Category:Economy of Jamaica

From Jamaica Wiki

Jamaican economy is based on agriculture and tourism. The location of the island and its climate as well as the resources found are the main reasons for this. Jamaica was mainly producing sugar and bananas until the 1940s. During the 40's bauxite was found and thus the bauxite-alumina industry started developing. By the 1970s, Jamaica had emerged as a world leader in export of these minerals as foreign investment increased.

Jamaica is a country that has significant economical problems but also has the potential to improve. Until 2000 Jamaica had its economy shrinking and suffering from negative growth. However in 2000 Jamaica had its first year of positive growth since 1995. The improvement followed because of the government macroeconomic policies. In part, these policies have been successful as they reduced the Inflation (from 25% in 1995 to 6.1% in 2000). The central bank also helped by stabilizing the exchange rate. However the Jamaican dollar is slipping and its average exchange rate is J$61.32 for US$1.00 in 2007.

Jamaican economy suffers from weakness in the financial sector, speculation, and lower levels of investment. These factors prevent the productive sector from growth. The government continues its efforts to raise new sovereign debt in local and international financial markets in order to meet its U.S. dollar debt obligations, to mop up liquidity to maintain the exchange rate and to help fund the current budget deficit.

Jamaican Government economic policies are aimed at foreign investment. The areas of interest are the ones that earn or save foreign exchange and generate employment. Also foreign investments searches are aimed at using the country's raw materials.

There is a wide range of incentives to investors provided by the government. Some of these incentives include remittance facilities, tax holidays, duty-free access for machinery and raw materials imported. Free trade zones were created to stimulate investment in garment assembly, light manufacturing, and data entry by foreign firms.

Despite all the measures the economy of Jamaica suffers from reduced export earnings, continued factory closures, and rising unemployment. The reasons for this are the intense competition, drug crime problems, the rising costs of operation mainly because of the high security costs. Some of the steps taken by the government to encourage economic activity are privatization, restructuring of the financial sector, reducing of the interest rates, and stimulating tourism and related activities.