Effects Of Informality In Jamaica

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Chapter one
1.0 Introduction
1.1 Background of the study
Jamaica is among the three largest islands in the Caribbean with an area of 11,420 square kilometers. Its population size is estimated at 2.6 million but the demographic rate has shown a decline for the past decade and was at 0.6% in 2001. More than 40% of the island’s population lives in rural areas, which might decrease in time, if the present rate of urbanization continues. The majority (90%) of Jamaicans is of African descent with the remaining 10% spread unevenly across ethnic groups such as Indian, Chinese, Syrian and Caucasian.
Having once been a colony of Britain Jamaica’s political and constitutional forms show much affinity to Westminster-Whitehall model of government but the
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The review of the relevant literature is guided by the key research questions, which are:
• What is the current state of informality in Kingston, Jamaica?
• What are the factors determining informality and demolition of Downtown, Kingston in Jamaica?
• What are the impacts of elimination informality in Downtown, Kingston, Jamaica?
• What are the approaches that can be used in eliminating informality and demolition of Downtown, Kingston, Jamaica?
2.2 Informality in Kingston, Jamaica.
A conservative estimate is that 41 per cent of GDP is generated by Jamaica’s informal sector, and businesses span the micro, small, medium and even large firms that do not conform to regulations and in instances evade taxes. Informality in doing business is considered by many to be the norm in Jamaica. It has been a process of finding ways not only to identify the informal players, but also to measure their output and to regulate them where necessary. This brings about challenges. Challenges which not only we as Jamaicans face, but also several of our Caribbean colleagues face these issues as well because of a similar type of economy and history as that of
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On the other hand, whereas for informal employment, less than 2 per cent of males and 2-3 per cent of females had a degree, the corresponding data for formal employment was about 22 per cent of males and 35 per cent of females.
2.3.3 Other features of informality include the following:
E) The use of cash as the most common medium of exchange, or bartering or swapping goods or services. Receiving payment that is not traceable, and income is not reported because of tax implications.
F) Labor laws, health conditions, safety standards, and location of activities according to zoning laws are all largely ignored.
G) Self-financed and/or under-financed. Experience difficulties accessing credit.
These features invariably provide the informal businesspersons with a competitive advantage arising from paying lower wages, non-compliance with tax requirements including avoidance of customs duties and statutory payments and non-compliance with established regulations and standards. Several factors have been advanced to explain the existence and pervasiveness of informal economic activity. In 2003 a study of the “informal economy” in Jamaica, cited the demand for informal services, including illegal goods and services, by tourists as well as Jamaican households. Specific reference was made to the demand for marijuana and other illegal substances,

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