Paul Andrew Bourne, BSc. (Hons.); Dip. Edu.
INTRODUCTION
The author has been intrigued by the BARBADIAN and BAHAMIAN economies and how those counties have outperformed the JAMAICAN economy from the vantage point that the latter leading in the 1970 was the economic giant of the Caribbean and Latin America.
The economic environment, the political directorates’ management team and the social amenities are all aspects of the reason that explains why such a situation may have occurred in the last forty (40) years. This paper begins by discussing the appropriate definitions of - the international economic environment, small state economies and ‘outperformed’ for the present purpose. Next, it identifies the social, political and economic indicators that are common to the countries being researched, and discuss some implications as to economic growth and human development. It is argued in economic circles that the ideas previously mentioned are measurement of prosperity of a region and so will be used to indicate economic performance among the three (3) regional states in the Caribbean.
INTERNATIONAL ECONOMIC ENVIRONMENT
Definitional issues
The term " same International Economic Environment" means that Jamaica, Barbados and Bermuda have a similar characteristic among them and this is the fact of their economies are small and as such are vulnerable to shocks from outside forces ( being in the form of international agencies and-or bodies). Further, the term suggests that all those countries face the same trade liberalization policies and measures and none is able to dictate or change international policies by itself.
"Outperformance"
Definitional issues
"Outperformed" means a position in which one country finds itself having a higher GNP/GDP per capita income and other economic indicators such as employment, trade deficits, debt management ratio to name a few than another locality. In addition to, being a situation in which the people of that geographic locale are ranked higher on the human development index than its rival. Such measurements include the provision of a quality Education and entitlement to good health care, et cetera.
SMALL STATE ECONOMIES
Definitional issues
For the purpose of this essay, an economy that is characterized as a small state economy is based on low levels of economic development. Given the above-mentioned situation, that economy requires easy and predictable access to export markets. Conversely, it may want to be able to attract foreign investment to boost the economy, without running the risk of having its market flooded with foreign imports. This is especially critical, given the fact that those imports might be coming from more efficient markets and disproportionately larger firms. Local producers of goods and services could easily be ousted from the local market. The implications of such a development are obvious unemployment levels would raise and social dislocation would ensue.
SMALL ECONOMIES
A small economy is usually abounding with informal enterprises that operate outside of the formally established regulatory framework. They are a source of employment, with all the attendant benefits, but it is a fact that their existence raises special competition issues.
In Table 1.1, the absolute values of Gross Domestic Product (GDP) for Jamaica, Barbados and Bahamas are US $8 billion, US $2.8 billion and US $4.785 billion respectively. Given that the GDP figure for Jamaica is approximately 185.71 percent points more than that of Barbados and 67.19 percent more than that of Bahamas, how is it then that we are postulating a position that both the Barbadian and Bahamian economies have outperformed the Jamaican economy? Economists have long argued that total GDP in absolute term is not an indication of a better position but instead a GDP per capita. The reason forwarded for this is simply, absolute money valued GDP is used as an indicator of standard of living a peoples within a particular geographic locality. As such, we need to compute a measurement for the actual standard of life for each individual within that defined landscape. Hence, GDP per capita is computed to show that position. Many economists now have accepted the position that economic prosperity’s measurement goes beyond GDP per capita; to include education, good and adequate health care services, and basic social amenities - measured by the Human Development Index.
Furthermore, to support the point above mentioned, Jamaica’s Gross National Income (GNI) per capita is US $2610 that is 373.56 percent points less than that of Barbados’ and 539.08 percent points less than that of Bahamas’. This indicates that on an average the standard of living of peoples within Bahamas and Barbados is higher than those who reside in Jamaica. In addition, based on the Human Development Index, the Bahamians and the Barbadians have enjoyed a higher quality of life in comparison to the Jamaicans.
From Table 1.2, in 1980, Jamaica’s GNP growth rate was -5.8 followed by an increase of 208.62 percentage point over 1980 (in 1990) and this was the highest rate of growth for that period. In 1995, the country’s growth rate (GNP) fell drastically by 94.64 percentage points over 1990. In 2000, the rate of growth over 1995 increased significantly by 70.0 percentage points (from 1.0 percent to 1.7 percent). It should be noted that Barbados’ GNP growth rate remained constant over 1995 and 2000 while Bahamas’ increased exponentially by 1400 percentage points over the same period. In 1980, the Bahamian economy rate of growth was 6.5 percentage points followed by an 83.08 percentage reduction over the ten (10) year period. Likewise, the Barbadian economy, over the same period previously mentioned, showed that its GNP growth rate fell drastically by 202.13 percentage points. Hence, it is clear that for all three countries to which this research seeks to analyze, the Jamaican economy is not the sole country that has been experience mild to exponential changes in its economic prosperity. Therefore, what explains why the Jamaican economy according to Human Development Index has not had ranking similar to that of the Bahamian or the Barbadian economy?
The author is subscribing that the deviation that has resulted in the other economies outperforming the Jamaican economies is due to political management. In that, the Jamaican economy was the first to begin trade liberalization in the 1980s because it wanted the International Monetary Fund (IMF) to loan it needed funds for Balance of Payments problems. In addition, political management was clear when the Jamaican economy in the 1970 temporarily went down the road of socialism. As such, the country departed somewhat from economy policies that were undertaken in previous administration. Again, the upturn in the economy 1990 may be as result a change in the political administration and policies management. In addition, the Jamaican economy (in the 1990) saw a structural change in its economy composition in that the informal economy expanded beyond that of the formal economy while Bahamian and Barbadian economies pursued consistent and sound economy policies irrespective of political administrative changes due peoples’ democratic franchise in the polls.
JAMAICA
When Jamaica got independence in 1962 from the British (that is United Kingdom), the island was the leading exporter of sugar and bananas. As such, the country experienced positive GDP growth and a surplus in its Balance of Payments. In the late 1960s to the early 1970s, bauxite/alumina was added to the country export earnings that further expanded the foreign exchange landscape of the island. Furthermore, in the 1950s the country had an income per capita that was higher than that of entire Latin America. In addition, statistics revealed that between 1952 and the 1962, the GDP of the island grew by 6 percentage points. The sparkling revelation was that, the growth rate was the highest in the Western Hemisphere. Manufacturing was on the rise through the ‘screw-driver’ type industries. Which begs the question, when did things go wrong and why?
Many political pundits posit that the dramatic downturn in the Jamaican economy began post independence when politics was being fashioned to govern. This the author does not agree with as the economy experienced real and positive growth in its GDP even after independence up to the 1970. On the other hand, politics may have plundered in the economy as the mass exodus of Jamaicans in the 1970s because of Manley’s socialist ideologies and close alley with Cuban leader Fidel Castro did fundamental change the economic and social landscape of the country. Continuing, because of Manley close relationship with the Cuban President, the United States in that same time was in Cold War with the Soviet Union and so was angered with Jamaica’s stance. The next step was the interference by the Central Investigations Agency (CIA) – (pbs.org).
Leading up to the 1980s, the country undergo much political warfare, political divisions, brain drain, fragmentation and a shift in policy focus that set in motion the differences between itself, Barbados and Bahamas. Now, the Jamaican economy is still grappling with the 1970s in addition to the structural adjustments that were decided by then administration of the 1980s. The author posits that the country was not ready to deal with trade liberalization and its implications in that period. This explains one of reasons why Jamaicans continue to migrate in large droves.
In 2000 approximately forty years after independence, the country is not able to boast of consistent growth as was the case pre-independence. On the other hand, the country is unable even to compete with Bahamas, Barbados and-or Trinidad and Tobago or even so the entire Latin America as was the case leading up to the 1960s. The country’s has been grappling with semantics over whether or not we have had negative growth in GDP. What is true, the country has been stagnant since 1995. In 2000, after a five-year period over 1995 the economy is able to boast of a 0.8 percent point growth, a 1.7 percent points growth in 2001 and a 0.8 percent growth in 2002 – (ECLAC).
In 2003, the Jamaican economy in interdependent on the tourist industry that is largely constituted of peoples with the United States and so one understands the economy down after 911. However, let me hasten to say, the country’s economy has had many structural deficiencies pre-911. In that, interest rates has been exorbitantly and these are higher than that of our trading partners, increase consumption of foreign and competition, unstable currency, a widened trade deficit, untamed crime, high levels of corruption, vulnerable financial sector, inefficient management and production – (World Bank, 1994).
How can the Jamaican economy compete with countries like Bahamas and Barbados when those economies boast in excess of 90 percent points literacy rates? Again, the elusion exists that we (Jamaicans) can effective compete with the rest of the world, even though our unemployment rate stands higher than that of the two (2) countries previously mentioned. The present (2003) political administration has introduced a freeze on employment even though in excess of 2000 graduants leave the three main Universities each academic year. This brave and unintuitive decision must have damaging effects on the economy come the next few years.
BAHAMAS
The Bahamas unlike Jamaica got independence in 1973 from the British (United Kingdom). Although the country is unable to boast of its bananas/sugar exportation and the earnings there from like Jamaica, in a short time the political administration has transformed that island. The country is able to boast of its earnings from tourism as it receive in excess of 70 percent points of the tourists industry and is also able to pride itself in the accomplishment of its international banking sector. The country has not made the carnal sin of flirting with socialism or angering the powerful United States. As such, that economy has not experienced political tribalism, gang warfare or political divisions that have troubled the Jamaican economy.
The political administration that is elected to represent the people understand that they do not have the absolute or comparative advantage of bauxite/alumina, sugar cane and-or bananas; have managed the service industry with the highest level of economic efficiency. One of the sectors that is within the service industry that, that economy boast is tourism. Table 1.1 revealed that the HIV/AIDS prevalence rate (4.13 percent) is the highest, and no only in comparison to Jamaica and Barbados but in regards to the rest of the English Speaking Caribbean.
Part III
Unlike Jamaica, the Bahamas government on recognizing that corruption was pervasive within the public sector, made a consorted effort to tackle the problem. They instituted various laws, in addition to the firing and granting early retirement to key public servants as a measure the clean up the sector. Today, Bahamas has the highest per capita GNI in Caricom (US $14,070). In 2000, the country had the highest GNP growth rate in comparison to Jamaica and Barbados.
BARBADOS
Barbados got independence in 1966, which represents four (4) after Jamaica. Like Jamaica, this country for most of the Twentieth Century (20th) depended on sugar and its byproducts for survival. The Barbadian political administrator having recognized that the global economy was change and is so even dynamic instituted various social and political reforms. The peoples and political administrator of this country made a conscious decision in the 1980s and 1990s to undergo rigid but prudent management practices for the betterment of the economy. Barbados unlike Jamaica does not have that political divide or political ideological shift in the 1970s. The country has continued along a continuous path of efficient management practices to this day.
The prudent managers of the Barbadian economy understanding that there was an impending shifts away from sugar production spent approximately 20 percent points of their GDP on education. Today, in comparison to Jamaica and Bahamas, Barbados literacy rate is 99.7 percentage points. According to the Human Development Index, the country has the highest ranking in Latin America and the Caribbean.
Table 1.2 revealed that the economy in 1980 had a GNP growth rate of 4.7 percent points followed by an exponential reduction by 202.13 percentage points in 1990, and a drastic increase of 131.25 percentage points in 1995 followed by stability in 2000. Despite those facts, the economy has continued to advance it human development and social infrastructure.
Owing to the consensus in political administrations who manage the Barbadian economy, they have managed to transform the country from that of a traditional agricultural sector to that of an industrialized economy.
Discussion and Conclusion
From the data presented, the author believes that Jamaica’s underperformance in comparison to Barbados’ and Bahamas’ is mainly due to political administrators’ mismanagement of the economy. In the 1980s, the government of Jamaica without proper assessment of the strengths and weaknesses of the economy and without having a thorough understanding of the economic climate went on wholesale trade liberalization policies. The Structural Adjustment Programme when analyzed by Doctors Michael Witter and Patricia Anderson (1989) revealed that there were massive job dislocations, business failures and social dislocations. Between 1991 and 1993, Jamaica’s inflation rose to an unprecedented 140 percentage points. Many political pundits posit that this is because of the political administration’s policies that were wholesale accepted as were proposed by IMF. On the other hand, Bahamian and Barbadian governments did not see it fitting to shock their economies with the wholesale trade liberalization.
The political ideological switch that was posited by Michael Manley resulted in a mass exodus of Jamaicans that are still having an impact on the economic landscape of the country -see Table 1.3. The astute George Beckford (Caribbean Economy, pp.7) states that, "the present characteristics and attitudes of the population of the Caribbean have undoubtedly been very greatly influenced by our population history. Population history of the Caribbean was almost entirely a history of Migration". In addition, Harrison (Tourism and the Less Developing Countries, 1992) posited that, "if political instability occurs, the developing nations’ ability to cope is far less". Therefore, in Jamaica, the 1970s political shifts followed by the political turmoil in the 1980s explain why Manley’s ideology continues to hurt the island
Table 1.3 (Jamaica)
Year Migration Balance
1841 -
1861 12800
1871 -800
1881 5600
1891 -24800
1911 -43900
1921 -77100
1943 25800
1960 -195200
1970 -296500
1982 --216900
1991 -188858
Source: Statistical Yearbook of Jamaica, 1994 page 68
Statistical Yearbook of Jamaica, 1999 page 66
Based on figure in Table 1.4, the data revealed that while Bahamas and Barbados were experiencing positive economic growth, Jamaica had negative growth. The figures do not suggest the reasons for such a disparity but the startling contrast is in the fact that Jamaica has an opened economy while Barbados and Bahamas do not have the same. In Table 1.1, both economies unlike the Jamaican economy sport a mammoth trade deficit with the rest of the world.
Exports/Imports Analyses
Table 1.5 – Annual Average Rate of Growth (in %)
1980 - 1985
1985 - 1990
1990 - 1995
1995 – 2000
Barbados 13 -9.5 0.3 0.8
Bahamas -13 -30.4 23.4 0.8
Jamaica -10.0 16.6 3.9 -2.4
Source: UNCTAD-Handbook of Statistics, 2002
In Table 1.5, the trade balance of the three (3) countries revealed that over the entire period to 2000, trading relations with the rest of the world is a negative figure. This is explained by the fact that, the country has little innate natural resources and so is interdependent on the international economies of the world to provide it be with various tangible goods. This indicates that the Jamaican economy performance better in relation to the rate of growth of Exports/Imports when compared with Bahamas and Barbados.
Once again the Barbadian economy is not has opened as is the case in Jamaica and so may explain why that country’s growth rate of exports/imports (measured in %) is lower than. This adds potency to the argument that the Jamaican economy was outperformed by Bahamas and Barbados mainly to political management and their decisions.
In 1995, the Jamaican government practiced loose monetary policy coupled with loose public sector management, which rapidly eroded all the gain within the external accounts. The businesses in Jamaica continue close in large droves mainly because of high interest rate policy, and the sudden thrust of trade liberalization. The country continues to grapple with high inflations, low growth, mass exodus of trained professionals/craftsmen, low investor confidence coupled with violent crimes. The economy repay approximately 60 percentage points of every dollar collect for debt servicing. This adds to the frustrations of the economy. Hence, little money is left for social amenities. This explains why countries like Bahamas and Barbados that spend approximately 20 percentage points of their GDP on education have progressed beyond us today.
The oil crisis in the 1970s coupled with the political ideology of Michael Manley have aided in the downfall of the Jamaican economy. The fact that Jamaica changed its economy policies via a number of experimentation in the same period and more so, since the last five (5) years, the country will continue to move in different directions. Another fundamental mistaken that was taken by political directorates then was decision to borrow from the International Monetary Fund. The Fund imposed a number of regulations and restrictions on the country that saw its downfall.
Is there no hope for Jamaica? Bahamas and Barbados continue with better economy management that was every practiced by the Jamaican directorates and policy makers. The answer, therefore, is political. We must expand the economic base of the country to reduce the informal economy and by extension the crime industry.
Despite the economic position of Jamaican economy, one advantage that we have to date is a lower HIV/AIDS prevalence rate that the two (2) countries to which the author has discussed at length in this essay. "Is that all that the Jamaican people have to boast over their counterparts?"
The economic environment of today world is different from that of the 1970s, if the country continues in its present vain, then they could be a group of international beggars. Let us not rest all the blame for this dilemma at the feet of our political directorates but let us understand that the peoples of Bahamas and Barbados have made a number of sacrifices to attain their present advantage over the Jamaican economy. Can the Jamaican peoples develop the degree of shared vision and commitment to change their today, tomorrow? Research cannot provide this answer but should enhance the process of understanding of the way forward. The author believes that although the Jamaican economy is outperformed economically the Bahamas and Barbados, the political directorates and peoples are able to pride themselves in again being the pearl of the Caribbean.