Download Before the arrival of Columbus in 1494 during his second voyage

Jeraurd Richardson
April 25, 2005
Econ 340-02
Term Paper on Jamaica
BACKGROUND:
Before the arrival of Columbus in 1494 during his second voyage, the discovery
of Jamaica was credited to Columbus but the Arawaks settled the land first. But
originally the very first people to come to Jamaica were the Arawaks and they were from
Venezuela. The Arawaks lived in uncomplicated societies based on fishing, hunting, and
small scale development of cassava. Columbus scared the Arawaks away and named it
Jamaica because he overheard one of the natives refer to it as Xaymaca. When Columbus
returned to the island for his second voyage, the Arawaks vanished after 70 to 80 years.
They are thought to have come to Jamaica in two major waves, the first wave was in 650
AD, and the second wave was in 900 AD. They were then joined by the Caribs, who
came from Guiana. While the Arawaks were a peaceful people, the Caribs were
cannibalistic and fierce fighters. Much fighting arose between these two groups.
They settled the area, and made the indigenous people slaves. The main thing
that made the Arawaks deteriorate or made their small economic activities weaken day by
day was new diseases such as smallpox and many more. The Arawaks didn’t have a clue
of what to do about the diseases nor had no antibodies for it. The migration of the
Arawaks destroyed the native population. The majority of the natives passed away after
the Spanish arrived and the ones that didn’t, they were tortured and threatened by
Columbus and his men. When the Spanish occupied the land of Jamaica they were upset
because they found out that there wasn’t any gold on the island so they used it to provide
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support for the discovery of the Americas. After Columbus and in about 1510, the
Spanish Europeans took over Jamaica. The Spanish ruler at the time was Juan de
Esquivel and he treated the Jamaicans worse than Columbus did. The Spanish inhabited
an area in the vicinity of St. Ann’s Bay and molded it into a settlement named New
Seville. The settlement of New Seville was named after the governor. The townspeople
had to relocate because of the region’s climate and marsh conditions. The townspeople
then settled in a present day Spanish Town. They built a beautiful city, with 500 houses
and several churches. Unfortunately, now none of this city remains anymore, it has
rotted away after years of neglect and disuse. Nowadays Jamaica is an independent
country and has been ever since 1962, they gained their full independence within the
British Commonwealth. They went through deteriorating economic conditions in the
1970s, which led to recurring violence and a drop off in tourism.
The elections of 1980 witnessed the democratic socialists voted out of office.
Political violence tarnished elections during the 1990s. Jamaica’s main cash crop is
Ganja or marijuana and its major industry is bauxite mining. Jamaicans rely on tourism
to bring in much needed U.S. dollars. Generally, the Jamaicans are very friendly people
who are willing to have a conversation with you, if you can put up with their thick patois
accents. Young adult Jamaican, particularly musicians are coming to America to create a
better life for themselves. The reason for musician coming for the U.S. is because
Americans tend to pay much more for their music than will Jamaica. Another reason is
because there are better and less expensive schooling that is available.
GEOGRAPHY:
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Jamaica is located in the Caribbean and is an island in the Caribbean Sea, south of
Cuba. Jamaica’s total 10,991 sq km and the land area is 10,831 sq km and the water area
is 160 sq km. Jamaica’s land area is slightly smaller than Connecticut. Jamaica’s climate
is very tropical, it is also hot and humid too. Jamaica’s current environment issues are
heavy rates of deforestation; coastal waters polluted by industrial waste, sewage, and oil
spills; damage to coral reefs; air pollution in Kingston results from vehicle emissions.
DEMOGRAPHICS:
Jamaica’s population is 2,713,130 which is the most current since July 2004. The
percentage ethnic groups that live in Jamaica are black 90.9%, East Indian 1.3%, white
0.2%, Chinese 0.2%, mixed 7.3%, other 0.1%. The percentage of religions that exist in
Jamaica are Protestant 61.3% (Church of God 21.2%, Baptist 8.8%, Anglican 5.5%,
Seventh-Day Adventist 9%, Pentecostal 7.6%, Methodist 2.7%, United Church 2.7%,
Brethren 1.1%, Jehovah's Witness 1.6%, Moravian 1.1%), Roman Catholic 4%, other
including some spiritual cults 34.7%. The languages spoken in Jamaica are English and
patois English.
GOVERNMENT:
The government consists of constitutional parliamentary democracy. The capital
of Jamaica is Kingston, they received their independence on August 6, 1962 from the UK
and they adopted their constitution the same day as well. Jamaica’s legal system is based
on English common law but it has not accepted compulsory ICJ jurisdiction. Jamaica’s
executive branch looks like this, the chief of state is Queen Elizabeth II and she has been
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ever since February 6, 1952. She is represented by Governor General Sir Howard Felix
Cooke and has been since August 1, 1991. The head of government is the Prime Minister
Percival James Patterson and has been ever since March 30, 1992. The cabinet which is
appointed by the governor general on the advice of the prime minister and in elections the
monarch is hereditary; the governor general is appointed by the monarch on the
recommendation of the prime minister; following legislative elections, the leader of the
majority party or the leader of the majority coalition in the House of Representatives is
appointed prime minister by the governor general; the deputy prime minister is
recommended by the prime minister.
ECONOMY:
Jamaica’s economy goes like this, they’re economy is heavily dependent on
services, which now account for 70% of GDP. The country continues to obtain most of
its foreign exchange from tourism, transfer of funds, and bauxite/alumina. The global
economic slowdown happened, particularly after the terrorist attacks in the United States
of America September 11, 2001. Since then they’ve had an underdeveloped economic
growth but the economy bounced back moderately in 2003, with one of the best tourist
seasons on record today.
But the economy still faced serious long-term problems such as high interest
rates; increased foreign competition; a pressured, sometimes sliding, exchange rate; a
sizable merchandise trade deficit; large-scale unemployment; and a growing internal
debt, the result of government bailouts to ailing sectors of the economy. The ratio of debt
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to GDP is close to 150%. Inflation is formerly a bright spot and is expected to remain in
the double digits. Depressed economic conditions have resulted into increased civil
unrest, including gang violence that was heightened by the drug trade. In 2004, the
government of Jamaica faced the difficult prospect of having to achieve fiscal discipline
in order to preserve the debt payments while simultaneously attacking a serious and
growing crime problem that is hindering economic growth in Jamaica.
Jamaica’s purchasing power parity is up to $10.61 billion which is the most
current since 2003. Jamaica’s GDP real growth rate is 1.9% and their GDP per capita
and purchasing power parity is at $3,900 which is most current since 2003. Jamaica’s
unemployment rates stands at 15.9% which is the most current as of 2003. The budget of
Jamaica goes like this, revenues are $2.596 billion and expenditures are at $3.111 billion,
which include capital expenditures of $236 million. The public debt of Jamaica is at
145.6% of GDP and the agriculture products of the country consists of sugarcane,
bananas, coffee, citrus, yams, vegetables, poultry, goats, milk, crustaceans, and mollusks.
The money making industries of Jamaica are tourism, bauxite/alumina, textiles, agro
processing, wearing apparel, light manufactures, rum, cement, metal, paper, chemical
products, and telecommunications. Jamaica’s current account balance which is the most
current as of 2003 is $842 million and their export is $1.355 billion f.o.b. The country of
Jamaica’s export commodities consist of alumina, bauxite, sugar, bananas, rum, coffee,
yams, beverages, chemicals, wearing apparel, and mineral fuels.
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Their exporting partners percentage wise looks like this, the US accounts for the
most amount of exports with 29.6%, the UK accounts for11% of the exports, Canada
accounts for 10.8% of the exports, France accounts for 7.9% of the exports, Norway
accounts for 6.8% of the exports, Germany accounts for 6.2% of the exports, China
accounts for 6% of the exports, and with the least amount of exports was the Netherlands
with 4.4% which is the most current since 2003. As of the 2003 Jamaica’s imports are
$3.265 billion f.o.b. and their import commodities are made up of food and other
consumer goods, industrial supplies, fuel, parts and accessories of capital goods,
machinery and transport equipment, construction materials.
Jamaica’s import partner by percentage looked like this, the US accounts for the
most amount of imports with 39.8%, both Trinidad and Tobago accounts for 9.7% of the
imports, Germany accounts for 5.6% of the imports, Venezuela accounts for 4.5% of
imports, France accounts for 4.5% of the imports, and with the least amount of imports
was Japan with 4.2% of the imports. The currency of Jamaica is the Jamaican dollar
JMD and the exchange rates of Jamaica looks like this Jamaican dollars per US dollar or
was 57.7409 in 2003, the exchange rate was 48.4159 in the 2002, the exchange rate was
45.9962 in 2001, the exchange rate was 42.7011 in 2000, and the exchange rate was
39.0435 in 1999.
TRANSNATIONAL ISSUES:
The transnational issues of Jamaica are it’s illegal drugs which are a major
transshipment point for cocaine from South America to North America and Europe; illicit
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cultivation of cannabis; the government has an active manual cannabis eradication
program; corruption is a major concern though; substantial money-laundering activity;
Colombian narcotics traffickers favor Jamaica for it’s illicit financial transactions.
(FDI) FOREIGN DIRECT INVESTMENT:
Now to talk about the FDI in Jamaica, the country is among a small number of
countries in the region, which have experienced growth in Foreign Direct Investment or
FDI in 2003. Jamaica’s top 3 investors are National Assets Recovery Services, Iberostar,
and Verizon Global Solutions. Jamaica’s Top 3 destination sectors are Hotels, tourism
and leisure, real estate, and financial services. Jamaica’s Top 3 business functions are
construction, customer support centre, and manufacturing. Jamaica’s Top 2 source
countries are US and Spain. According to the World Investment Report 2002, published
by the United Nations Conference on Trade and Development or the UNCTAD, Jamaica
is ranked 2nd in CARICOM, and 5th in the Latin American and Caribbean region in
Foreign Direct Investment or FDI inflow performance in 2001. The report further cites
that of the 140 United Nations or the UN member countries, ranging from developed
nations such as the United States to developing economies like Rwanda, Jamaica was
ranked 26th overall in attracting foreign investment inflows, according to JAMPRO.
The increase is very significant because a decade ago they were ranked 33rd.
The World Investment report shows that of all the countries in the Latin American
region, Jamaica was ranked 9th in outward FDI flows in 2001, outperforming countries
such as Argentina, Brazil, Bermuda, Costa Rica and the Dominican Republic.
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Outward FDI flows increased from an average of US $51million in 1990 to 1995,
from US $89million in 2001, and it peaked in 1999 at US $95million. During 2003,
Jamaica recorded record level of FDI inflows, a trend that shows no sign of slowing,
particularly in the tourism sector. Jamaica is a key member of the Caribbean Common
Market, which is strategically located just 1000 miles from the US and so it provides
investors with access to both these markets. A range of goods produced by Jamaica also
enjoys preferential access to the EU. The implementation of the Free Trade Area of the
Americas agreement in 2005 will open up markets across these regions. The United
Nations World Investment Report in 2004 reported that Latin America and the Caribbean
last year experienced a decline in FDI flows for the fourth consecutive year, with inflows
falling by three percent to $50 billion, the lowest since 1996. On the other hand, Jamaica
remained one of the few regional economies, which showed an overall growth in FDI
flows over the last four years, in addition to an increase of inflows for the 2003 period
over 2002.
To help investors to capitalize on these opportunities, Jamaica offers a range of
investor-friendly incentives, good infrastructure and a highly skilled workforce.
Improvements to infrastructure include the liberalization of the telecommunications
sector and substantial investment in the Kingston Containerised Trans-shipment Port, a
state-of-the-art hub between North and South America. The road network has also been
upgraded, stimulating development in areas close to new routes. Jamaica has a long
history of stable democracy and has one of the most liberalized and modern regulatory
environments in the western hemisphere. There are no constraints to capital flows in and
out of the country; exchange controls have been removed; and the government has
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implemented tough legislation to protect the integrity of the financial system. Its priority
investment sectors include IT, tourism, agribusiness, manufacturing, minerals and
chemicals, and textiles. The Development Minister, Dr. Paul Robertson, spoke at the
launch of the UN report at JAMPRO’s headquarters on Trafalgar Road this past
September 23, 2004 and he pointed to statistics from the Bank of Jamaica (BoJ), which
showed that Jamaica attracted record FDI inflows of US$720.4 million in 2003
representing an even greater amount than the preliminary estimate of US$520 million.
The country also outperformed countries such as Argentina, Costa Rica, the Dominican
Republic and Trinidad. Dr. Robertson said that Jamaica, with its advantage of location,
had benefited from the global shift in FDI flows toward services, benefiting from
investment in tourism, information and communication technology. He credited the
country’s ability to attract growth in these areas, to government’s initiatives to liberalize
the telecommunications sector, the privatization of state-owned companies, growth in the
tourism industry and putting incentives in place to attract private capital. “Our reality is
that the service economy is our real economy,” he stated.
In addressing arguments, which purport that relying on the service industry made
the economy more susceptible to shocks, Dr. Robertson said the flip side of the argument
was that the economy would also be able to rebound more quickly from those shocks.
“In any case, the structure of the world economy today is so different that it is very
difficult to avoid some of those situations,” he pointed out, mentioning the worldwide
impact of the September 11, 2001 terrorist attacks on the United States. Commenting on
the growth in the ICT sector, Dr. Robertson said the industry was based on greater levels
of value added and its contribution to economic growth and job creation was significantly
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more than the apparel industry under the 807 arrangement. In 2003, there were 5,000
seats in 13 call centre locations island wide and the sector is growing by about 9.7
percent per annum, he pointed out. The Development Minister stated further, that the
outlook showed possibilities for incremental growth in the sector and the replacement of
the jobs lost in the garment sector. He noted however, that the focus on ICT did not to
exempt the need for a strong manufacturing sector but made the case for the country to
get involved in areas where it enjoyed a comparative advantage.
CONCLUSION:
In conclusion, Dr. Robertson maintained that the strength of the economy lay in
its geography, its location and closeness to certain markets and its advances in the ICT
and tourism sectors. He said that by 2010, tourism would be more evenly spread across
the island and also stood to be totally transformed based on local and foreign investment.
Meanwhile JAMPRO’s President Patricia Francis, announced that next fiscal year, the
country should begin to benefit from the European Union-funded private sector
development programme, which would see a total of 28 million Euros being spent over a
three-year period to develop the services sector. The investment will provide for the
implementation of various sector development programmes and the employment of a
corporate finance broker, who will be charged with restructuring domestic investment.
Furthermore, she said, a service sector survey has been commissioned to provide critical
information on strategies to be adopted to ensure maximum impact. According to the
“capacity theory” in economics that projects future investment based on the current share
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of capital stock to output, this experience presents Jamaica’s future in attracting FDI
inflows into a positive light.
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