Your SlideShare is downloading. ×
  • Like
Readiness of Jamaica as a Location for IT Investments - FullReport
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Now you can save presentations on your phone or tablet

Available for both IPhone and Android

Text the download link to your phone

Standard text messaging rates apply

Readiness of Jamaica as a Location for IT Investments - FullReport

  • 97 views
Published

Diagnostic study on the Location Readiness Index for Jamaica using the McKensey/WorldBank LRI Methodology

Diagnostic study on the Location Readiness Index for Jamaica using the McKensey/WorldBank LRI Methodology

Published in Business , Travel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
97
On SlideShare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
4
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Location Readiness IndexJamaicaABSTRACTDiagnostic study of the IT-based services industry in Jamaica conductedleveraging the Location Readiness Index (LRI)Developed in collaboration with
  • 2. LOCATION READINESS INDEX 2LOCATION READINESS INDEX................................................................................................... 3I. TALENT POOL INDEX.................................................................................................................... 6II. COST INDEX ............................................................................................................................. 9III. QUALITY OF INFRASTRUCTURE INDEX ......................................................................................... 11IV. RISK PROFILE INDEX................................................................................................................ 13V. ENVIRONMENT INDEX .............................................................................................................. 15VI. MATURITY OF INDUSTRY INDEX................................................................................................. 18
  • 3. LOCATION READINESS INDEX 3Location Readiness IndexA quick diagnostic of the IT-based services industry in Jamaica has been conducted leveragingthe Location Readiness Index (LRI) - a modeling tool developed by the World Bank inpartnership with McKinsey & Co. designed to help countries identify existing gaps andweaknesses and allow policy makers to prioritize the areas that are more important forincreasing the overall location attractiveness of a country. The figure below presents the sixcriteria evaluated for the LRI assessment, which are: (i) Talent Pool Availability; (ii) CostStructure; (iii) Quality of Infrastructure; (iv) Key Risks; (v) Overall Environment; and (vi) SectorMaturity.Figure: Location Readiness Index (LRI) frameworkTalentPoolMarketMaturityEnvironmentQualityofInfrastructureCostRiskProfile
  • 4. LOCATION READINESS INDEX 4The LRI scores are in the range of 1 to 5 and the figure below shows their interpretation:Figure: Interpreting LRI scoresThe LRI assessment was conducted for Jamaica in comparison with Kenya – an emergingindustry leader in Africa region, and Armenia – an emerging IT/ITES leader in Europe andCentral Asia region, as a way to benchmark Jamaica’s position in terms of readiness as anoutsourcing destination for IT-enabled services. United States of America were considered asthe main potential outsourcing market for Jamaica.This preliminary analysis shows that Jamaica is a relatively competitive destination for aninvestor aiming to develop an off shoring IT-enabled industry. Jamaica shows relativecompetitiveness in terms of generalist talent pool, costs, and industry maturity, however,there is still a critical need to establish a competitive knowledge and IT processing talentpool, improve the quality of infrastructure and mitigate country risks, and further developthe business environment in order to become a truly hospitable offshore destination forIT/ITES.The figure below presents a comparison snapshot of the LRI scores along each of its sixdimensions. Countries compared are: Jamaica, Kenya and Armenia.1Extremelyfavorable•Country is readyto attractIT/ITESindustries on allpoints2Favorable•Most of thecriteria arefavorable•Low level ofadditionalpreparation isrequired toattract theIT/ITESindustries•Minimal policyintervention isrequired by thegovernment•Investors will beready to invest•Focus is onactive outreachprograms3Actionneeded•With a clearroadmap,country will beattractive overthe next 1–2years•Significantgovernmentintervention isrequired tochange policiesand attract theIT/ITESindustries.4Significantactionneeded•Either talent isnot available orcost is notfavorable.•Multiple otherareas are notfavorable•Significantactions arerequired toattract theindustry5Not ready•All areas needsignificantimprovement:•No costarbitrage•Talent notavailable• Perception ofhigh-riskcountry•No availabilityof class Ainfrastructure•Unreliabletelecommunications andcommunication networks
  • 5. LOCATION READINESS INDEX 5Figure: Jamaica comparison charts2.42.11.83.03.23.52.23.23.91.44.23.83.94.23.1 4.82.53.02.8LocationReadiness IndexTalentCostInfrastructureRiskEnvironmentIndustryMaturityGeneralists - DataJamica LRI=2.32 Kenya LRI=3.18 Armenia LRI=3.122.41.92.03.03.23.52.23.34.41.44.23.83.94.23.2 4.91.92.53.02.8LocationReadiness IndexTalentCostInfrastructureRiskEnvironmentIndustryMaturityGeneralists - VoiceJamica LRI=2.33 Kenya LRI=3.32 Armenia LRI=3.183.42.53.03.23.52.23.54.81.54.23.83.94.23.24.92.02.53.02.8LocationReadiness IndexTalentCostInfrastructureRiskEnvironmentIndustryMaturityKnowledge ProcessJamica LRI=3.33 Kenya LRI=3.48 Armenia LRI=3.243.55.02.73.03.23.52.23.44.61.44.23.83.94.23.21.82.53.02.8LocationReadiness IndexTalentCostInfrastructureRiskEnvironmentIndustryMaturityIT ServicesJamica LRI=3.46 Kenya LRI=3.41 Armenia LRI=3.18
  • 6. LOCATION READINESS INDEX 6I. Talent pool IndexTogether with the existence of a competitive telecommunications market, the availability of askilled talent pool is the single most important factor in the growth of an IT-based servicesindustry. The talent pool assessment in the LRI diagnostic calculates the (i) Suitability, (ii)Willingness, (iii) Accessibility, and (iv) Trainability of university graduates in subjects that maybe of interest to companies operating in the IT/ITES industry. Calculations were carried out foreach of the four traditional IT/ITES business lines classified as following: Data Processing, VoiceProcessing, Knowledge Processing, and IT services.Based on the annual statistics from the Ministry of Education, Jamaica produces around 97.6thousand high school and tertiary graduates who may be employed in the IT/ITES industry eachyear. Jamaica ranks the 85thfor the Higher Education and Training pillar of the 2011-2012Global Competitiveness Rankings published by the World Economic Forum. With a score of 3.9out of 7, Jamaica scores higher than Kenya (94th) but lower than Armenia (76th).Nonetheless, the assessment suggests that compared with Kenya (3.89) and Armenia (4.79),Jamaica (2.70) shows a relative high proportion of graduates suitable for data processing. This islargely due to a relatively high number of high school and university graduates in a generaldiscipline (around 90 thousand). Additionally, there is a high number of English speaking workforce, as the official language in Jamaica is English. The talent pool index for voice services isassessed at 1.9, which is much higher compared to Kenya (4.36) and Armenia (4.88) for thegeneralists-voice group.However, Knowledge Processing (4.78) and IT Services (4.95) are two groups where Jamaica isscoring very poorly in terms of talent pool readiness. Jamaican tertiary institutions producearound 6 thousand graduates with degrees in business management and accounting that are ofinterest to the Knowledge Processing sector. To this group were added another 4 hundredgraduates with degrees in arts and media that are of interest to creative industry as part of theKnowledge Processing sector. Nonetheless, even with relatively high percentage for suitability,accessibility, and willingness, the ready to hire population for Knowledge and IT groups are verysmall and score extremely poorly.The assessment suggests that out of 97.6 thousand graduates with potential to be employed inthe IT/ITES sectors only 76 thousand are actually ready to be hired, and an additional 11thousand could become suitable provided that they get a training of maximum six-month. Thefigure below shows how the ready to hire population was calculated for Jamaica.
  • 7. LOCATION READINESS INDEX 7Figure: Jamaica’s Ready-to-Hire PopulationGraduatecategoryTotal graduates(thousand)Suitability(percent)Accessibility(percent)Willingness(percent)Ready to hire(thousand)Trainability(percent)Potential TalentPool(thousand)90 35.3 40.690 37.5 42.86.4 2.6 2.81.2 0.6 0.6TOTAL76 87The Suitability, Accessibility, Willingness, and Trainability estimates are based on the insightsfrom a focus group comprised of the JCS Governing Council members. The group integrated 12experts with experiences in varying segments of the local ICT sectors. Participants used theiron-the-ground knowledge of the industry to arrive at consensus on each of these estimates.Among their considerations were listed:a) The level of educational attainment of the profile of potential participants in the fourbroad categories;b) The physical and transportation environment and its impact on proximity for access;c) The source of potential catchment for talent for each of the four categories;d) The actual experiences with current call center operations;e) Their historical knowledge of data entry modes;f) In the absence of actual local implementations of KPO and IT Services, generatingprojections as to what would obtain within those domains.Estimates for call-centers (General-Voice) category were independently validated in parallelwith the HEART/NTA agency that conducted some level of analysis in this sector for a limitedgeographic region last year.GeneralistsData 70%80 70 20GeneralistsVoice 70 85 70 20KnowledgeProcessors 80 80 65 15ITSpecialists 85 85 65 10
  • 8. LOCATION READINESS INDEX 8The table below compares Jamaica’s LRI scores for the talent pool size and quality with those ofKenya and Armenia in four different business lines.General - Data General - Voice Knowledge Process IT ServicesJamaica Kenya Armenia Jamaica Kenya Armenia Jamaica Kenya Armenia Jamaica Kenya ArmeniaI. Talent Pool Index 2.70 3.89 4.79 1.90 4.36 4.88 4.78 4.79 4.90 4.95 4.61 4.96Ready to be hired / Willingness 2.2 4.0 4.8 2.0 4.5 4.9 4.8 4.8 4.9 5.0 4.6 5.0Potential / Trainability 1.7 3.7 4.7 1.6 4.0 4.8 4.8 4.7 4.9 5.0 4.6 5.0
  • 9. LOCATION READINESS INDEX 9II. Cost IndexThe cost index calculation of the LRI is made up of two main components. The first component,Hourly Cost of Doing Business, takes into account the hourly cost per full time worker doing aparticular job required to keep an IT-based services firm running. The second componentmeasures the incentives offered by the government authorities to companies operating in theIT/ITES industry. The figure below shows Jamaica’s cost of operations expressed in Full TimeEquivalent (FTE).Figure: Jamaica Cost of OperationsUS$/FTE/HourGeneralists – Data Generalists – Voice Knowledge Process IT ServicesLabor 7.57 10.06 15.09 17.80Facilities 2.82 2.69 3.38 3.64IT/Telecommunications 0.59 0.58 0.52 0.59SG&A 1.22 1.48 2.11 2.45TOTAL $12.2 $14.8$21.1 $24.5As detailed in the figure above, the cost of operations has been broken into four categories:Labor, Facilities, IT/Telecommunications, and Selling, General, and Administrative (SG&A)expenses. Labor costs include not only the salaries for direct employees, but also salaries formanagement and support staff. Note that the comparative low cost of employment forengineers in the IT sector is due to their low support and management expenses.The cost analysis suggests that Jamaica has a competitive cost base, largely due to relatively lowwages paid. According to the Jamaica Employers Federation’s 2011 Annual Salary and BenefitsSurvey of Technical, Professional, Supervisory and Clerical Employees, Volume II and salary datafrom JAMPRO (Jamaica Promotions Corporation), the salary range for fresh graduates who areof interest to the industry is around $520 up to $1,900 per month. Salaries for specialistsemployed in the IT services sector being at the highest end. Mid-managers are reported to earna monthly salary between $1,000 and $3,265.
  • 10. LOCATION READINESS INDEX 10For all the business lines the average labor cost in Jamaica is higher compared to Kenya (GD-$2.91, GV-$4.3, KPO-$5.7, IT-$4.6) and Armenia (GD-$5.6, GV-$6.7, KPO-$8.1, IT-$4.7).However, the average rental price of $20 sqft/month for the highest-class office space is similarto Kenya’s ($20.16) and lower than Armenia’s ($23).FLOW, a major Jamaican broadband operator, is charging $490 per month for leased lines onisland. This price is similar to what broadband operators are offering in Armenia, but nearly oneninth the $4,500/month price in Kenya.According to JAMPRO, the government of Jamaica is supporting the industry through a numberof free trade zones such as IT Parks, as well as single entity free trade zones for individualcompanies, which does not necessarily have to be located in an IT Park. These zones offer largetax exemptions, no tariffs, reduced or no VAT, and tax benefits for expatriates for unlimitedtime. However, the government should direct its efforts even more on incentives andinfrastructure support for business operating in this sphere, because poor government supportcan become a significant bottleneck in attracting foreign investments.The table below compares Jamaica’s LRI scores on the cost dimension for Fully Loaded Cost andIncentives with those of Kenya and Armenia for four different business lines.General - Data General - Voice Knowledge Process IT ServicesJamaica Kenya Armenia Jamaica Kenya Armenia Jamaica Kenya Armenia Jamaica Kenya ArmeniaII. Cost Index 1.79 1.38 1.77 1.99 1.38 1.86 2.46 1.46 2.04 2.71 1.44 1.78Fully loadedcost/FTE/hour1.2 1.0 1.0 1.5 1.0 1.1 2.1 1.1 1.4 2.4 1.1 1.0Incentives 3.5 2.5 4.0 3.5 2.5 4.0 3.5 2.5 4.0 3.5 2.5 4.0
  • 11. LOCATION READINESS INDEX 11III. Quality of Infrastructure IndexThe quality of infrastructure index was measured along four different categories, collecting atotal of nine indicators to analyze the availability, quality and reliability of Jamaica’stelecommunication, real estate, power supply, and transportation infrastructure.The LRI analysis suggests that the quality of infrastructure in Jamaica is not at its highest andmeasures for improvement should be taken. The table and graph below show that overallJamaica with a score of 3.03 performs better than Kenya (4.17), but worse than Armenia (2.53).Its national infrastructure has a long way to go to reach the readiness level of USA, which is amodel country for infrastructure development.Jamaica Kenya ArmeniaIII. Quality of Infrastructure Index 3.03 4.17 2.53Quality of telecom and network serviceUptime of end-to-end network 1.0 4.0 1.0Mean Time to Restore (MTTR) 1.0 3.0 2.0EIU connectivity rating 4.0 4.0 4.0Real estateTotal inventory of class A spaces 5.0 5.0 5.0Vacancy rate of the class A/B spaces 2.0 5.0 1.0PowerAnnual average power outage days 5.0 5.0 1.0Annual power demand as % of power supply 1.0 1.0 1.0TransportationTotal road length/per capita 4.0 5.0 5.0Total rail length/per capita 5.0 5.0 5.0Even though Jamaica still suffers from poor overall connectivity, shortage of good office space,large number of power outages, and inadequate transportation infrastructure, Jamaica’snetwork availability during the year (est. 99.99%), mean time to restore (MTTR) the networkafter an incident (est. 2 hours), electricity peak time shortage (est. 0%), and the vacancy rate ofclass A/B spaces (est. 15%) is very favorable.Spatial Innovision Limited reports that the total time in the calendar year that the network isavailable through the internet or the uptime of end-to-end network is estimated at 99.99% andon average it takes only 2 hours to restore the network after an incident. These translate into avery favorable LRI score of 1 in regards to the quality of telecom and network servicesreadiness.However, Jamaica (3.41 out of 10) ranked 85thout of 152 countries on the ICT DevelopmentIndex (IDI) in the 2011 Measuring the Information Society Report published by the International3.04.22.5012345Jamaica Kenya Armenia
  • 12. LOCATION READINESS INDEX 12Telecommunication Union. This gives Jamaica a score of 4 in terms of Connectivity readiness inthe LRI diagnostic. On the IDI Kenya and Armenia with a similar LRI score ranked the 115thandthe 72nd, respectively.Even if Norma Breakenridge former President of the Land Economics and Valuation Society,estimates the total inventory of class A spaces at 3 million sqft (LRI score 5), its vacancy rate of15% translates into a favorable LRI score of 2.With a 0% shortage during peak times, the electricity supply meets the demand, but NationMaster reports that the electricity grid needs to be upgraded to decrease the current numberof 20 days of power outages per year.The transportation infrastructure requires attention, as well. The current road length of 22,121Km (Central Intelligence Agency, The World Fact book) and the total railway of 370 km (JamaicaRailway Corporation) are not ready and require significant action from the government.In terms of infrastructure development, Jamaica scoring 3.7 out of 7 was ranked 79th(out of142 countries) in the latest Global Competitiveness Report (2011-2012) published by the WorldEconomic Forum, which in addition to communications and power supply infrastructure takesinto account the readiness of transport such as quality of roads, railways, ports, and airtransportation.
  • 13. LOCATION READINESS INDEX 133.23.83.2012345Jamaica Kenya ArmeniaIV. Risk Profile IndexThe country risk component of the LRI model measures three areas: (i) regulatory risk -transparency, stability, and predictability of a country’s regulatory environment; (ii) investmentrisk - country’s macroeconomic and currency stability and capital freedom; and (iii) data risk -the adequacy of a country’s intellectual property and data protection.With an overall LRI risk score of 3.22, Jamaica’s overall risk is similar to Armenia’s, but betterthan Kenya’s (3.78).IV. Risk Profile Index 3.22 3.78 3.22Regulatory risksStability of law/regulation 1.0 2.0 1.0Transparency & fairness of legal system 3.0 4.0 3.0Bureaucracy 2.0 5.0 4.0Country investment risksMacroeconomic stability 5.0 5.0 5.0Currency fluctuation 5.0 4.0 3.0Capital freedom 1.0 2.0 1.0Data protectionProtection of intellectual property 4.0 4.0 4.0According to the latest report by the Heritage Foundation, the overall process for starting abusiness has been streamlined, but licensing requirements are burdensome and cost over twicethe level of annual average income in Jamaica. The Jamaica’s economy does very well in termsof Regulatory Efficiency though - the Business Freedom being favorably scored at 84.7 pointsout of 100 in the 2012 Economic Freedom Index (Heritage Foundation).On the Transparency and Fairness of Legal System, Jamaica (3) doesn’t do so well. It scored only4 points out 10 on the 2011 Business Extent of Disclosure Index (World Bank DevelopmentIndicators), which measures the extent to which investors are protected through disclosure ofownership and financial information, and 40 points out of 100 on the Property Rights Index(Heritage Foundation, Economic Freedom Index 2012). The Heritage Foundation reports thatthis low score is partially due to the fact that the judiciary lacks adequate resources, and trialscan be delayed for years. Additionally, bureaucracy can cause significant delays in securing landtitles and inadequate law enforcement and an inefficient legal framework weaken the securityof property rights and the rule of law.
  • 14. LOCATION READINESS INDEX 14With regards to the regulatory risks, Jamaica (2) unlike Kenya (5) and Armenia (4) does well interms of Bureaucracy. The Economist Intelligence Unit evaluated the quality of bureaucracy inJamaica at 0.64 points out of 1 (World Bank, Worldwide Governance Indicators, GovernmentEffectiveness). This score indicates that the bureaucratic climate in Jamaica is much better thanin Kenya (0.0) and Armenia (0.25).On the Macroeconomic Stability, however, Jamaica does very poorly. The World EconomicForum assessed Jamaica’s Macroeconomic Environment at 2.6 points out of 7, which placesJamaica on the last position out of 142 countries ranked in the 2011-2012 GlobalCompetitiveness Report on their Macroeconomic environment.The Heritage Foundation classified Jamaica as a “moderately free economy”. Jamaica’s 2012score on the overall economic freedom is at 65.1 points out of 100, which makes its economythe 58thfreest among 179 world economies and the 12th out of 29 countries in the South andCentral America/Caribbean region. Kenya (57.5) and Armenia (68.8) ranks the 103rdand 39th,respectively. Thus, Jamaica (1) scores extremely favorable on the LRI curve with regards tocapital freedom.The Heritage Foundation denotes that critical development challenges confronting theJamaican economy include corruption and relatively high government spending. Public debt hassurpassed 115 percent of GDP. Reducing the bloated public sector, following through on plansto divest loss-making state-owned enterprises, and enforcing expenditure restraint are allessential in order to meet fiscal targets. Undermining anti-corruption efforts, the judicialsystem remains inefficient and clogged with a significant backlog of cases. Nevertheless,Jamaica has taken steps to enhance regulatory efficiency and better integrate its economy intothe global marketplace. The economy performs relatively well in investment freedom andbusiness freedom. Procedures for conducting a business have become streamlined, and foreigninvestment is welcome in many sectors, although the investment regime needs moretransparency to spur dynamic investment growth.Within the 2010–2011 Global Information Technology Report, the World Economic Forumranked Jamaica’s Intellectual Property Protection on the 78thposition out of 138 countries. The3.2 points out of 7 are translated into an LRI score of 4. In the same report Kenya (2.9) andArmenia (2.7) scored worse along this dimension. The LRI assessment indicates that significantaction is needed to increase data protection in all of the three countries.It is worthwhile to note that the country risk, as like infrastructure quality and businessenvironment is not an absolute barrier to success, given the example of Philippines’ rapidgrowth in this sector despite its high risk ranking.
  • 15. LOCATION READINESS INDEX 15V. Environment IndexThe environment index of the LRI assessment measures the business and living environment ina country and includes four parts: (i) general government support of business, includingbureaucratic burden and corruption; (ii) the overall business environment; (iii) quality of life,including desirability of location, disease burden, and crime; and (iv) accessibility to the mainmarkets where services are expected to be delivered, including flight time and frequency.Jamaica’s LRI scores compared to Kenya’s and Armenia’s along these dimensions are presentedin the table below.Jamaica Kenya ArmeniaV. Environment Index 3.20 3.76 2.87Government supportGovernment policy towards foreigninvestmentNational government policy towards FI1.0 3.0 2.0Labor lawsFlexibility of labor laws for industry4.0 4.0 3.0Bureaucratic burdenEase of bureaucratic burden4.0 4.0 4.0Flexibility of regulationDuration (days) to start a business1.0 2.0 1.0CorruptionLevel of corruption4.0 5.0 5.0Business environmentRating of overall business environment 5.0 5.0 3.0Employment practices 2.0 2.0 2.0Compatibility of business ethics/culture 2.0 4.0 2.0Accessibility (name changed)Travel time 3.0 5.0 4.0Frequency 5.0 5.0 5.0Time difference 1.0 4.0 3.0Living environmentOverall attractiveness of living environmentRating of quality of life 2.0 3.0 3.0HIV/ AIDS- adult prevalence rates 4.0 5.0 4.0Number of murders per capita 5.0 5.0 3.0Number of rapes per capita 5.0 1.0 1.0Jamaica Kenya ArmeniaAs can be seen, Jamaica does not do very well in terms of business and living environment(3.45). Its overall score is better than Kenya’s (3.76), but worse than Armenia’s (2.87). Metricssuch as bureaucracy, corruption, accessibility, quality of life and HIV/AIDS risks, determiningamong others the overall attractiveness of living environment, are hindering Jamaica’sprospects to become a thriving outsourcing market.The World Bank’s 2012 Doing Business report ranks Jamaica the 88th(out of 183 countries) onits easiness to run a business. For comparison, Kenya and Armenia ranks the 109thand 55th,respectively. Recent changes in the procedures and regulation to start a business and protect3.23.93.0012345Jamaica Kenya ArmeniaEnvironment Index
  • 16. LOCATION READINESS INDEX 16the investors, as well as deal insolvency mitigation have moved down the country by threepositions from its previous year ranking (85th).The World Bank reports that it takes at least 7 days to start a business in Jamaica (DoingBusiness 2012 report). This time period is way below the average for countries in Latin Americaand Caribbean (54 days) and OECD countries (12 days). For additional comparison, in Kenya andArmenia it takes 33 and 8 days, respectively, to start a business.The Heritage Foundation remarks that Jamaica officially encourages foreign investment, but theinvestment regime lacks transparency and efficiency, which gives Jamaica a score of 85 points(out of 100) in terms of investment freedom (Economic Freedom Index 2012, Open Markets).Although the labor market remains underdeveloped and relatively constraining, restrictions onwork hours are flexible, which scores Jamaica’s labor freedom at 69.6 points (out of 100)(TheHeritage Foundation).The World Economic Forum ranked Jamaica’s Burden of Government Regulation on the 111thposition out of 138 countries (The Global Information Technology Report 2010–2011). With ascore of 2.7 out of 7, Jamaica does a little worse than Kenya (2.8) and Armenia (3.1).Transparency International’s 2010 Annual Report rated the Jamaica’s Corruption PerceptionsIndex at 3.3 (on a scale of 0 to 10 – very clean). This ranks Jamaica the 87thamong 178 worldcountries and below Kenya (154th) and Armenia (123rd) in terms of corruption spread.With no direct non-stop flights and an average flight time of 7 hours from Los Angeles toKingston, Jamaica becomes geographically remote for the West Coast of the USA. However,Jamaica is easily accessible from the East Cost. There are a few non-stop flights from New York(JFK) which on average take 4 hours to Kingston (KIN).In terms of compatibility of business ethics/culture, which is based on the Geert HofstedeStudy, Jamaican culture is not much different than that of US scoring favorable on the LRI curve(2). The largest differences are along the Individualism versus Collectivism dimension (IDV),which measures the degree of interdependence a society maintains among its members, andalong the Uncertainty Avoidance dimension (UAI), which expresses the degree to whichmembers of a society feel uncomfortable with uncertainty and ambiguity. Jamaica with an IDVscore of 39 points is considered a collectivistic society, versus US-91 points considered one ofthe most individualistic societies. On the UAI dimension, Jamaica scores 13 points versus US-46points, and thus Jamaica is considered to have a low preference for avoiding uncertainty. Themethod applied to determine the Jamaican culture distance index was the Kogut & Singhformulation, which generates a normalized statistic by dividing each of the four physic distancedimensions (i.e. PDI, IDV, MAS, and UAI) by the variances to produce a standardized number.
  • 17. LOCATION READINESS INDEX 17Health and safety also remain as concern for foreign investors. UNICEF estimated the adult HIVprevalence rate for Jamaica at an alarming rate of 1.7%. This rate is lower than in Kenya (6.3%),but much higher than in Armenia (0.1%). The United Nations Surveys on Crime Trends and theOperations of Criminal Justice Systems registered the homicide rate for Jamaica at 52.1 per100,000 people. Additionally, based on the number of police-recorded offences, the UnitedNations Office on Drugs and Crime calculated the rape rate at the national level at 25.5 per100,000 people.International Living, which ranks and rates the world’s best places to live, gave Jamaica in 2011a score of 63 points out of 100. Compared to Kenya (53) and Armenia (55) the quality of life inJamaica is rated higher.
  • 18. LOCATION READINESS INDEX 182.24.22.8012345Jamaica Kenya ArmeniaVI. Maturity of Industry IndexThe maturity of industry index describes how well developed the country’s IT-based servicesindustry already is, how many IT-based businesses are being done, and whether there is anactive business association to coordinate private and public sector activity and promote theindustry to investors. The LRI assessment indicates that Jamaica has already matured a goodIT/ITES industry. The LRI Maturity of Industry scores for Jamaica in comparison with Kenya andArmenia are presented in the table below.VI. Maturity of Industry Index 2.20 4.20 2.80Vendor Capability / Experience in providingoffshoring servicesEmployees in IT/ITES as % of totalemployees in non agri. 3.0 5.0 4.0Presence of Industry association (Yes/ No) 1.0 1.0 1.0IT/ITES GDP as % of total services GDP 1.0 5.0 1.0Based on the estimates form the Labor Market Expert, Spatial Innovision Limited reports that2.5% employees are working in the IT/ITES industry as part of the total employees in non-agriculture labor. This percentage is higher compared to both Kenya (0.59%) and Armenia(1.6%).From the 2011 Statistics on Computer and Related Services and Telecommunications(UNCTAD), Spatial Innovision Limited estimated that IT/ITES GDP represents a very high 6.3% ofJamaica’s total services GDP. In Armenia this percentage constitutes 5.4 and in Kenya it isestimated only at 0.15.