Jamaica

0 FavoriteThe island – discovered by Christopher Columbus in 1494 – was settled by the Spanish early in the 16th century. The native Taino Indians, who had inhabited Jamaica for centuries, were gradually exterminated and replaced by African slaves. England seized the island in 1655 and established a plantation economy based on sugar, cocoa, and […]

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The island – discovered by Christopher Columbus in 1494 – was settled by the Spanish early in the 16th century. The native Taino Indians, who had inhabited Jamaica for centuries, were gradually exterminated and replaced by African slaves. England seized the island in 1655 and established a plantation economy based on sugar, cocoa, and coffee.

The abolition of slavery in 1834 freed a quarter million slaves, many of whom became small farmers. Jamaica gradually obtained increasing independence from Britain, and in 1958 it joined other British Caribbean colonies in forming the Federation of the West Indies. Jamaica gained full independence when it withdrew from the Federation in 1962.

Deteriorating economic conditions during the 1970s led to recurrent violence as rival gangs affiliated with the major political parties evolved into powerful organized crime networks involved in international drug smuggling and money laundering. Violent crime, drug trafficking, and poverty pose significant challenges to the government today. Nonetheless, many rural and resort areas remain relatively safe and contribute substantially to the economy.

The Jamaican economy is heavily dependent on services, which now account for more than 60% of GDP. The country continues to derive most of its foreign exchange from tourism, remittances, and bauxite/alumina. Remittances account for nearly 20% of GDP and are equivalent to tourism revenues. Jamaica’s economy, already saddled with the lowest economic growth in Latin America, will face increasing difficulties as the global economy slows. The economy faces serious long-term problems: a sizable merchandise trade deficit, large-scale unemployment and underemployment, and a debt-to-GDP ratio of almost 130%.

Jamaica’s onerous debt burden – the fourth highest per capita – is the result of government bailouts to ailing sectors of the economy, most notably the financial sector in the mid-to-late 1990s, and hinders government spending on infrastructure and social programs as debt servicing accounts for nearly half of government expenditures. Inflation rose sharply in 2008 as a result of high prices for imported food and oil and should fall in 2009 with the decline in international oil prices. High unemployment exacerbates the serious crime problem, including gang violence that is fueled by the drug trade.

The Golding administration faces the difficult prospect of having to achieve fiscal discipline in order to maintain debt payments while simultaneously attacking a serious and growing crime problem that is hampering economic growth.

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