HYBRIDIZED NEOLIBELARISM AND ITS EFFECTS IN JAMAICA

HYBRIDIZED NEOLIBELARISM AND ITS EFFECTS IN JAMAICA

It is increasingly coming to the attention of experts how different areas of the world are being converted to “irrelevance” structurally due to the integration of the global market combined with soaring industrial capitalism whose productivity is highly uneven. It has brought adverse effects in the regions affected, with the agricultural sector worst hit. The future of the poor farmers in the affected areas is under concern due to the deepening of the integration of the global food economy, with continued huge disparities in production scale, technology, and product subsidization which only favours rich nations.

A stark picture denoting the disparities in global production, the social and economic fallout between farmers of these two regions (Amin, 1977) has been created by using Jamaica as a case study. Jamaica is a country that has been previously used as a testing ground for international macro-economic policies in the “Third-world republics”. Identified as a “best scenario” of the outcomes of the policies establishes, Jamaica is the best case study to determine how to trade and liberal policies applied by international bodies like the World Bank, and the IMF have impacted the developing countries both at a positive and negative picture. Our paper discusses the conjecture that domestic and external forces of dependencia and neoliberalism respectively have impeded the development of Jamaica; investigating the extent at which these forces have forestalled the sectors of Agriculture and human development. In this paper, I will explore the impacts of structural adjustment policies precisely how the removal of government subsidies to farmers and the elimination of import tariffs affected those in agriculture and farming. I argue that these neoliberal policy actions negatively affected the welfare of most Jamaicans who depended on subsistence farming, thus leading to a decline in human development. As discussed in the introduction, it is imperative to understand that this research mainly focuses on three areas of discussion which are outlined in the bibliographies below.

The first section, Gopaul, C. (1996). Kingston, Jamaica: structural adjustment and policy (p117–35). In Fabricius, I. Harris N. (Eds). Cities and Structural Adjustment. Routledge: London.  In Chapter 7 of this book, Gopaul highlighted the impact of 13 years background of Structural adjustment Program (SAP) in Jamaica from 1977 until 1990. The author focuses on the macroeconomic environment as the main objective of the structural adjustment program, which encompasses liberalization, privatization, deregulation, and restructuring the country’s economy. Thus, imposing exchange control mechanism and free-market policies and other poor macroeconomic indicators that lead the Jamaican economy to failure. Gopaul undertakes the example of the impacts of SAP reform on KMA (Kingston Metropolitan Areas) that affected urban population, deterioration of the urban structure, social facilities, the collapse of the urban transportation system, increase in unemployment, inequality and poverty among men and women in the region. This chapter is essential because the Agricultural sector is mostly dependent on a sound transportation system that links rural farmers to the urban market. This resource provides an example of the failure of the transportation system in Kingston. Thus, the evidence from this chapter will help me build a case that after restructuring the economy, the Government of Jamaica also relinquished its responsibility for public sector transportation and other direct subsidies that affected agriculture.

In the second section,  Calhoun, M. B. (2004). Agriculture, Trade, and Development in the International Political Economy: A Case Study of Jamaica. (Doctoral Dissertation). The University of Maryland. This doctoral thesis research studies the Agriculture sector of Jamaica drawing from a profound historical perspective starting from the pre-colonial era. It gradually examines the internal and external factors that affected and shaped agricultural development in Jamaica and countries in the Caribbean. According to Calhoun, Jamaica has been blessed with fertile soil, abundant water stocks, warm weather and human resource capacity, which is suited for the production of several agricultural products. Over its history, Jamaica has been a leading producer and exporter of some of the world’s most demanded products such as sugar, banana, tobacco and coffee (Chapter 2, p.109). Calhoun focuses on the politics of agriculture under neoliberal structural adjustment program (SAP) and examines all types of policies, restructuring, agreements and trade regulations that were imposed by IMF and World Bank for developing countries like Jamaica operating within that region. The research outline and probe the reasons for Jamaica’s agricultural sector declined, continued poverty and underdevelopment of the economy. This dissertation examines the impact of globalization and trade liberalization, preferential trade agreements and reduction of commitments mandated by the WTO through Agreements of Agriculture. I will use this resource to provide evidence of the impact of structural adjustment on both economic and human development.

In the third section, Thomas-Brown, K. (2013) coping with Neoliberalism: Poor Jamaicans, informal employment and survival. Caribbean Geography 18:6-20. This paper addresses the social impacts of neoliberal policies and structural adjustment program (SAP) packages on the life of ordinary residents in Jamaica. The author summarizes the origins of the neoliberal policies in Jamaica, its implementation and effects of economic restructuring, unemployment on living standards in four towns outside of the capital. It shows that neoliberal policies and structural adjustment program (SAP) had played a significant role and resulted in decreased formal sector employment opportunities leading to the rise in informal activities that pushed people into illegal practices and operations. The author used a qualitative method in analyzing the neoliberal policies and its impacts on people who lived and worked in these towns and painted a picture of their struggles. The coping strategies people used to ensure their survival across changing circumstances of their life. This type of analysis is useful for my research to provide examples of SAP impacts on human development. It will help me draw images of the adverse effects of neoliberalism and its unfair and inequity Structural Adjustment program on human development in Agriculture.

Jamaica Island was a slave colony of England until its independence in 1962 (Weis, 2004). From independence, Jamaica has had trouble integrating into the global economy due to lack of economic infrastructure and productivity. The post-independence Government of Jamaica (GoJ) inherited weak state institutions without the local capacity to reinvent its role for production and a tax base from its under-skilled and unemployed masses (Michelle & Blake, 2017, p. 586). Jamaica was undergoing an economic crisis in the 1980s and 90s. It was an underdeveloped economy which was heavily dependent on imports and exported only one crop in a few export markets. After WW2, the Jamaican economy underwent massive economic growth, which resulted in reforms in the social and national structure. There emerged industries of mining and tourism, which were highly depended on (Le Franc, 1994). Mining industries like the bauxite-alumina emerged as a result of friendly foreign investment policies by the government. Within a few years, substantial investments in the mining sector by the United States and Canada ensured that Jamaica was the world’s leading exporter and producer of bauxite. However, the stakes were owned by foreigners which meant that there was little money to benefit the Jamaican people. This changed with the coming to power of the Manley government in 1972. The government had a socialist reformism plan, which saw the government owning 51% of the shares in the mining sector. It translated to an increase in taxes from 25 million to 200 million in one year (Boyd, 1988).

The foreign investors’ reaction to the direct government intervention was to cut back the production of bauxite in Jamaica and relocate to other countries. This retaliatory response from the mining companies had negative impacts on the local economy. Jamaica ceased to be the global bauxite producer from 23% of the world’s global production in 1965 to 13% of the world’s total bauxite production in 1979. Other adverse developments in the world economy like the hiking of the prices of oil, which tripled between the years 1973 and 1974. Combined with the world’s recession, the country’s terms of trade were adversely affected. The exports reduced compared to imports, as evidenced by a 40.6 million Jamaican dollar deficit in the balance of payments by the year 1972, later deteriorating to 213 million in 1976 (Harvey, David 2005). The government began borrowing to reduce the deficits in their balance of payments. Massive borrowing led to a hike in debt from 124 million US Dollars to 489 million US dollars by 1976. To strengthen their economic growth and reduce poverty, Jamaica turned to the international financial institutions, namely; the International Monetary Fund (IMF) and World Bank (WB) for their development loans (Thomas. B. 2013). These loans were conditional to restructuring the country’s economy in what constituted neoliberal policies such as structural adjustment program reforms. Neoliberal policies encourage substantial private property rights, free markets and free trade (Harvey, 2005). The first standby agreement that the GOJ signed with IMF was in July 1977, followed by a second three-years extended fund facility (EFF) agreement which came into effect in May 1978 (Gopaul, 1996).

As a result of the heavy burden from the third world nation, the IMF and the World Bank proposed a package of economic reforms which would be geared towards stabilization of the Jamaican economy. These policies were aimed to re-orient the country away from planning models which were state centred towards a better market strategy of development which relies on primary exports—structural adjustment policies like neoliberalism on human development in agriculture in Jamaica in the last three decades.

Interrelated factors like proto-globalisation, colonization from Europeans, denote distinctiveness within cities in the Caribbean region (Jaffe, 2008). Jamaica is a nation that has a history of colonialism in its rural and urban settings. In recent years, there has been an endowment in rapid urbanization, and other neoliberalist policies that have led to the development of Jamaica policies of neoliberalism were introduced in 1977. During this time, Jamaica underwent problems on the economic front; for example, the rate of unemployment in 1972 was 23.6% (Handa & King, 2006; Hyatt, 2007). Financial hardships were suffered throughout the country, starting from, extraordinary high prices of oil globally, low levels of production, reduced export prices, declining growth rate and burgeoning national debt. The federal government had a tough time in trying to balance the financial budget (Timms, 2008), with attempts to make up for shortfalls in the budget by looking for the assistance of international agencies of lending such as the World Bank and the IMF. Jamaica, just like many nations in the Latin region, decided to default on loans from the IMF during the 1970s. Continuous lending from the IMF lowered the evidence of the island’s success in achieving the shortfalls in the budget led to the establishment of conditions in the subsequent loans borrowed. The terms got established in SAPs laying out ground rules that guided the island’s management of political and economic systems, specifically, reducing and limiting the interference of the government in the sector of the economy. The Consensus of Washington, a term established in 1989 by the economist John Williamson, refers to the necessary standard package of reforms by institutions like the World Bank and IMF based in Washington. It constitutes of neoliberalism; using austerity in fiscal policies and establishing conditions which promote economic policies like laissez-faire through trade liberalisation and privatization to maintain global economy (Timms, 2008).

The economic reforms of the Jamaican government were characterized by financial deregulation, dollar devaluation, privatization, macro-economic adjustments, economic liberalization, Foreign Direct Investment liberalization, and non-FDI capital flow freeing. The SAPs initial implementation had negative impacts because the island had to ‘acclimatise’ to the policies identified above. In theory, outcomes expected were to increase exports demand to stimulate economic growth and local production further. But the growth of the economy has never been higher than two per cent during any time since the mid-1970s. Also, SAPs and neoliberalism introduction and their continued impact on the social environment and the economy of Jamaica have had controversial responses. Some controversies are concerning inconsistencies in how SAPs was implemented by the Jamaican government before the mid-1980s, whereas other debates focus on the real versus perceived outcomes of the economy. Example, Tennant & KirkPatrick (2002) note that before the 1990s, IMF had a long history of a troubled relationship with Jamaica, while Easterly (2005) identifies that it is in the top 20 recipient countries of continuous adjustment lending from the IMF due to its weak growth and macro-economic outcomes.

The rapid devaluation of the Jamaican dollar and escalation in prices combined with the removal of food subsidies put many ordinary consumers who relied heavily on goods imported at a disadvantage. Reed (1996) identified that incomes below the rate of inflation were kept by austerity, but, according to Living Conditions survey, price inflation was exceeded by wage inflation between the years1993 and 2002, which led to a sharp hike in real wages and a poverty reduction rate. However, it did not reassure ordinary Jamaicans much, who faced higher prices, while local producers have not been very favoured by a competitive economy (Timms, 2008; Beeson, 2007). As SAPs introduction accelerated, increased hardship was experienced by the more imperfect people as there was a skyrocketing in prices and specific services and goods became inaccessible and scarce. However, contrary to the known perception, for the years of 1989 to 1993, the Survey of Living Standards reported a reduction in inequalities. Handa & King (1997) made an argument that consumption shares in the bottom echelon of the population hiked from 2.4 per cent to 2.8 per cent while there was a decrease in the top stocks from 28.9 per cent to 26.5 per cent. However, it was noted that when inequality levels were considered for individual years between 1989 and 1993, inequality increase in 1991 and 1992 was in line with policy reform acceleration in the trade and financial sectors. The most significant inequality decline occurred from1992-1993 and was consistent with strong rebounds in the agricultural industry, where many poor Jamaicans are employed. Handa & King(1997) further observed that from1989 to1993, the share of food (food ratio) increased among those in the top echelons and reduced in the bottom echelons, indicating an improvement of the living standard of the poor people living in Jamaica. This evidence would go on to make an inference that, contrary to popular perceptions, the policies of neoliberalism did not ultimately impact negatively on the poor in Jamaica.

In conclusion, the primary purpose of this paper was to bring a manifestation of the hybridized neoliberalism policy in Jamaica. Jamaica’s case is prevalent in that causes of the dependencia, and the overall underdevelopment have been conclusively explained in the hypotheses dissertations discussed in our paper. It, therefore, offers a solution for the majority of the third world economies. The hypotheses presented explored the availability of the embedded structures like the domestic agriculture stagnation, dependence on exports, export and local consumption have insufficient diversification of output that have retarded the overall development process. With the availability of these forces, Jamaica continues to face the risk of being marginalised primary commodity exporter. For this trajectory to be reversed, it is crucial for Jamaica, and the third world countries to enhance their capacities to produce, expand their agro-industries, diversify exports, create their international brand, and capitalize on the endowment of their resources to unlock untapped potential and create a self-reinforcing, balanced development.

References

Amin, Samir. 1977. Imperialism and Unequal Development. New York: Monthly Review Press

and survival. Caribbean Geography 18:6-20

and the Caribbean during the last three decades. Journal of Agrarian Change, 2(3), 381-400.

Calhoun, M. B. (2004). Agriculture, Trade, and Development in the International

Easterly, W. (2005) ‘What did structural adjustment adjust? The association of policies and growth with repeated IMF and World Bank adjustment loans’, Journal of Development Economics, 76, 1-22.

Ervine, K., & Fridell, G. (Eds.). (2015). Beyond free trade: alternative approaches to business,

February 17, 2020, from http://hdr.undp.org/en/humandev

Gopaul, C. (1996). Kingston, Jamaica: structural adjustment and policy. In Fabricius I Harris

Handa, S. & D. King (2006) Adjustment with human face evidence from Jamaica, UK: Pion Publications

Harvey, David. (2005). A Brief History of Neoliberalism. Oxford: Oxford University Press.

Hyatt, K. (2007) ‘Assessing the competitiveness of Jamaican Ackee in light of the challenges faced by sugar and bananas,’ Proceeding of 26th West Indies Agricultural Economics Conference (Caribbean Agro-Economics Society) 26th July 2006, Puerto Rico, [Retrieved on November 5, 2010], from http://ageconsearch.umn.edu/bitstream/36947/2/Proceeding

Jaffe, R. (2008) The Caribbean City, Ian Randle publishers: Kingston.

Kirkpatrick, C. & D. Tennant (2002) ‘Responding to the financial crisis: The case of Jamaica’, World Development, 30(11), 1933-1950.

Michelle A. Munroe & Damion K. Blake (2017) Governance and disorder:

N (eds) Cities and Structural Adjustment, 117–35. Routledge, London.

neoliberalism and violent change in Jamaica, Third World Quarterly, 38:3, 580-603, DOI:10.1080/01436597.2016.1188660

Political Economy: A Case Study of Jamaica. Doctoral Dissertation Submitted to the Faculty of the Graduate School of the University of Maryland.

Politics and power. New York: Palgrave Macmillan.

Reed, R. (1996) Structural Adjustment, the environment and sustainable development, London: Earthscan Publications.

Reforms in Jamaica. Journal of Agrarian Change, 4(4), 461-491.

Spoor, M. (2002). Policy regimes and performance of the agricultural sector in Latin America

Studies, 33(1), 61-88.

Thomas-Brown, K. (2013) Coping with Neoliberalism: Poor Jamaicans, informal employment

Timms, B.F.(2008) ‘DevelopmenttheoryanddomesticagricultureintheCaribbean: recurring cries and missed opportunities’, Caribbean Geography, 15(2), 102-117.

United Nations Development Program. (2019). Human Development Report. Retrieved on

Weis, T. (2004). Restructuring and redundancy: the impacts and illogic of neoliberal agricultural

Weis, T. (2006). The rise-fall, and future of the Jamaican peasantry. The Journal of Peasant