'Crime pays'

Jamaican armed forces on the streets of kingston.

KINGSTON — Lottery scam inflows may be Jamaica’s third largest foreign exchange earner. Income from defrauding persons overseas only follows remittances and tourism earnings, if estimates of US$300 million a year are true.

The fraudulent activity was listed among the highest threats to Jamaica in the national security policy published by the Cabinet for public comment last Friday.

But the cost of crime and corruption, which includes higher cost of doing business, capital flight and loss of foreign investment, could have wiped out as much as 90 per cent of what the economy could have been today.

“The economy is now, at best, one-third of the size it should have been,” said the report prepared by University of the West Indies Professor Anthony Clayton. “It may have shrivelled to just 10 per cent of the size that it should have been.”

In calculating the impact of crime in Jamaica, economists have attempted to isolate the cost centres.

In 2003, UWI Professor Al Francis (and others) estimated that health costs associated with crime were 0.4 per cent of GDP, lost production was 0.2 per cent, and expenditure on security was 3.1 per cent, giving a total of 3.7 per cent of GDP.

“The allowance for security included defence, justice, correctional services and the police,” said the report of Francis’s estimate. “This is, of course, an over-estimate, as expenditure on security would not be zero even if Jamaica had a low crime rate.”

On the other hand, that estimate didn’t include non-monetary costs, such as long-term social damage caused by the cycle of violence, where children who are profoundly traumatised by violence are more likely to be violent as adults.

It also excluded indirect impacts of crime on businesses, which include undeclared losses to extortion, higher spending on security, and reduced access to borrowing, more expensive insurance and more costly capital, resulting from higher risk. (Observer)

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