1655: english occupied jamaica and created agricultural-based economy (slave labour) to support...
DESCRIPTION
1920: sugar cane increase; increase in land size 19th century: rise in banana trade, 1890= banana replaced sugar cane as major export Great Depression (1930s): demand for economic development from British rule= 1 million pounds/ yr for 20 yrs on development BUT… funds were not implemented to deal with Jamaica’s structural problemsTRANSCRIPT
LIFE AND DEBT: A MOVIE DEBRIEF- LET’S BREAK THIS DOWN!
JAMAICA: A BRIEF HISTORY 1655: English occupied Jamaica and
created agricultural-based economy (slave labour) to support industrial revolution in England
18th Century: sugar cane export flourished
1807: abolition of slave trade= no more sugar cane exports, followed by serious drought
1865: social, economic progress from English including new technologies (irrigation)
1920: sugar cane increase; increase in land size
19th century: rise in banana trade, 1890= banana replaced sugar cane as major export
Great Depression (1930s): demand for economic development from British rule= 1 million pounds/ yr for 20 yrs on development
BUT… funds were not implemented to deal with Jamaica’s structural problems
ABSTRACT Jamaica’s indebtedness to international
lenders, especially the IMF= structural adjustment policies and forced free trade
The weakness of the Jamaican dollar= due to a series of devaluations imposed by the IMF
WHAT’S THE DEAL WITH THE IMF? The IMF is only concerned with short-term
borrowing to meet immediate needs of a country- the effect is more $ in the pockets of 1st world nations (U.S., Great Britain, etc.) because of high interest rates
The World Bank was established to help rebuild countries after WWII (i.e. England)- Jamaica under British rule
1962: Jamaican Independence after 300+ yrs
POST- INDEPENDENCE: WHAT DID THIS MEAN?
Post independence, countries like Jamaica quickly realized they had financial troubles because lack of economic strength= they needed time to build their economy!
1973: hike in oil prices= a large $$ impact Jamaica is oil importer- went to private
banks for loans IMF: try to cutback spending, THEN come
to us
PRESSURE FROM THE IMF Manley: felt pressured to approach IMF
because Jamaica unable to pay for imports
Wanted repayment plan compatible for long-term development
IMF: development is Jamaica’s problem IMF: loaned $$ short term with high
interest rates, imposed heavy conditions
IMF’S CONDITIONS 1. Budget cut-backs 2. Devaluations in currency ($$) 3. Interest rates under their control 4. Free trade 5. Privitization
= vicious cycle, because there is no money allocated fordevelopment of Jamaican economy
IMPORTS AND EXPORTS IMF restricted spending to healthcare &
education Initially, IMF: decrease imports, increase
exports Imports: what comes INTO the country Exports: what goes OUT of the country
Jamaica is dependent on imports from other countries: oil, medicine, books, food, etc.
Debt reaches $7 billion
CROPS Jamaican crops are rotting, because U.S.
crops are cheaper to buy in Jamaica (CRAZY!)
IMF put pressure to openup to imports: previousmeasures prevented imports,ensuring Jamaican farmerstheir own market (too smallto be self-supporting)
PRODUCE (THINK: HONEYDEW MELONS) Jamaican produce is more expensive ($
$) because it is not mechanized- “Can a machine compete with a machete?”
Produce doesn’t meet standards
“Free trade flows inone direction: towardthe U.S.A.”
DAIRY INDUSTRY
Dairy industry had been growing in Jamaica 1992: government took out loan of $50
million from Inter-American Development Bank to support dairy industry
Condition: had to abandon local subsidies (additional financial support to farmers, i.e. tax cuts), and abandon restrictions on imported milk products
Abandon restrictions on imports= U.S.A. started importing powdered milk
Powdered milk: cheap (affordable), does not spoil (for longer transportation), easier storage
Result: Jamaican farmers went out of business= could no longer keep up with imports of powdered milk; cut back on business dramatically
BANANA INDUSTRY: THE LOME AGREEMENT
Jamaica produces 90, 000 tonnes of bananas- exported to UK (former colony)
Europeans who had colonies in the past wanted to give them extra help
The Lome Agreement is an agreement of African, Caribbean, and Pacific (ACP) countries with the European Union, which gave former colonies extra help in trade= guaranteed market, tariff free
IS THE LOME AGREEMENT FAIR? U.S. (on behalf of Chiquita) went to the WTO and charged that this preferential treatment of certain countries was against WTO rules of free trade
Chiquita, Dole, and Del Monte (U.S. owned) control 95% of world banana market= most grown in Latin America under repressive and exploitive regimes; very low wages (sometimes $1/day).
In Honduras, Chiquita banana workers went on strike; they were forced back to workat gunpoint: there are no unions to protect
workers!!
Under these conditions, the multinationals can bring their produce to market more cheaply.
Banks won’t invest in Jamaican bananas
FREE TRADE ZONE In the free trade zones, workers paid less than
what American workers would be paid. Kingston Free Trade Zone (FTZ), encircled with
fencing and barbed wire, rows of factories, assembly of garments
FTZ not part of Jamaica= not subject to things like income tax, duties, not subject to any other Jamaican laws.
Don't meet the quotas= don't get paid for the work you did. $30/week wages.
On the job, one can't talk or go to the bathroom freely. Workers have to pay many taxes (where is the $$ going?!)
Foreign companies were promised that Jamaican workers would not form unions
Chinese workers imported= tension between Jamaican workers and Chinese workers- WHY? Chinese getting paid in US $$!
FTZs are counterproductive- factories now moving to Mexico= cheaper labour, loss of 18,000 jobs
How is Jamaica going to repay loans they took out to open the FTZ?
WHAT WAS THE IMF’S RESPONSE? Director of IMF says: key to growth is to
attract foreign investment (private investors)
Manley says that private foreign investors won't provide money for some of the things the country needs: infrastructure, education, healthcare, food self-sufficiency= they are only interested in making a profit
HOW CAN JAMAICA CHANGE IMF POLICY? Votes in IMF are proportional to the size of the
country in the world economy, so U.S. has 17.5% of the vote, then Japan and Germany.
To change an IMF policy, need 80% of the vote (can't be done without the support of U.S. and W. Europe).
Does Jamaica really have a “say” in changing policies? How is this ironic?
MCDONALDIZATION
McDonald’s could be purchasing Jamaican products- instead, they import them (Why?)
McDonald’s using cheaper imported beef American ranchers use an anabolic
steroid Stilbestrol that isn't sold in Jamaica, enabling them to produce more meat more quickly (and therefore, more cheaply)= “Cancer-causing agent”
SLAVERY? In slavery, the master would take the best part of the food. Similarly, today in America, only the best parts
of the chicken are sold (the back, neck, feet, etc.), are dumped into Third World countries.
Dark meat from U.S. being sold into Jamaica at 20 cents/lb., even though it costs 50 cents/lb. to produce, simply because it can't be sold in the U.S= Jamaican chicken farmers are suffering