Economy Of Jamaica The Jamaican economy is an ailing economy and a prime example of an impoverished nation with an inadequate manufacturing infrastructure, limited nation and agricultural assets and declining foreign investments. With a decline in foreign investments Lee Bailey, President of Cruise Shipping Association who was a guest on the television program, A Nation In Crisis on November 2nd, 2000 at 8:30 pm live on T.V. J stated that with no water, no roads no infrastructure why would foreigners want invest? Why would they want to build a home with these conditions? Mark Kerr Jarrett, President of Montego Bay Camber of Commerce, another guest on A Nation In Crisis stated that law and order must be returned to the streets in order to sell the nation to foreign and local investors. He also said people must reinvest to increase the income of the nation. Jamaica has experience a deteriorating economy along with falling living standards for over 15 years as a result of a heavy debt, a devalued currency and societal malaise.
The government is still repaying monies they have borrowed from international leading agencies such as the international Monetary Fund (IMF) and the World Bank. Payment of 3.6 billion in foreign debt alone consumes 49% of the total budget. A series of floods and hurricanes that ravaged the country exposed the governments poor emergency relief preparation forcing authorities to solicit extensive loans from abroad. These debt burdens are an amount of money borrowed together with repayments of interest. Listed below are reasons for an ailing economy: a.) Inflation b.) Balance of payments deficit c.) Balance of trade deficit d.) Government measures, stop-go policies related to change in government e.) Heavy dependence on imports f.) Debt burden on government g.) Heavy unemployment h.) Low levels of exports i.) Lack of policy cohesion j.) Lack of labor mobility (Abiraj, 387) Some of the reasons why countries have to borrow money from international agencies are as follows: Mismanagement of the economy Poverty An inability to live within the means available in a country Lack of self-reliance or a high dependence on others who often help out by providing loans.
High level of unemployment- this causes a low level of incomes from taxation and therefore not enough money is added to government. Lack of exports to earn sufficient foreign incomes so that borrowing becomes necessary Low levels of domestic production so that not enough income is generated to propel the economy on a self-sustained path of economic development (Abiraj 391). The major stress on Jamaicas stability can be attributed to the governments inability to sufficiently modernize and expand the economy. Key sectors in this island economy are bauxite and tourism, which account for more than half of the islands exports. Although tourism accounts for 45% of Jamaica foreign revenue, the many discounts that tourism resorts must now offer to attract a clientele limit the earning that this potentially lucrative but aging industry can generate. Apart from the many discounts limiting the potential earnings of tourism it was stated by Gordon Butch Stewart, CEO of Sandals Resort International and Air Jamaica, who was also a guest on the phone on the television programed A Nation in Crisis that many tourist are frightened by the aggressiveness of many vendors and remain on the cruise ships that stop Jamaica.
He also said that compared to other Caribbean Islands there arent as much economic activities as there should be. The markets intended for tourists are not so enticing in appearance. It is very unlikely for tourist to patronize areas that are trashy and mash up. Furthermore, cruise ship patronage is declining due to higher taxes and increasing competition from other Caribbean island. Despite the steady production of bauxite, a valuable mineral found in abundance on the island, high export taxes have impeded the industry growth.
A worldwide downturn in international prices or man mineral extractive has further stymied overall mining growth and new investments. Agricultural production now depend almost entirely on domestic consumption due to the sectors inability to compete internationally, especially in the production and sale of bananas, where firms like Chiquita dominate the world market due to economies of scale. Jamaica, once a haven for foreign investment, has experienced a continued slump since the 1980’s. High taxes on foreign capital have managed to drive away many corporations, thereby limiting the capital inflows necessary for stable economic growth and development. Economics.