Management Of International Placement

Capital: Kingston
Population: 2,651,000 (2003)
Official language: English
Time: GMT minus 5hr
Currency: Web domain:
Major religion: Christianity
International dialling code: +1876

Economy

Overview: Jamaica has a relatively large and diversified economy. It grew strongly in the early years of independence, but then stagnated in the 1980s, burdened with persistent large fiscal and external deficits, due to heavy falls in the price of bauxite, fluctuations in the prices of agricultural commodities, and economic policies which left the country with high inflation, a fast devaluating currency, growing external debt and a large public sector containing many loss-making industries. Jamaica signed a series of agreements with the IMF, continuing into the 1990s and 2000s.

Substantial efforts have been made to attract investors through a range of tax, customs and other incentives, developing its equity markets, and encouraging joint ventures and privatisation, notably of hotels. The free-trade zones at Kingston, Montego Bay and Spanish Town allow duty-free importation, tax-free profits and free repatriation of export earnings. The US, China (Hong Kong) and Taiwan have provided most investment in these zones. Tourism and manufacturing are important industries. Investment and remittances from Jamaicans abroad make a significant contribution to GNI.

The financial sector was troubled from late 1994, with many banks and insurance companies suffering heavy losses and liquidity problems. The government set up the Financial Sector Adjustment Company (Finsac) in January 1997 to assist these banks and companies, providing funds in return for equity, and acquired substantial holdings in banks and insurance companies and related companies, bringing government expenditure on financial-sector rescues to more than US$2.8bn by 2001, exacerbating the economic problems and saddling the country with a large external debt. From 2001, once it had restored these banks and companies to financial health, Finsac divested them.

Despite the reforms, for successive governments it proved very difficult to break out of the cycle of deficits, currency devaluations, very high inflation and falling living standards. Even in the latter 1990s, after reductions in the public sector and when inflation was in single figures, the economy continued to shrink or stagnate. Three years of recession were followed in the 2000s by four years of very modest growth rising to 2.0% in 2003, with inflation at over 10%, until the island was devastated by hurricane Ivan in September 2004 and growth dipped to 1.2% for 2004.

Trade: Exports of goods and services account for 41% of GDP and manufactured exports for around 64% of total merchandise exports (2003). Main exports are alumina and bauxite (more than 60% of merchandise exports by value), sugar, bananas and clothing. Main imports are raw materials, fuels, consumer goods, food and capital goods. Main partners for exports are the US (28%), Canada, and the UK and other EU countries. Imports come from the US (44%), Latin America, other CARICOM countries and the EU.

History

Little is known about the island's early history, except that there are many traces of Arawak habitation, and that Arawaks, agriculturists who made good-quality textiles and pottery, were living there when Christopher Columbus landed on 14 May 1494, on his second American voyage of exploration. He named the island Santiago (Saint-James) but the name was never adopted, and it kept its Arawak name 'Xaymaca', of which 'Jamaica' is a corruption. Lacking gold, Jamaica was used mainly as a staging post in the scramble for the wealth of the Americas.

The Spanish arrival was a disaster to the indigenous peoples, great numbers of whom were sent to Spain as slaves, others used as slaves on site, and many killed by the invaders, despite the efforts of Spanish Christian missionaries to prevent these outrages. There were no Arawaks left on the island by 1665, but there were enslaved Africans replacing them.

In 1645 the British captured Jamaica from the Spaniards, whose former slaves refused to surrender, took to the mountains and repelled all attempts to subjugate them. These people came to be known as Maroons (from the Spanish cimarron, meaning wild, a word applied to escaped slaves). Between 1660 and 1670 pirates used Jamaica as a place of resort. In 1670 Spain formally ceded the island to Britain. Two years later the Royal Africa Company, a slave-trading enterprise, was formed. The company used Jamaica as its chief market, and the island became a centre of slave trading in the West Indies. Nonetheless, the battles of the Maroons to retain their freedom succeeded when, in 1740, the British authorities recognised their rights to freedom and ownership of property.

Settlers, using slave labour, developed sugar, cocoa, indigo and later coffee estates. The island was very prosperous by the time of the Napoleonic wars (1792-1814), exporting sugar and coffee; but after the wars sugar prices dropped, and the slave trade was abolished in 1807. After the emancipation of slaves in 1834, the plantations were worked by indentured Indian and Chinese labourers. Sugar prices fell again in 1846. Jamaica's worsening economic situation caused widespread suffering and discontent.

In October 1865, a political protest at Morant Bay organised by G W Gordon developed into an uprising during which the local magistrate and 18 other Europeans were killed. The governor, E J Eyre, declared martial law and launched a punitive campaign of ruthless severity, with several executions without trial, including the hanging of Gordon, who had not instigated any violence. The reaction in Britain was astonished outrage. Eyre was removed from office and Jamaica placed under Crown colony rule (1866). The banana industry was established in the second half of the 19th century, on big estates and smallholdings. In the early 20th century, Jamaicans worked on banana plantations in Central America and Cuba, and in the construction of the Panama Canal.

Jamaica's first colonial constitution gave considerable power to settlers. The governor's council included senior figures such as the bishop and chief justice, but the representative assembly was controlled by white settlers. After the imposition of direct Crown colony rule in 1866, settlers lost their power and the governor was advised only by the mainly nominated privy council. With amendments, this constitution was retained until 1944.

In 1938, the People's National Party (PNP), led by Norman Manley, was formed to campaign for independence. The Jamaica Labour Party (JLP), led by Sir Alexander Bustamante, was founded in 1943.

In 1944, an executive council, with half its members elected by universal adult franchise, was established. In 1953, ministers from the council took over most portfolios, and Bustamante became chief minister. Manley followed, in 1955. When Jamaica joined the Federation of the West Indies in 1958, it had full internal self-government with a legislative council (senate) and legislative assembly (holding real power).

On independence in 1962 Bustamante was prime minister. With bauxite in demand, tourism flourishing and a revival in bananas, Jamaica's economy boomed. In 1972, the PNP, led by Norman Manley's son, Michael, won the elections, and remained in office until 1980, when the JLP under Edward Seaga came to power. The PNP, again under the leadership of Michael Manley, won the elections of 1989