Introduction
Global economic competitiveness is what every country aims at, and is determined by several factors. These include the legal and administrative framework that governs a country’s institutions, economic policies, labor market efficiency, and economic innovation (Hamalainen 2003).
Jamaica’s economy
Jamaica is a third world country with an economy that is largely dependent on services such as the manufacturing industry, tourism, insurance, mining, and agriculture. These services account for about 65% of the country’s Gross Domestic Product. However, Jamaica’s economy is threatened by high crime rate (due to rampant drug trade), corruption, unemployment, and under-employment and public debt. The ailing economy reached its peak in the early 1990s (Bank 2004).
Economic problems
Unemployment arises from the high levels of poverty. Consequently, there are a large number of school drop-outs and this impacts on the workforce directly. Jamaica is a well-known hub for drug trade. This has spurned the emergence of violent gangs by drug cartels and therefore means an increase in the crime rate. The level of crime in Jamaica is so high that it accounts for the single-most cause of economic instability. Insecurity is a very big threat to the economy since economic investors tend to shy away from such risk. Corruption in the country’s institutions also discourages economic development since public funds as well as those from donors and development partners are not put into good use. Jamaica’s huge public debt arises from the government’s effort to bail out other ailing sectors of the economy that necessitated heavy borrowing of funds from the international community. Debt servicing hinders the government from investing in other areas of the economy, leading to stagnation even though monetary sources from donors tend to lighten the burden to some extent (Karagiannis & Witter 2004).
Good governance and economic policies
Global economic competitiveness can only be achieved through good governance and management. The government has the prerogative of implementing sound economic policies that would ensure positive economic growth. The government of Jamaica realized this and took a firm stand to salvage the country from an economic stagnation by government initiative to implement sound economic policies. The economy operates on a free market and this applies to state enterprises as well as private organizations. The government set out on a path to achieve economic liberalization and stability by introducing economic policies geared towards these goals. Such actions as removing exchange controls, stabilizing the currency, reducing inflation to single digit percentages and removing restrictions on foreign investments all set a platform for stringent financial discipline necessary for attracting investors and opening up international trade.
It should not be forgotten that the global oil crises of 1974 and 1979 left the country reeling in an all-time high inflation that worsened the petroleum-dependent country’s economy. The Jamaican economy continues to suffer many setbacks in the increasingly competitive global environment. The economic fluctuation that continues to haunt the country can be attributed to the global recession and high inflation. Poor policy implementation is also at the helm of Jamaica’s economic problems. For instance, as I had mentioned earlier, the country is heavily indebted due to the government’s initiative to finance the sectors of the economy that perform poorly at the expense of others.to create a balance, the government is forced to borrow from external sources ,leaving them in debt. The government policy of debt servicing through an agreement with the International Monetary Fund serves to further depress the economy. The other policy of exchange rate devaluation in an effort to ward off the high inflation rates also tends to lessen the value of the country’s currency (Karagiannis & Witter 2004).
Economic solutions
The solution to Jamaica’s ailing economy lies in tackling the root cause of these economic problems. The country must invest in good governance. A government should commit enough to implement government policies that are aimed at achieving sustainable growth. Such policies can include improvement of the education sector. Targeting the education sector ensures that a more qualified workforce reaches the job market. The major problem facing Jamaica’s economy is the insecurity that undermines economic development. The government has set out to curb this problem by rigorous public campaigns to get more children enrolled in learning institutions. The high crime rate can be curbed since children will be spending their time in school instead of joining dangerous drug cartels. Solving the crime problem will indirectly enable the problem of unemployment to be dealt with to ensure a sounder economic environment favorable for growth. An educated nation implies an empowered nation, and one that is able to generate a productive workforce. The financial sector can be improved by the government availing loans to small scale borrowers to help relieve the public debt. This would greatly reduce the government’s need to borrow heavily from international financial institutions like the World Bank and the International Monetary Fund.
Achieving global economic competitiveness
Economic competitiveness is achieved by countries that have a strong performance in relation to labor market efficiency and economic innovation. Innovation is all about using old knowledge to come up with new ideas. Investing in innovation ensures that a country produces marketable products that are protected by intellectual property rights and that are able to compete in the global market. The free market policy adopted by the government of Jamaica encourages productivity from both the private and public sector. Productivity is enhanced by an economic environment that encourages training opportunities, and is thus a direct pointer towards quality education. Labor market efficiency refers to a free and fair market that protects employees and at the same time looks after the interests of the employer. Government policies that spurn investor confidence, such as a transparent and incorruptible legal channel, and a highly accountable public sector should be ensured. Other players that are the landmark of global economic achievement are good infrastructure, highly developed financial markets and quality education (Bank 2004).
Conclusion
Jamaica is a perfect example of a country that is just starting to get back on its feet after years of languishing in economic pitfalls. All countries that are listed to have achieved global economic competitiveness share a common factor of good governance. Jamaica’s problems that undermine its economic development mainly poverty, low quality education, unemployment and insecurity all impact negatively towards achieving this goal as they discourage investment.However,it is worth commending the government for its effort in implementing economic policies that hopefully, will steer the country towards economic stability. In view of all these economic problems, the bottom line remains that good governance, coupled with sound economic policies are the driving force behind achieving a global competitive economy.
Bibliography
Bank, Inter-American Development. Revitalizing the Jamaican economy:policies for sustained growth. Boston: IDB, 2004.
Brown, Harold, and Charles Herzfeld. Global innovation/national competitiveness. New York: CSIS, 1996.
Hamalainen, Timo. National competitiveness and economic growth. Finland: Edward Elgar Publishing, 2003.
Karagiannis, Nikolaos, and Michael Witter. The Carribean economies in an era of free trade. Chicago: Ashgate publishing, 2004.