By Staff Reports onWorld News
KINGSTON — Jamaica is known all over the world as a tropical paradise. It’s a place to get away, relax in the sun and put your worries to rest. However, for many Jamaicans escaping one’s troubles is not so easy. Jamaica currently boasts a 19 percent poverty rate and an economy that has been mostly stagnant for the past 30 years. So, why is Jamaica poor?
1. Financial Crises & Mismanagement
A major reason for poverty in Jamaica is the nation’s long history of financial crises and economic mismanagement from the government. The state of Jamaica started facing financial difficulties in 1970s; the nation took a major hit when it’s over-reliance on bauxite mining was exposed by falling bauxite prices. Coinciding with this decline was a large amount of public spending. Together, these policies resulted in stagflation and caused massive unemployment and a large national debt.
2. Political Change
The 1980s saw Jamaica transition from a democratic socialist nation to a capitalist nation, but these changes failed to produce sustained economic growth. Austerity measures taken in the effort to pay off the country’s national debt resulted in greater disparities between the country’s rich and poor. The nation began to see steady growth in the 90s, but faced a financial crisis from 1996-2003 that caused the national debt to grow from 79 percent of its GDP to 141 percent.
In trying to pay off this debt, the country has focused less on the development of its citizens and more on Jamaica’s financial stability. Jamaica has also recently suffered from the 2008 financial crisis.
So, the answer to the question of “why is Jamaica poor?” is that the result of Jamaica’s poor economic growth can be felt throughout the country. The nation spends 20 percent of its budget paying off foreign debt, which is 115 percent of its GDP. Unemployment is at 12.9 percent and for young people that rate is 27.4 percent.
3. Organized Crime
Poverty and high rates of income inequality and unemployment in Jamaica have also spurred a rise in organized crime. The stagflation of the 1970s led to a rise in gangs organizing drug-trafficking operations. These gangs began to coordinate with both of Jamaica’s major political parties and have used their power to intimidate voters on election day. Jamaica continues to have major problems with drug trafficking, political violence and political corruption and has currently one of the highest murder rates in the world.
However, Jamaica’s situation is improving. In 2013, Jamaica entered a four year program created by the International Monetary Fund to institute reforms that could help Jamaica better manage its debt and produce economic growth. Since the program’s initiation, both unemployment and inflation have declined, and Jamaica’s GDP has seen modest growth.
Jamaica has also partnered with the World Bank and has instituted policies that improve education and early childhood development, diversified Jamaica’s energy needs with investments in renewable energy and helped small farmers get greater market access.
– Carson Hughes
Photo: Flickr
