Jamaica has had a very long history as a plantation economy spanning centuries. This has meant that agricultural activities have been at the heart of economic activity and livelihood for the masses of Jamaican people for several years leading up to Independence in 1962.

Since the 1950s this historical agricultural concentration of the economy started to change as the bauxite and alumina mining, tourism and light manufacturing started to become important facets of the productive economy. The Government of the time created incentives to draw overseas capital investments into the country to tap into and develop its large bauxite deposits and to engage in other productive activities. The evidence suggests that, by 1952, the country had established a vibrant bauxite sector and was extracting over a million tonnes of the ore by the mid-1950s.

Since the 1950s this historical agricultural concentration of the economy started to change as the bauxite and alumina mining, tourism and light manufacturing started to become important facets of the productive economy. The Government of the time created incentives to draw overseas capital investments into the country to tap into and develop its large bauxite deposits and to engage in other productive activities. The evidence suggests that, by 1952, the country had established a vibrant bauxite sector and was extracting over a million tonnes of the ore by the mid-1950s.

Aside from government incentives for private capital to operate in the country, the Jamaican economy was benefiting from the post-World War II period, which saw a significant increase in bauxite demand for reconstruction purposes as Jamaica was seen to have large and high quality deposits of the ore. Furthermore, Eastern European countries, such as Hungary and Yugoslavia, who were traditionally large producers, were also adversely impacted by the war and so were unable to satisfy vast swathes of world demand.

As agriculture continued to decline, bauxite therefore emerged as Jamaica’s main income-earner, and by the 1960s the country had established itself as one of the leading producers of the ore in the world, reaching the number two spot by the end of that decade. Driven primarily by strong foreign investments in bauxite and exports of the ore, the 1960s was a period of consistent, robust growth for the country, setting a very promising tone for the future economic prospects of the society.

Relatively good economic performances continued into the early 1970s as the bauxite sector persisted as a world leader and demand remained strong both for post-war reconstruction efforts and new wars in which America was engaging. Growth, however, took a snag for most of the years after 1973, a year in which the world economy experienced a major oil price shock which hit the Jamaican economy very hard and exposed its over-reliance on the bauxite sector.

The pursuit of a strong socialist agenda by the Michael Manley-led Government, in the face of significant economic challenges during that decade, brought notable but economically unsustainable social advances which created fiscal imbalances and forced the country into a very tough borrowing experience with the International Monetary Fund (IMF) in 1977 which was to persist well into the 1990s.

Bauxite started to fall out by the end of the 1970s as global prices for the ore started to plummet, new competition emerged from Australia and Guinea and the companies retaliated against a levy imposed by the Government, whose socialist current was facing robust resistance from the US and the capitalist West.

The country’s borrowing relationship with the IMF deepened in the 1980s and started a swing towards free market economics, which saw the creation of free zones and an expansion in the services sector such as the retail trade, hotel and tourism. The expansion reflected in growth in the early 1980s, and again in the middle of the decade, but by the end of the decade Gross Domestic Product (GDP) was at no greater size than it was in 1970 as major negative growth was also experienced in some years.

Economic and financial liberalisation in the 1990s, under the PNP Government which had shed its socialist notion of the 1970s, brought a deluge of new products into the country as well as capital inflows. But, while this happened, the country’s manufacturing and agricultural sectors — on which the poor are heavily dependent — virtually capsized, creating an economy far more oriented towards importation and distribution of final produce than domestic production.

During the 1980s and especially the 1990s, bauxite and increasingly tourism were important foreign currency earners for the economy, with remittances joining that cohort in the late 1990s. Free market capitalism in a high interest rate environment contributed to the mid-1990s financial and banking sector slump and the resultant large-scale government bailout of the sector threw the country’s fiscal apparatus into a state of imbalance, thereby making social necessities less of a budgetary priority and largely reorienting the Government’s focus to issues of macroeconomic stability.

Taken as a whole, it is not therefore surprising that, with the exception of the early post-Independence years and small periods in the 1980s and early 1990s, the Jamaican economy has experienced negligible economic growth — a phenomenon which has persisted well into the 2000s despite continued liberalisation of the economy.

Jamaica has experienced comparatively commendable advances in development in areas such as health and education, but it is clear that its cumulative stagnation has caused many to remain in poverty and has constrained the rate of development of human and general productive capacities. Indeed, growth in Jamaica has been far too stagnant to make any meaningful cuts in incidence of poverty and to optimise the country’s resource capacities — human and otherwise. There are now far more people demanding a share of the ‘economic pie’ through expanded education, but the central problem remains that the ‘economic pie’ is not expanding. The total value of the economy, in real terms, is hardly better off today than it was in 1962.

Denarto Dennis is a lecturer in the Department of Economics at the University of the West Indies, Mona. Comments to denarto.dennis02@uwimona.edu.jm.

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During the 1960s Jamaica established itself as one of the leading producers of bauxite in the world, becoming our main income-earner. But, by the end of the 1970s, global prices for the ore started to plummet,