3. There is a strong and statistically significant correlation between reduction in the poverty
ratio and the inflation rate. The main implication of this relationship is that stable or
falling prices have facilitated higher consumption expenditure levels, thus pushing more
persons over the poverty line threshold.
Since changes in prices have ‘real income’ and ‘substitution effects’, the important issue
becomes one of identifying the nature of the ‘real income effect’ which would have resulted in a
significant fall in the poverty ratio between 1992 and 1998. With low levels of economic growth
and a stable unemployment rate it cannot be expected to be so large as to result in such a dramatic
fall in poverty.
5. The Invisible and the Undetected Sectors
In societies with high levels of inequality, economic growth may not necessarily have a
positive impact on poverty levels since the benefits of economic growth may be unequally
distributed. It is not unreasonable to expect that improving standards of living might be linked with
growing production and productivity. In Jamaica where the period of economic decline and
stagnation of the productive sectors now exceeds approximately 25 years, it therefore seems
necessary to look elsewhere for the source(s) of the apparent improvements in social and economic
well-being. In so doing, it may also be possible to locate the reasons for the divergent trends and
patterns just described.
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5.1 The Informal sector
The informal or underground economy is often the first place to look, and indeed, there is a
large and expanding informal sector in the Jamaican economy. The practice of occupational
multiplicity as a method of economic survival and advancement has had a long history in Jamaica.
The level of reporting the earnings from second and third sources – many of which are in any event
highly variable – has been normally very low, and has been one of the many reasons for the
decision to focus on consumption expenditure indices.
Jamaica has traditionally also had a large small farm sector which, as recently as 1999
accounted for about a third of the employed labour force. Since the early 1970s however, the
growth of self-employment or own account activities has been both rapid and substantial – rising
from 14% of the labour force in 1970 to 29% in 1997 [Labour Force Surveys – Jamaica]. The
expansion of this sector over the 1989-97 period is shown in Table 2.
Table 2 – growth of the informal sector, and of remittances
Year
1989
1990
1991
1992
1993
1994
1995
1996
1997
Own account workersa
28.1
32.7
33.2
32.9
31.3
30.9
28.8
29.6
28.7
Net Remittances (US$m.)
…
130.8
130.0
149.8
181.2
433.6
542.4
572.9
594.7
a) Expressed as a percentage of the labour force
Sources: Labour Force surveys of Jamaica: Statistical Institute of Jamaica, 1989-1997
IMF Balance of Payments Yearbook, 1998
It will be seen that this group now accounts for some 29% of the labour force -having peaked
at 33% in 1991. This growth was largely in response to the declining economy and the associated
contraction of the formal wage and salaried sectors. There are also important differences between
the older small farm sector that was formally linked into the market and large estate economies, and
the newer economic activities. Today, most of the activities are in the informal sector, and tend to
be concentrated in the petty trading and distributive sectors; many have a very transient character,
and attrition rates are extremely high. It has also been estimated that a fairly significant number of
these activities are illegal or at least border on illegality [Witter and Kirton, 1990; McBain et al
1994; Le Franc and MacFarlane Gregory 1985; Klein and Tokman, 1993]. The difficulties of
tracking and measuring the activities of the informal sector have long been recognised [Hart 1989].
These more recent developments have therefore only compounded the earlier problems of
measurement. The real extent and value of the activities carried out in this sector tend not to be
captured by the official data collection processes. It may then be that the anomalous relationships
being observed are due to the unrecorded benefits being gained from this growing informal sector.
Notwithstanding the growth of this sector all evidence suggest that the value- added, and the
impacts on incomes and production are all quite small. The large majority of the activities or
enterprises are extremely small one-man operations, attrition rates are very high, and revenue levels
are very low [Witter and Kirton 1990; McBain et al 1994]. At the same time, the sector has actually
been contracting – falling from 33% in 1991 to 29% in 1997 [See Table 2]. This is an interesting
development, as this is the same period over which the proportion falling below the poverty line
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Statistics, Development and Human Rights
also declined. The informal sector therefore seems to be an unlikely source of the significant
increases in the consumption levels. The bivariate regression of the poverty ratio on a measure of
the informal sector shows no statistically significant relationship (see Appendix 1).
The data are presented graphically in Figure 1, and there it will be seen that increases in
informal sector activity are associated with increased poverty levels. The reason for this may be that
as poverty levels increase, more individuals turn to these kinds of activities in search of some means
of economic survival.
5.2 The Remittance Economy
Remittances from Jamaicans abroad can be regarded as the main or only source of the higher
consumption levels. Very high levels of migration – external, internal and circulatory – have been
traditional and longstanding features of the Jamaican society and culture. Since the emancipation of
slavery, Jamaicans have moved in large numbers to Panama and other countries in Central America,
Cuba, the United Kingdom and most recently to the United States and Canada [Conway, 19992000]. Invariably the migratory patterns have been dominated by the search for economic
opportunity. Periods of economic decline and stagnation have usually been associated with sharp
increases in emigration. It has been estimated that net migration from the Caribbean region during
the period 1950 -1990 amounted to 5.6 million – representing some 16% of the region’s population
in 1990. Of this 1.7 million occurred in the 1970s – a time of serious economic difficulty. Jamaica,
Puerto Rico, and Haiti normally account for the majority of the emigrating population. In Jamaica
alone, net migration over the period was just under one million [ECLAC, 1998].
These high levels of emigration have been associated with substantial remittance flows – in
cash, as well as in kind. Monies come in to purchase property for retirement, cash and consumer
goods are sent to support families left behind, and funds may be used as capital in new and/or
existing business ventures [ECLAC 1998; Chevannes and Ricketts 1997]. In Table 2 the volume of
documented transfers is shown.
They are not as large as might have been expected given the large net migration figures; this
is probably because the official figures are almost entirely based on remittances from farm and hotel
workers who participate in government-sponsored programmes. Both the quantum and rate of
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Statistics, Development and Human Rights
growth are nonetheless striking – especially when compared with the value of other segments of the
economic system. Over the 1990-97 period, these transfers leapt from US $130.8m to US $594.7m,
and at the present time remittances account for 10% of GDP. [IMF Balance of Payments Yearbook,
1998]. However, since this does not include the amounts transferred by private and informal (and
perhaps also illegal) means, it may be assumed that these figures represent only a small fraction of
that actually being transferred.
Remittances could be expected to contribute to improved levels of economic and social wellbeing through two routes: either as direct support for higher consumption levels; and/or because of
the improved incomes and earnings that have been generated from the investment of these funds in
productive activities.
Regression analysis shows that there is indeed a significant relationship between remittance
flows and changing consumption levels. This is graphically shown in Figure 2.
In the next section the possible impacts of increased resources that may be coming from
remittances on three areas deemed critical for social and economic development – viz health,
education and productive expansion will be examined.
6. Improved Consumption Levels and Health.
At first glance health status would appear to have improved. The SLC shows that the
percentages reporting an illness during the reference period fell from 17% in 1989 to 9% in 1998;
all consumption quintiles show significant declines in reported illnesses. However, data from the
same surveys suggest that more often than not, the poor enjoy a better health status than the rich.
These data are presented in Table 3.
Table 3 – percentage reporting illness in 4 week reference period -by quintile status – 1990-98
YEAR
Quintile
1989
1990
1991
1992
1993
1994
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1995
1996
1997
1998
Statistics, Development and Human Rights
Poorest
2
3
4
5
14.9
17.1
17.1
17.9
17.1
17.3
16.0
16.3
22.1
19.8
12.1
14.4
14.1
11.7
16.0
10.1
9.8
11.0
10.8
11.4
12.1
12.8
12.5
10.4
11.3
13.5
13.6
13.9
11.3
12.2
10.4
10.5
7.5
10.1
10.7
9.6
11.0
10.2
10.6
12.2
11.1
10.0
8.7
10.3
8.5
8.9
9,1
8.6
8.2
9.2
Source: Jamaica Survey of Living Conditions, 1989-1998. Planning Institute of Jamaica.
Not only is this last bit of information unusual given the abundance of evidence that a close
and inverse relationship between socio-economic status and health is probably universal [Marmot et
al 1997; Wilkinson, 1996; Drever & Whitehead 1997; Acheson 1999], but it is also questionable
since other available aggregate data from public facilities suggest rising rates for chronic noncommunicable diseases, and for communicable diseases such as acute respiratory tract infections,
gastroenteritis and HIV/STDs. The morbidity and mortality rates resulting from violence and injury
have also increased exponentially to the point where it is currently the leading cause of reported
morbidity [Economic and Social Surveys of Jamaica].
A more likely explanation of the falling illness rates reported may well lie in changing
perceptions and definitions of illness. Recent qualitative data [Le Franc and Lalta, in progress] show
that straitened economic circumstances among the poor tend to lead to delays in the search for care,
and redefinition of the meaning and urgency of “being ill”. Support for this line of argument may be
found in the fall-off (over the 1992-98 period) in the proportion of those seeking primary care:
from 70% to 60% in the poorest quintile, as compared with 80% to 73% in the top quintile. In fact,
the poor have consistently been less likely to seek care, and have more mean days of illness. Most
striking however is that the poor tend to have higher hospitalisation rates, and while those rates
have remained fairly constant for the richest group, they have significantly increased among the
poor. The data are presented in Table 4.
Table 4 – health seeking behaviours, hospital use and illness burden – 1989 -1998
Year
% Seeking Care
1992
1993
1994
1995
1996
1997
1998
Q1
35
39
44
54
53
48
58
Q5
60
60
63
58
63
65
65
% Seeking
Primary care
Q1
Q5
70
80
47
70
73
83
72
81
72
84
66
74
60
73
Hospitalisation
Rate (%)a
Q1
Q5
4
4
2
4
13
3
8
4
3
5
9
7
10
6
Mean Days of
Illness
Q1
Q5
12
10
12
10
12
9
11
10
10
11
13
8
12
9
a) Expressed as percentage of those reporting an illness
Source: Jamaica Surveys of Living Conditions. 1992-1998
Theodore [1997] has used the SLC data as well as other hospital data to assist his analysis of
the impact of the introduction of user charges, and the increasing use of private health facilities that
has followed on the deterioration of the public ones. He arrived at similar conclusions: “The poor
have found it prohibitively difficult to access health care over the period….severity of illness has
increased, and a disproportionate share of the increase is borne by persons belonging to the two
poorest quintiles…. The highest levels of hospitalisation [also] occurred among persons belonging
to the first two quintiles” (p. 21).
7. Improved Consumption Levels and Education
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Statistics, Development and Human Rights
Doubts may similarly be raised about the extent to which the apparent improvement in
consumption levels has benefited education and human capital development. Here again the picture
would at first appear rosy: school enrollment figures have increased and are now well in excess of
95% at primary and secondary levels. But a closer and more detailed examination of other trends is
called for. First, there is now a fair amount of evidence that the real problem in the education
system is the quality rather than the quantity of the educational product offered [Miller 1999; Craig
1996; McIntyre 1990]. Second, the SLC data have also shown that
•
•
•
more than one-quarter of the students were absent for more than one-quarter of the
reference period (20 days). In some regions this figure was as high as 40%; and
Not only is “money problems” the main reason given ( by two-thirds of those responding)
for non-attendance, but the proportion giving this reason rose by 28% over the 1978-98
period alone. In 1990 those giving this reason stood at 18%.
Th percentage share of education in per capita consumption (constant prices) actually fell
between 1990 and 1997, and in 1998 it was virtually the same as that in 1990.
8. The Expenditure of Remittances: Who or what benefits?
The central question remains: where are the inflows from remittances being expended? Given
the declining economy, the declining numbers in the informal sector, and the unchanging
unemployment levels, it seems reasonable to conclude that productive growth has not been a
significant consequence. The limited contributions to economic growth and development may also
be deduced from the recent findings by Chevannes and Ricketts that contributions to start-up
business capital from this source seldom exceed US$3,000. Although expenditures on imports have
grown from US $1,856.9m in 1989 to US $2,996.9m in 1998 (an average annual rate of 5.4%) over
the period, this is smaller than might be anticipated if this were where the monies were being spent.
Finally, the preceding examination of the situation in the health and educational sectors indicate that
these do not appear to be major beneficiaries either.
This last conclusion is further supported by an examination of the changing expenditure
patterns. The data are presented in Table 5 below. It will be seen that ‘Transportation’, and
‘Housing and Household Operational Expenses’ have been the areas in which there have been the
greatest increases. Some of this could be explained by sharply rising transportation, housing, and
utility costs, but a real question would have to be: to what extent might the higher levels of
expenditure on housing represent a real rise in housing conditions and the material standard of
living?
Table 5 - percentage change in group expenditure in 1998 compared with 1990 at constant 1990
prices
% CHANGE
+17.1
-15.6
-116.3
-16.6
-2.9
+42.7
-17.2
+133.1
GROUP
Food and Beverages
Fuel and Household Supplies
Housing and Household Operational Expenses
Durable Goods
Personal Care
Health Care
Clothing and Footwear
Transportation
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Statistics, Development and Human Rights
Education and recreation
Miscellaneous consumption
All groups
+57.8
-33.3
+24.0
Source: Jamaica Survey of Living Conditions, 1998
It is difficult to answer this question as the aggregate consumption data continue to generate
contradictory and anomalous, or at least inconclusive, findings. Home ownership and exclusive
access to toilet and kitchen facilities may be used as one set of indicators of improvements in
material living conditions. Between 1990-1998 the proportion of the population owning their own
homes fell from 67% to 59%; among the poor the fall was from 83% to 74%. Further, the
proportion of the population with exclusive use of kitchen facilities actually fell from 84% to 82%
between 1992-1998. A more detailed examination of the changes within the quintiles shows that
whereas in the top quintile, the situation remained constant for both types of facility, in the 2
poorest quintiles there were some fluctuations, but over the same period, the trend was generally
downward:
•
•
In Quintiles one and two, exclusive use of kitchen facilities fell from 88% to 80%, and
from 90% to 82%, respectively.
In Quintiles 1 an 2, exclusive access to toilet facilities fell from 84% to 78% and 85% to
78%, respectively.
At the same time, those living “rent-free” rose from 10% to 14% - with most of the increase
occurring in the bottom two quintiles. The increase in the percentage share of the commodity group
– Housing – could perhaps instead be related to the increase in single and two-member households
especially in the principal urban area and in the highest quintile, and the sharp increase in rented
accommodation - also in the highest quintile. An accurate picture of whether or not there are
qualitative improvements in the housing conditions of the poor really requires more detailed
analysis within the quintiles and within the households. Even more helpful would be longitudinal
analyses of panels of individuals so as to determine sources of income, and actual patterns of
expenditure of that income over time.
The problem of trying to relate the flow of remittances to changing consumption levels is
further compounded by the fact that most of the recorded remittances are in fact produced by a
relatively small number of persons. Little is currently known about how the inflows from this group
actually ripple through the economic system; but it is clearly important to be able to determine the
extent to which their expenditure habits account for the widespread consumption increases being
reported.
This then speaks to the one of the critical problems with near total dependence on
consumption data in open, migratory economies for mapping real welfare levels and changes
therein. In so far as the sources of consumption expenditures are unclear, and the precise utilisation
patterns are not delineated, and there is no relationship with employment changes or investment
activities little can be said about the sustainable impact on social and human development. Quite
apart from possible changes in the migration flows, the characteristics of the migratory pattern can
change with immediate impact on the likely level of remittances. For example, where individuals
migrate leaving families behind the remittance flows are likely to be different from those when
whole families migrate. A discussion of this is beyond the scope of this paper, but it helps to draw
attention to the possibly ethereal nature of increased consumption levels being recorded. Finally,
unless more is known about intra-household resource allocations and use, it is difficult to
understand the relationships between household income and household consumption and how this
might affect levels of individual poverty, and changes therein.
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Statistics, Development and Human Rights
In Jamaica there have been a number of safety net and poverty alleviation programmes. It
may be that some of the observed improvements could be due to successful the targeting of these
programmes. However, recent assessments of poverty progammes in the Caribbean [Caribbean
Development Bank, 2000] which show declines in real per capita social expenditure, and that the
quantum and reach of prograrmme benefits are in fact very small, cast doubt on any such
conclusion. If policy formulation and the design of appropriate interventions are to be accurately
guided, then a better understanding of those factors that properly measure human development and
links it with changes in economic development and well-being is needed.
9. Conclusion
The fundamental question that has driven the discussion in this paper has turned on the extent
to which purely consumption-based poverty measures poverty really measure human development.
This question is especially significant in light of the more inclusive definitions of human and social
development that are currently being utilised in academic, policy-making and developmentassistance circles. It is a definition that emphases capacity and capability building, and which
recognises the need to promote a synergistic relationship between social and economic development
where each requires the other.
The use of consumption-based measures and indicators is understandable given the
difficulties in obtaining accurate data on incomes – especially in countries where informal activities
abound, and where occupational multiplicity has a long and well-established place in the social and
economic structures. It may also be acceptable where the linkages between earnings, labour market
structures and behaviours, and consumption pattern are fairly clear, predictable, and reasonably well
understood.
In open, migratory societies such as Jamaica these conditions may not hold, and when
contradictory and anomalous relationship are evident, it becomes necessary to look more closely at
the usefulness of the measures being utilised, and at what additional information and data might be
needed if those measures are to be productive. The analyses in this paper have shown that there are
no relationships between changes in consumption levels, and increases in employment; and there is
even a negative relationship between economic growth and the poverty levels. The size and growth
of the informal sector also appear to have a negative impact on changes in the consumption levels.
On the other hand, the critical and significant factors are the rate of inflation, and remittances from
workers and relatives.
At the same time more detailed analysis of the available data suggests that the increased levels
of consumption are not being translated into improvements in health, education or economic
productive activities. Not only then is there a questionable linkage between these increased
consumption levels and human development, but doubt must also be cast on the sustainability of
these apparently improved levels.
More and other kinds of information is clearly required. Micro-level analyses of intrahousehold and intra-quintile consumption and resource allocation patterns, how these change over
time, and how they respond to increased monetary or other inputs are all necessary. In other words,
until and unless there is a better grasp of the precise ways in which, and pathways through which,
increased consumption levels are being supported, and of those factors that stand in the way of their
translation into productive activity, it can be misleading to depend on consumption-based data as
the primary indicator of improved levels of human development.
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Statistics, Development and Human Rights
Appendix 1
Correlation Matrix
Growth
Inflation
Unemployme
nt
Informal
Sector
Remittances
Poverty
Growth
Inflation
Unemployment
Informal
Sector
0.22
0.68
-0.52
1.00
0.16
-0.66
1.00
-0.44
1.00
0.71
0.66
0.70
-0.76
1.00
-0.63
-0.72
-0.56
0.59
-0.95
Remittances
1.00
Bivariate Regression Equations
Poverty Ratio –dependent variable
Constant
Growth
Inflation
Unemployme
nt
Informal
Sector
Remittances
R2
F
Period
1
26.17 (9.23)
0.90 (0.95)
2
20.18 (5.86)
3
37.13 (0.60)
4
5
-35.42 (-1.00) 36.21 (7.92)
0.25 (2.56)*
-0.61 (-0.16)
2.09 (1.82)
0.10
0.91
1989-98
0.45
6.56
1989-98
0.003
0.025
1989-98
Notes (1) figures in brackets represent t-statistic
(2) * indicates statistical significance at the 5% level
** indicates statistical significance at the 10% level
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0.32
3.31
1989-97
-0.02 (-1.97)**
0.39
3.86
1990-97
Statistics, Development and Human Rights
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