INTRODUCTION
Poor people have to meet the increasing price of foodstuffs whose extra cost does not necessarily mean an increase in nutritional value; indeed in many cases much of the food in advanced societies is losing its food value.
Andrew Webster, 1970, p.16
Individuals, families and groups in the population can be said to be in poverty when they lack the resources to obtain the type of diet, participate in the activities and have the living conditions and amenities which are customary, or at least widely encouraged or approved, in the societies to which they belong. Their resources are so seriously below those commanded by the average individual or family that they are in effect, excluded from ordinary living patterns, customs and activities.
Townsend 1979, p.31
According to Andrew Webster¡¦s sociological perspective as quoted above, the disadvantaged within our societies are continuously confronted with the situation of having to meet the rising cost of food with modest economic power. Webster¡¦s position, however, was written prior to the Structural Adjustment Programme (SAP) that was recommended by the International Monetary Fund (IMF) in the 1980s as the required pathway for Third World countries to which was wholesalely embarked on by the Jamaican government in the same period. After the first phase of the SAP in the 1980s, prices of food rose significantly to the point where the poor became poorer, widespread unemployment affect the economic base of many poor Jamaican families, and subjective poverty became a real phenomenon that occurred thereafter. In the same period, government was moving away from a welfare type state which was made for compounding the problems of many poor families. Hence, the issue of the SAP affected mainly innercity people in Jamaica who were unable to structure their position as they are not owners of factors of production. The results were squalor, high unemployment, the erosion of values, and unabated murders that began to live among residents of communities like Southside in Central Kingston.
The second view takes the researcher to Townsend¡¦s outlook, where prior to the SAP in the 1980s, when many people in Jamaica were below the poverty line, now (post 1980s), the situation has even worsen significantly to the position where countless number of people are not living ordinarily, and properly and may be termed as inadequate subsistence existence.
Few Jamaicans need any formal introduction on communities such as Southside, Downtown-Kingston, in regards to the sociological problems that those residents experience on an ongoing basis. The issue of periodic gun violence, social deprivation, economic deprivation, and psychological segregation, are just some of the dilemmas that we are aware to which the people of those areas continually face.
Because we (sociologists and economists, alike) are seeking to address the issue of modernity and development, this process cannot be attained without firstly, understanding the nature of innercity residents¡¦ traditions, values, norms, cultures and infrastructure before modernity and development are deemed possible. What is modernity, in our today¡¦s discussion, about? The answer should be concerned with social change and human progress.
Caring for Southside in Central Kingston has everything to do with the security of Jamaica. In that, those people who are mainly affected by insecurity are the poorest, innercity residents, in this case reside in close proximity to the harbour/ports and airport in Downtown, Kingston, which is the nation¡¦s hub of economic activities. As such, any civil uprising by those residents will affect the entire island of Jamaica. Meaning, helping the development of Southside strengthens the modernity/development of Jamaicans by extension. The development of all in Jamaica must be the concern of the state, the private sectors and the upper/middle class of this society.
Low education, social deprivation, lack of economic opportunities, low self-esteem, and a high teenage pregnancy, inadequacies of information, poor infrastructure and conflict mismanagement are just some of the issues that people of innercity communities in Jamaica, just like Southside, experience. Those situations need to be address with immediacy as any delay for the future may result in civil unrest similar to that of Haiti. Policy makers and decision-makers need to understand that those issues bar modernity and development and speak to social incivility of any modern nation. Undoubtedly, those issues bar the stride of any policy that is geared towards economic growth and-or development. As such, this research seeks to provide a guide as to a policy direction that may be used to address modernity/development of Southside, Central Kingston, Jamaica, as a model.
RATIONALE
Innercity communities like that of Southside in Jamaica are plagued by political ideologies that are different from that believed by other communities that oftentimes are adjoining and so this create tension among neighbours that oftentimes results in unaddressed conflicts ¡V leading to bloodshed and further conflicts. Meaning, the violence oftentimes begins with close associates who because they have nothing to do in the days prey on each other as wild animals. The lack of modernity and development in this community like many others, speaks to the social and interpersonal dynamics that will befall those areas and the island by extension reducing any civility that forms the base upon which development is sustained in a nation.
Can there be modernity and-or development in Southside with the past gun violence that befalls that community? Answer ¡V the struggle to acquire lands and political supremacy in many African nations have left them unmodernized, underdeveloped and impoverished to say the least. Meaning, wars and unrest oftentimes in its wake leave a need for modernity.
Because the community of Southside is unable to deal with the issue of crime/violence and development over the years, it has left the area improvised. Meaning, with civil unrest comes unemployment, poor building maintenance, poor management of the environment, and the social ills that accompany such situations. Thus, by Western definitions of modernity and development, economic growth, social and political orders are crucial for stability of a nation. Therefore, the periodic unrest results in the residents being unable to attend school, and work regularly and this affect the development of the human potential of the people therein.
The residents of Southside are negatively affected by high unemployment, high teenage pregnancy, overcrowding, poor infrastructure, low skills, insecurity, poor environment, marginalization of women and exclusion that are all components of underdevelopments. According to the Independent Commission on Population and Quality of Life (ICPQL) (September 19-21, 1997) stated that:
ƒÞ But the lot of the mass of the people, almost one third of who live below the poverty line, has not changed of whom live below the poverty line, has not changed significantly. After Emancipation they were compelled to find their own employment, create their own culture and eke out an existence on the margins of society. In the view of some highly respected historians, this marginalization was the result of a conspiracy between the ruling elite and the middle class who have always aspired to claim equality with the elite, to manipulate the economic and political process so as to maintain the status quo.
ƒÞ Today, there are many who believe that the mass of the ordinary people on the margins of society, forced to live in squalor and misery, who have again created their own employment, often illegal and associated with violence, and who have created their own set of values and attitudes which are viewed as being anti-social, are victims of the same conspiracy.¡¨
The researcher subscribes totally to the position of the ICPQL above, and beliefs that in order that Jamaica does not sink to the low of Haiti; the inequalities, underdevelopment and poverty coupled with the social dilemmas be quickly addressed.
LITERATURE REVIEW
Development has been treated by economists as if it were nothing more than an exercise in applied economics, unrelated to political ideas, forms of government, and the role of people in society. It is high time we combine political and economic theory to consider not just ways in which societies can become more productive but the quality of the societies which are supposed to become more productive-the development of people rather than the development of things.
Professor of Development Economics: Michael P. Todaro, 2000
Introduction
Despite non-developmental economists position on development in that their definitions lack social coverage and its bias in favour of an economic construct, the fact is, we are seeking to comprehend an economic phenomenon and so readers ought to be cognizant of this fact as we seek to lay a materialist foundation for the evaluation of Jamaica¡¦s development (economic) over the decades. Hence, the researcher will broaden the construct of the non-developmental economists¡¦ definition of development to incorporate health, education, leisure, increased social amenities and social expansion of resource to people within the geographic locality defined as Jamaica. This position will concur with the perspective of development economists like Michael P. Todaro. In addition, the new definition seeks to address political ideological changes, forms of government and how those phenomena impact on development.
Economic Development is an illusive idealism for most developing economies. In that, poverty, infrastructure inadequacies, poor and inadequate technological advancement and use of new techniques, governmental mismanagements of the economy, low levels of educational attainment of the masses, corruption, dependency on agricultural export products, political tribalism, and sub-standard health care are but a few of the barriers to economic development in those countries. Jamaica, in addition to the entire Caribbean islands, is apart of the construct of developing economies. What is meant by the term developing countries, before we proceed into this discussion? Developing countries are seen as constituting inadequate physical infrastructure; poor social security systems; high level of unemployment and corruption; low use of technology, high dependence on primary products; imperfect markets and information coupled with poor work attitude of the populous. Hence, how is it possible to attain economic growth and by extension development?
Many persons inadvertently and incorrectly interchange economic growth and economic development as though they are synonyms. Economists posit that ¡¥economic growth¡¦ is an increase in the Gross Domestic Product (GDP) of a nation. GDP is the aggregate of all goods that are produced, distributed and consumed in an economy in a given year. As such, an increase entails the employment of more factors of production (land, labour, capital and entrepreneurship). Equally G.D.P is the aggregate of the factor incomes.
Apart from the definitional properties of G.D.P, a thorough understanding of this measurement of production must be understood by the reader in order that s/he is able to grasp the issues that will be critically presented in this paper.
GDP¡¦s Growth does not automatically disaggregate into a share of production to each sector within the economy. The growth of the economy may entail all sectors getting proportionately more or proportionately less than other sectors. It has been the case on a wide scale that the owners of capital, the entrepreneurs, have been receiving significantly more of the GDP than the other participants. It is this disparity between the wage earners and the owners of capital that must be addressed in order to develop the human capital of the population as a whole. This is especially the case when capital is very unequally distributed. An increase in productive capacity of an economy may not have been for the general good of all peoples therein but may be due largely to small sub-sector of the populace.
Economic development, however, is significantly different from that of economic growth. In that, ¡§Development in human society is a many sided process. At the level of the individual it implies increase in skill and capacity ¡K¡K¡K¡K and material well being¡¨. Implicit in that definition is the accumulation of the surplus of individual firms. In order for this surplus to be meaningful as a human indicator of development and large enough to ensure the survival of firms and improve the standard of living of those employed by the firm, the surplus cannot be consumed after a day. If this is done, then the standard of living of the workforce will decline and this decline is concomitant with the lack of development in the domestic economy.
Economic growth in some economies can then be associated with immizerization, in that economic growth may result in misery. This occurs when economic growth causes a high proportion of the population to become impoverished while a smaller proportion accumulates substantial wealth. As such, this growth may lead to impoverishment of a sector or some sectors within the economy but this cannot be the case for economic development implies the improvement in human capital which is not important for growth.
Therefore, the different approaches to development strategies will be discussed in this paper. In addition lessons learnt from those strategies will also be forwarded. This will be done within the framework of critically examining the Jamaican economy between the decades of the 1950s through to 2001.
The 1950¡¦s: The Decade of Economic Growth
At the start of the 1950¡¦s, the Jamaican economy (economy) was very dependent. The economy was dependent on exports for foreign exchange and also dependent on imports to provide essential commodities that the economy did not produce itself. Jamaican imports during 1950 have mainly consisted of food along with smaller amounts of manufactured consumer and capital goods. This economic dependence on food is a longstanding structural feature that had begun during slavery. ¡§The economy in 1950 typified the colonial model of dependent underdevelopment. It was an open, import dependent monocrop economy: 90% of its foreign exchange was earned from one crop, sugar. The labour force was primarily agrarian, distributed between wage labour on the plantation and in the sugar factories and small farmers, over 80% of whom owned less than 5 acres.¡¨
The economy was very dependent on foreign countries (which provided the markets for the export products and the foreign direct investment necessary to produce the products). The development strategy of Sir Arthur Lewis (Economic Development with unlimited supplies of labour) was being carried out which came to be known as industrialization by invitation. This theory stated that the economy of developing nations would improve if there was foreign direct investment. This strategy included various policy prescriptions which would make the economy become more attractive to the overseas investor. (1) Low minimum wage which would decrease the wage bill (relative to other countries) of the potential investor. (2) Decreasing tariffs on imports and exports related to this industry. (3) Providing the investors with the best location for the industry. (4) Providing the potential investor with all the utilities which are often times needed by at reduced prices. The result was that foreign investors exploited the Jamaican economy. When absolute values are used more output was produced but the Jamaican economy did not experience development (i.e. growth with development). The surpluses did not accumulate in the island; .it was repatriated to the home country of the foreign investors.
As a direct result of the high levels of foreign direct investment, the decade was characterized by rapid economic growth. Development of the Jamaican economy did not accompany the economic growth-taking place . One reason for this was that the national income of Jamaica was unevenly distributed. The sectors of the economy that were experiencing rapid growth and foreign direct investment included Bauxite, Tourism and agriculture (including food processing). Foreign investors owned these industries. The surplus of these industries was repatriated to the homeland of the foreign investors leaving a bare minimum in Jamaican. These industries can then be seen as enclaves. An enclave is ¡§a portion of a territory that is surrounded by another territory whose inhabitants are different in character, culture and ethnicity.¡¨ Those industries provided high wages for few of the native inhabitants of Jamaica that is the local bourgeoisie and the managerial elite with almost none being distributed to the local masses. There were few backward linkages in these industries to the rest of the economy.
One example of such an industry was bauxite. In 1952 bauxite production began with 300,000 tons and by 1957 output had reached 4.5 million tons and became the world¡¦s largest producer (See table 3 in the appendix for an illustration of the increase in importance of the bauxite industry). By the end of the decade the bauxite industry of Jamaica would have become the nation¡¦s top foreign exchange earner. This increase was as a result of the bauxite industry. This period saw an increase in economic growth and economic development. But economic growth rate was higher than that of economic development. Underdevelopment in the economy was evident by the rapid unemployment, insecurity of job tenure and a high demand for land ownership by the masses. Therefore, despite rapid economic growth and large foreign direct investment the Jamaican economy remained dependent and underdeveloped.
The 1960¡¦s: Industrialization by Invitation
The decade of the 1960¡¦s was marked by high economic growth without the accompanying economic development. In 1961, Jamaica was given monetary independence via the establishment of the Bank of Jamaica and in 1961 Jamaica was given parliamentary independence. Despite these developments, the Jamaican economy was still import dependent and export oriented.
Economic growth was mainly due to the increase in bauxite production, the prosperity of the tourism industry and government policies that encouraged foreign investment. As was the case in the 1950¡¦s, the major players in the aforementioned industries were still foreigners and this reinforced the dependency of the island economy. This dependency continued during the decade because foreign capitalist (1) forged joint partnerships with Jamaican capitalists. (2) Entered into technology and management contracts with Jamaican capitalists. Also, Jamaica¡¦s export sector was dependent on overseas countries for markets and for foreign direct investment.
The 1970¡¦s
In the early years of the decade (1970 ¡V 1973) there was continued economic growth and foreign direct investment. The JLP was in government until 1972 and as a result the economic strategy was still based on the decade of the 1960¡¦s (Industrialization by invitation). The economic development strategy industrialization by invitation had resulted in unprecedented growth. The economy grew on average 6% per year from 1952 to 1972; this represented the highest growth rate of any nation in the Western Hemisphere. The economic growth did not result in economic development. By 1972, the highly unequal distribution of income and wealth had become more unequally distributed and there was alarmingly high unemployment.
The economy had changed however. (1) It was larger than in the 1950¡¦s or 1960¡¦s (GDP and GDP per capita had increased as shown by table) (2) It was highly differentiated (more industries played an active role in the economy). The figures provide by the Statistical Institute of Jamaica (STATIN) indicate the shift in the differentiation of the economy as the agricultural sector declined (became less important in terms of employment, % of GDP, % of Exports).
Mining, Tourism and Manufacture were two new industries that had emerged in the decade of the 1950¡¦s. By the 1970¡¦s, mining was the major foreign exchange earner and employer and manufacturing came second while agriculture was third. The growing significance of the Mining and Tourism was concomitant with declines in the agricultural sector. Foreign direct investment was still positive but was declining. One of the main factors which attributed to the decline was the fact that large investment in the nation¡¦s leading foreign exchange sector mining (specifically bauxite) was declining.
Further, the decline was due to the completion of the investment phase in the bauxite industry and eventually to the negative impact of the Bauxite Levy that was imposed by the PNP government (which will be discussed later). The PNP put into place a massive welfare (socialist) programme. The policy of the PNP was to take more of the surplus away from the owners of foreign capital.
The policies of the PNP government during the decade represented a drastic change in government¡¦s development strategy so much so that the ideology of Jamaica¡¦s two most powerful parties was different. The PNP adopted a socialist development strategy. Table1, summarizes the development strategies of the PNP. Comparing table 1 with table 2 (showing JLP policies in the 1980¡¦s and PNP policies in the 1970¡¦s) it is observed that three of the PNP¡¦s policies were repealed by the JLP government as a direct result of differences in growth ideology. Politically affiliation the PNP were closer to Socialism (Left Wing) and hence the policies that were implemented gave the state a greater role in the direction of the economy. The JLP presented the capitalist (Right Wing) alternative in which the economy was driven by the private sector.
The decade of the 1950¡¦s and 1960¡¦s were characterized by high economic growth but unequal distribution of income. Michael Manley wanted to ensure a more equitable distribution of national income. The programme of income redistribution included (1) Equal pay for women (2) Minimum wage (3) Bauxite levy. (4) Formation of the International Bauxite Association. (5) Land reform. (6) Rent control. (7) Food (Agricultural) subsidies. (8) Free education (9) Skills training (10) Literacy training. (11) Unemployment benefits. (12) Tighter regulation of the economy (by exchange rate, import and price control) to reduce the demand for unnecessary products, check inflation and reduce capital flight. These policies warranted an increase in government expenditure that in turn required an increase in government revenue due to taxation if not the government could not sustain these policies.
Using Education as an example: The PNP government of Michael Manley reformed the education sector. Education was free to tertiary level. The common entrance system that was used to place students in high school adopted a policy of 70: 30. This meant that seventy percent of all students that were placed in high schools were from (public) primary schools (elementary schools) while the other thirty percent came from preparatory (private schools) schools. This resulted in a large increase in the number of students enrolled in high schools. STATIN data indicate that the expenditure on education increased every year from 1973-1978 and this helps to explain the increase in government expenditure. Those figures indicate that from 1970 to 1980 the number of high schools increased by 6 but the increase in students was phenomenal, enrolment increased by over 114% (by 27442 pupils).
Was that all that was happening in the island? (1)The infrastructure of the high school and primary schools had not improved enough to cater for the large increases in attendance. This means that the system was increasingly becoming over burdened. (2) The supply of teachers has outstripped the expansion of the education system. From a development aspect, the high levels of CXC passes were associated with the high levels of government expenditure. The decade of the seventies and early eighties had the highest passes in all 8 subjects analyzed.
Health facilities were dramatically improved during the 1970¡¦s so much so that the Infant Mortality rate decreased from 32.5% prior to 1970 to 11.3% in 1980. Infant mortality and life expectancy are health indicators of development of a population. According to Social and Economic Survey of Living Condition, the end of the 1970¡¦s, Jamaica had the second lowest infant mortality rate (only the U.S was lower) and the second highest life expectancy (only the U.S. had higher) of the six countries in the study.
¡§Jamaica¡¦s infant mortality and life expectancy levels have improved steadily¡Kto the point where the country¡¦s health indicators are considerably above the third world norm, moderately better than that for middle income countries and slightly below industrialized countries. In the case of infant mortality improvements the rate of change in Jamaica matches that achieved in the United States of America over the 1938 to 1980 period and is considerably above that achieved in most middle-income developing countries. Much of this is due to increased spending on health services as overall public spending increased.¡¨
The Government needed a robust economy in order for its tax revenues to be sufficient to balance the budget. If this was not the case then the government had to seek alternatives means of finance, that is, it had to borrow to finance its policies.
Jamaica was not planning for the severity or the External shocks that it experience in the 1970¡¦s and those shocks substantially weakened the economy. The shocks were: (1) The massive increase in oil prices from 1973 and 1974, (2) Significant increases in commodity prices in 1974, (3) The credit blockade of the U.S.A. in March 1976, (4) Foreign press attacks on the Jamaican government negatively affected the Tourism sector and (5) The destabilization of the Jamaican economy engineered by the Central Intelligence Agency (CIA). All those issues indicate the dependency and vulnerability of the Jamaican opened economy as manifested itself during the decade of the 1970¡¦s.
Internally the economy was also under pressure. In that, (1) The consumption level of the population was increasing and pressuring the current account. (2) The bauxite companies lowered the production of bauxite to protest the imposition of the bauxite levy. (3) The capitalist class imposed a go slow in production and refused to take on new investments. (4) The flight of capital by foreign investors and by sections of the upper class. (5) Migration at all levels (from upper to lower classes). The economy was experiencing negative growth (except for 1978) from 1974 to 1980.
As a result the government had severe problems in carrying out its expansionary fiscal policies. In the latter years of the decade (from 1977 to 1979) the Jamaican economy was in crisis.
Jamaica had two ways of dealing with the problems. One measure was the implementation of the Emergency Production Plan (EPP). Two was entering into Loan agreements with the IMF and World Bank (International Bank for Reconstruction and Development). The EPP was designed to address the problems facing Jamaica in 1977. The EPP presented a policy of re-orientation of the Jamaican economy to greater self-reliance through increased internal integration, democratic (egalitarian) production relations and subsequently increased production. According to the plan the government should nationalize the Cement Company, oil refinery, all banks and insurance companies. The governments demand for funds would be solved by (1) Increased taxation (2) Reduction in government expenditure (3) Foreign credit (4) Bank of Jamaica support.
The EPP isolated agriculture as the most important factor in the future development of the Jamaican economy. According to the EPP the sustaining development of Jamaica depended on Land reform in the rural areas of the island. The Land reform would be undertaken in three forms that would ultimately be a continuation and expansion of the Project Land Lease, cooperatives and Community Enterprise Organizations (CEOs). George Beckford put forward the idea of CEO¡¦s. The CEO¡¦s would lead to new and self-sufficient agricultural sector. This agricultural development would have several spin-offs such as agro-processing and furniture manufacture.
In the first phase of the programme, land would be leased to small farmers for five to ten years. The small farmers would also be entitled to a line of credit from the government to cover initial costs o planting, harvesting and transportation. In the second phase, the government would provide farmers with leases of up to 49 years. In the third phase, the government would create a large cooperative farming program.
The Michael Manley administration rejected the EPP and instead sought funding from the IMF. The reasons behind the government's decision were (1) The plan was deemed to be infeasible (2) Aspects of the plan were formalized versions of similar plans which were already in progress. (3) The government wanted a short term solution and the EPP was a long term solution (4) The public sector would have reacted very negatively to any short term liquidity crisis of the government as it affected their salaries (5) Public opinion of the PNP party was declining and the government saw the acceptance of the EPP as political suicide (6) The plan was created by radical thinkers of the University of the West Indies and the PNP blamed them for the plight of the government. The reasoning behind the abandonment of the EPP was that the government could not adherer to the budgetary constraint of the plan which resulted in a budget deficit of US $200 million.
The IMF consented to giving Jamaica US $74 million loan. For this loan, Jamaica had to agree to undergo structural adjustment (SAP). The IMF conditionalities included (1) A 40% devaluation of the Jamaican dollar (2) Reduction in government expenditure (3) Increase in government taxation (4) Reduction of certain agricultural subsidies (4) Reduction in import tariffs. The SAP led to the deregulation of the Jamaican economy. The role of the government and private sector was changing. The private sector was becoming increasingly responsible for economic growth while the government was retreating in that regard.
The result of the structural adjustment programme (SAP) was alarming. The standard of living had fallen by 45% below that of 1975, the economy had to repay a loan of U.S. 1,867 Million, the real wages fell (55% for females and 42% for males) and the country continued experienced negative growth.
The then Michael Manley administration, did not like this situation in which the government played a less active role in the economic growth and development of the nation. Where income was redistributed away from the working class and the poor to the entrepreneurs and owners of capital. This in effect made the wealthy wealthier and the poor more financially depressed. As a result the PNP terminated the relationship with the IMF in 1980. This was too late for the PNP and as a result the JLP won the elections of 1980. The JLP would become the next government and led Jamaica into the new decade of the 1980¡¦s
The 1980¡¦s
The Edward Seaga led JLP won the general election in 1980. The administration was a one of moderate capitalism. The development strategies of the JLP conflicted with those of the out going PNP. The government of Jamaica during the 1980¡¦s adhered to the opinions and policies of the IMF and World Bank and economic development was structured according to the goals of these organizations.
The policies ensured that the process of structural adjustment continued into the foreseeable future. The development strategy of the JLP (IMF and World Bank) resulted in the several policies being implemented. (1) An increase in the debt burden of the nation (2) A Laissez Faire type government (3) A more open economy (4) The adoption of the comparative advantage principle.
The external debt of Jamaica increased from 1.9 Billion in 1980 to 4.3 billion in 1988 and there was a large public sector deficit of even though the government cut expenditure heavily during the decade. Between 1977 and 1990 Jamaica received seven IMF Loans so that during the eighties over 90% of Jamaica¡¦s foreign debt was owed to external loan agencies (primarily IMF, World Bank, IDA, USAID, CIDA). Debt financing for the nation was made available in large amounts due to the relationship between the JLP and the Reagan government. The economy grew during the first three years of the decade (1981-1983) as a direct effect of the multilateral capital inflows.
¡¥By 1984 the honeymoon was over.¡¨ The multilateral organizations did not allow rescheduling of loans therefore the loans borrowed had to be repaid. This put the Jamaican economy under intense pressure in order to repay the loons borrowed. The multilateral agreements entered into by the JLP government had strict structural adjustment requirements and they were enforced in the mid-1980 (especially in 1984).
The then government devalued the Jamaican dollar, and deflated the economy (by increasing interest rates and decreasing government spending). With the decrease in the value of the dollar the value of imports (and hence consumption) increased while the value of exports decreased worsening the terms of trade and the balance of trade account. In the first half of the eighties (1980-1985)91% of imports had to be financed by more loans and 4% by grants the remainder was financed by a drawdown of Net International Reserve (NIR). By 1985 debt to GDP was 206%, debt to exports was 265%, and debt servicing was 29% of GDP and 40% of exports. The loans that were borrowed did not develop the nation it only served to finance consumption expenditure.
From 1984 to 1989, the government seemingly began to learn from its mistakes earlier in the decade. The balance of payments deficit had decreased significantly. In February 1988, the balance of payment deficit was only 7% of GDP. Multilateral and bilateral loans still accounted for a substantial portion of this deficit (68%). The source of loan payments had shifted towards bilateral, and domestic donors so that by February 1989 the ratio was: bilateral donors 44%, multilateral donors 40% and commercial banks 9.5%.
The damage to the economy had already been done. The debt servicing would take years to clear the debts incurred and as a result the structural adjustment programmes would have to continue if Jamaica wanted to get more loans from multilateral donors or bilateral donors. All those policy directives and programme had made the normal, poor, man worse off.
The government employed the theory of comparative advantage in the economic plans of the 1980¡¦s. The government postulated that the Jamaican economy had a comparative advantage in labour. This was the reasoning behind the introduction of the free zones
The then administration, offered attractive sites for international companies to build factories for export oriented processing. These zones were called free zones.
Companies such as Tommy Hilfiger and Brooks brothers built factories in Jamaica for this purpose. These factories could import and export the products involved without tax. These factories were enclaves with no backward linkages to the Jamaican economy. The profits from these factories were never meant to stay in Jamaica and subsequently were repatriated to the country of origin of the foreign owners. The surpluses from the Bauxite and tourism industry also went back to the country of origin of the owners leaving a bare minimum in Jamaica. The surpluses were then not available to develop the nation yet still there was economic growth. Could this explain the type of communities such as Southside in Central Kingston, Downtown-Kingston, Jamaica?
From a welfare perspective, the private sector cannot develop the nation because it adheres to the free market. The free market does not dictate development. Therefore, there are certain services that the free market cannot provide equitably. If a consumer or cannot afford a commodity the law of effective demand prevents the consumer from receiving it. Therefore with the cut in social welfare programmes, the development of persons who are poor was reduced or halted. According to Aldrie Henrie-Lee, 30.5% of Jamaica lived below the poverty line in 1989 (Henrie-Lee, Adrie 2001). The analysis here is that a cut in government expenditure will up to 30.5% of the Jamaican population.
The hurricane season of 1988 spawned a hurricane known as Gilbert. Hurricane Gilbert devastated the tourism and agricultural sector in addition to numerous innercity communities that were felt in there then position.
Tourism was in decline due to the destruction of the industry by the Hurricane and due to bad report by the foreign media. Jamaica¡¦s main agricultural crop, which was destined, to be sold on the export market was destroyed. This meant reduced foreign exchange earnings. At the end of the decade the Jamaican economy was devastated.
The 1990¡¦s and Early 21st Century
In 1989, the PNP led by Michael ¡¥Joshua Manley¡¦ won the General elections. The PNP would remain in power for the entire decade of the 90¡¦s. The decade will be analyzed in two periods. The first period is 1989 to 1994 which predates the financial sector crisis. The Second Period is 1994 to 2001 which includes and continues from the financial sector crisis. During the 1990¡¦s the Jamaican government embraced the concept of liberalization of the economy. Liberalization embraced two concepts (1) Deregulation and (2) privatization.
Privatization meant that the government would sell government owned assets to private individuals and firms. The PNP government, therefore, embarked on a capitalist strategy to develop the economy. In this new paradigm the engine of growth was the private sector. This strategy was new to the PNP, because of the democratic socialism of the 1970¡¦s but the economy had experienced the shift towards capitalism during the 1980¡¦s.
The free market policies implemented by the PNP administration was done in order to satisfy the requirements of multilateral loan donors and bilateral donors and in this way the PNP and JLP government were both constrained by international bodies. The development of the nation was not in the hands of the government but was once again in the hands of international institutions via the provisions in their loan agreements. Privatization resulted in economic instability (Bloom et al 2001).
From 1989 to 1994, annual inflation was high reaching a high of 80.2% in 1992 as a direct result of the removal of foreign exchange controls (Bloom et al 2001). Even though the nominal exchange rate of the economy was depreciating Bloom (2001) argues that the Jamaican dollar was still over valued and hence the real exchange rate was appreciating. The result is a decrease in exports and an increase in imports. Weakening the trade balance and putting pressure on the government to borrow to finance the deficit.
The high level of imports can also be explained by the fact that Jamaican consumers have an inelastic demand for imports. This can be due to (1) The amount of necessities that are imported and hence cannot be bought locally. (2) The preference for the imported goods due to quality (3) The cultural attrition which results in the imported goods being of high prestige in comparison to the local brand.
Deregulation also opened up the economy to large-scale foreign competition. In Ricardian economic rationale this policy would benefit the consumers because of the increase in the variety of goods and the lower price. This led to the decline of various industries, as Jamaican industries could not compete with foreign produce. The foreign producers had a competitive edge over the domestic producers in many aspects (1) Up to date technology and production processes (2) Well educated and trained workforce (3) Government subsidies (4) Dumped excess production on the Jamaican market and hence could out-compete any local firm. Therefore the recently privatized firms were being destroyed by the international firms it had to compete with. This hindered economic development and also put the private sector under tremendous strain while the preferential access to European markets was declining. This economic shift leads to a decrease in foreign exchange earnings and a further shift by the ruling administration away for many social programmes.
The economy then suffered another destabilizing event: the Financial Sector Crisis. Financial sector of the economy suffered a major crisis during the decade resulting in immediate government intervention. In this period from 1994 to 1995 inefficient banks and insurance companies collapsed. Many companies collapsed because of several reasons (1) The banks and insurance companies did not adhere to the core objectives of there trade. They bought real estate invested in agriculture and investing in risky and long term projects. Many banks became insolvent and had severe liquidity problems. Many other banks did not receive high returns on the investment undertaken or made a loss on the investment. (2) The transactions of many financial institutions were not at arms length (not in accordance with normal accounting and business standards). (3) Inflation had reduced the real interest rate received on their investment. (4) Foreign companies had out-competed the domestic firms in which the banks and insurance companies invested.
In order to offset financial instability the government created the Financial Sector Adjustment Company (FINSAC). The purpose of FINSAC was to protect the savings of thousands of Jamaicans, to ensure that workers in these industries retained their jobs, to give financial assistance to companies and to reorganize those companies that were not profitable. One of the greatest examples of this is in the banking sector where a number of unprofitable banks were merged into one bank known as Union Bank (Subsequently RBTT Union Bank).
The negative effect of this is that the government had to use tax revenue to restructure the financial sector. This revenue could have been used to fund development programmes and hence social reforms suffered. The impact of the restructuring could be said to be tempered by the resale of these companies. The fact is that when these businesses were sold the same pool of owners (who responsible for the crisis) bought back many of these companies. Despite the government¡¦s intervention many businesses closed resulting in high unemployment.
The informal sector grew as a result of the crisis. According to Mason (2001) there were at least 15000 higglers in downtown Kingston alone who by there thrift and industry support about 68000 people with the income earned.
Even though 1995 marked the end of IMF loan agreements, the Jamaican government started to accumulate more debt during the later years of the decade (1995 to 2001). The source of these loans changed from external to internal. The growth rate of this decade was very low with negative growth in from 1996 to 1999 low growth levels in 2000 (0.67%) and 2001 (1.73%) which is low (Alleyne 2003).
Jamaica has an ageing population (according to the Jamaica Survey of Living Conditions 2001). The explanation as given by the Jamaica Survey of Living Conditions 2001 was that the mortality and fertility rate has declined over the decade. The number of Jamaicans below the poverty line has declined. The reason for this is that the inflation rate has declined substantially in the last eight years of the decade.
According to Mason (2001) there have been improvements in the health care sector even thought public expenditure on health care has declined. This marks an improvement in development of Jamaicans. But a major problem in terms of Jamaican health care is the aids epidemic. In 1982 the first HIV/AIDS case was reported and this figure increased to 1028 in 1994 (Social and Economic Survey of Jamaica, 1994). The aids epidemic is dangerous in many ways (1) It is spreading in the younger age group than in the older hence depriving the economy of many members of the younger generation. (2) The cost of healthcare for these persons deprives the country of the alternate uses to which these resources could be put. Despite widespread education programmes the disease is still a serious concern.
Crime and violence are very important social problems in Jamaica. Does this affect development? Crime and violence influence modernity and development. This problem is higher in depressed or poor areas (inner-city or ghetto areas) than in upper-middle class communities. The scope of this problem is expressed by Mason (2001) who states that one third of the Jamaican population is below the poverty line. Unemployment is said to be one of the main causal factors that affect poverty and crime. According to Economic and Social survey of Jamaica (various years) unemployment was averaging 23% in the last decade. Unemployment for women has always been higher than those of men (Polanyi-Levitt 1991). This is very important as the number of households headed by a female is high. The unemployment problem must be solved for Jamaica to develop and rid itself of many social problems such as crime.
Education is presently free for people up to age eleven. The government has also set up various cost sharing schemes in the high schools to assist children whose parents cannot afford the high school fee. The government also subsidizes higher education. The government, however, has signed an agreement with the World Trade Organization (WTO) to liberalize education at the tertiary level, high school level and primary level. This means that the education sector will be made level for international schools.
The present impact will be that the government will no longer subsidize individuals who attend local Universities such as the University of the West Indies (UWI) and the University of Technology (UTech). This must be detrimental to the development policy of any nation. The intellectual property of its citizens from primary level will no longer be directly under its control. At present adult literacy is still a problem even with the presence of the Jamaica Movement for the advancement of Literacy (JAMAL) started in the 1970¡¦s.
Mason (2001) states that emigration has always been a good indicator for economic development. When citizens cannot find the ways and means to survive they immigrate to foreign countries usually the USA, U.K. and Canada. Mason (2001) states that over 2.5 million Jamaicans now live in foreign countries. Even though Jamaica receives the remittances from the persons living in these countries it does not make up for the loss of skill and the resulting Brain drain (Mason 2001).
Mason (2001) outlines the pattern of migration. Firstly in 1948, 492 Jamaicans were sent to the U.K., afterwards 163,000 Jamaicans migrated to the U.K. The most popular occupation of these early immigrants was self employment through the setting up of small shops and business. If Jamaica had granted them the same opportunity these individuals could have stayed in Jamaica and help develop it. Since 1970, the pattern of migration shifted towards North America so that now 85% of migrants reside in the U.S.A.
Based on the economic perspective detailed presented above, why there exist many such communities as Southside in Central Kingston, Jamaica, today? Answer - according to the Independent Commission and Quality of Life that took place in Kingston, Jamaica, (11-13 June, 1998) from a publication titled ¡§Caring for the Future, From Vision to Policies¡¨, Professor Rex Nettleford, Deputy Vice Chancellor of the University of the West Indies posited in his opening remarks that:
The university¡¦s quest (is) to remain an instrument of development and growth on the threshold of the third millennium; growth and development not simply in terms of such indicators as gross domestic product and gross national income, of employment statistics and consumer durables like motor cars, refrigerators and television sets per capita, but in term of the creative potential of the still most valuable resource at our command ¡V people.
¡¥People¡¦ are at the heart of the report ¡¥Caring for the future¡¦. ¡¥All too often people are forgotten in favour of abstract macroeconomic targets: low inflation rates, balanced national budgets. If population is considered in numbers alone, isolated from the other aspects of life, this is wrong in both human and scientific terms. The quality of life of population as people, therefore, should be the central focus of all policy-making.¡¨
According to Rex Nettleford¡¦s sociological background of development, at the heart of ¡¥Caring for the future¡¦ are people. Meaning that, gross domestic product and gross national product cannot be the sole measurement for development as items such as leisure, mental comfort, education, peace and contentment in addition to the environment are crucial indicators of development within the context of sustainable development and modernity of nations. This construct speaks to the theory of global modernity explained through the lens of sociology of development. This position may be explained by certain values, norms and motivation ¡V such as the drive for high achievement.
Hence, why has the state not played an active role in community development as is the case with its macroeconomic policies? What is community development? The present Deputy Dean of the Faculty of Social Science, in a scholarship masterpiece, wrote a paper titled ¡§The Elements of community development¡¨ in which he encapsulated an ideal definition of the topic that clearly and best fits the model for this study:
¡§A popular U.N definition (U.N. Economic and Social Council ¡V 1960) focus on two elements when community development is described as -
i. the participation of the people themselves in efforts to improve their level of living with a much reliance as possible on their own initiative; and
ii. The provision (by government and the wider community) to technical and other services in way which encourage initiative, self help and mutual help and make these more effective.¡¨
Community development cannot be attained with any quick fix measures as at the heart of this process are people who are dynamic. In order to understand the complexities of this phenomenon, let us look at the positions forwarded by the Independent Commission on Population and Quality of Life held in Jamaica in 1997:
ƒÞ Community development must motivate people to take an active part in programmes to meet common need;
ƒÞ The common need of the people must be determined not be external agents but by the residents themselves;
ƒÞ Meaning that people must be willing to analyze their actions and counteractions alongside possible payoffs;
ƒÞ That is, if the citizens are not effectively motivated internally to work towards anything, then the sustenance of any programme will fail;
ƒÞ So in order that any programme be initiated, such an experience must be requested by the residents as a feasible and desired option;
ƒÞ Lastly, to understand how best to get any initiative up and function effectively- that through community members effectively motivated, to be aware of the factors that influence their wants and what considerations may be important in helping them to accept any other opinions about their needs, a knowledge of the community is ¡§key¡¨
Although communities¡¦ development may appear a mammoth task to undertake by developing countries given their incapacities as it relates to material and economic resources, the issue can be address if all agencies with the island take a concerted effort at tackling this demon that befalls development of a modern nation.
All the academic works previously cited and positions forwarded have offered a variety of views, reasons and explanations for the existence of the underdevelopment of communities like Southside in Central Kingston. It is through this in formation that the researcher will guide his study in an attempt to discover if those views provide invaluable information in constructing a model named ¡¥Caring for Southside¡¦ in the Jamaican context. The researcher will also be able to decipher any differences in his findings and the findings of those studies, in order to see whether or not the causes are different and therefore need to be researched more and addressed by the Jamaican society.