Jamaica, an island of almost 3 million people with most living below the poverty line. Statisticians love to gloss over the numbers and present what they often want us to see.
It’s easy to lie with statistics, but this is not a mathematical piece that is filled with formulas and notation. I am taking a jab at globalization, the utopian vision that was thrust onto our and most developing countries’ doorsteps that we never asked for.
The other day I was watching a documentary called “Life and Debt” which was based on Jamaica’s troubles with the IMF and how it affected Jamaica’s economy over the long haul.
It’s an interesting documentary that I will reference a lot throughout this passage. Enough of the babbling from my side let’s continue.
Globalization For All Its Worth
Like every new “world order”, oftentimes economists, scholars from various disciplines, politicians, government officials, and the oligarchs who run things planetarily get together and morph the word through their lends.
I believe that if they could have the power to shape the world into a square instead of a sphere, they would’ve done it without blinking.
I understand that lust for men throughout history is the idea of spreading certain ideologies and religions around the world and if you read the books, they will go to great lengths to let it be known.
Currently, they are pushing climate change and the idea of an electric society that is detached from the old age energy resources of oil and gas. While it seems romantic, it isn’t realistic yet, until there are substantial technological breakthroughs.
Check the stats of companies selling solar equipment and check their revenue numbers for example. Nevertheless, after sitting around with their friends, they decide it’s best to move in this direction.
A Tale of Two Parts
Ancient Beginnings
It’s hard to tell exactly when globalization started but experts point to the “Silk Road” to be the major point in history where globalization was in full effect. The Silk Road was a path between Rome and the Chinese empire, it was a way for them to trade goods during that time such as cotton.
It basically linked the Western world with the Middle East and Asia. One of the earliest trades was silk for horses. It performed well in the beginning and for most of the time was quite efficient, despite the intermittent wars and enemies who tried to disrupt this supply chain earlier on.
I also want to touch on the point that during this time, it wasn’t a large piece of both economies and others.
This first phase of globalization was largely based on two empires, China and Rome. Its decline was largely correlated to that of the two bilateral empires at that time.
Another wave of globalization swept the planet when the Middle East was one of the dominant powers at that time. They were mainly trading spices in a time when the Muslims dominated the Mediterranean and Indian Ocean trade.
Another phase came along which was pivotal even to us Caribbean and Latin American people. Within the 15th to 18th century, the Europeans had a resurgence and seek to impose their strength upon the planet.
Fueled by the energy to discover new lands and the spirit of Christopher Columbus, they somehow discovered the Americas and took advantage of it.
This was when the famous slave trade had started and Africans were brought to the Caribbean to help foster the expansion of sugar and various other items such as Potato, Tomato, and so on.
Europeans such as the Spanish, English, French, and others were the main players here and the ghost of the past still lingers within this region up until today despite over a hundred years since “slavery”.
This little history could be seen as the first part of globalization, you still have historians who would argue that this is still not globalization in the way we know today. But I will leave that up to the scholars.
Industrialization
The second part of globalization which in itself contains different phases is when the British became the dominant force on the planet. This started around the 1800s and went right up to the early 1900s.
This rise was largely credited to the intellectual power they had and the resources at their disposal to develop machinery equipment to mass-produce and transport products.
This basic model of large-scale industrialization allowed them to develop thousands of different products which could then be shipped off into other countries.
British had also had a lot of colonies around the world that benefited from these technological advancements and further cemented their place as the dominant power. This came at a cost that was reflected in the various colonies around the world such as in Africa, the Caribbean, Latin America, and Asia.
Up until that point, everything was going well, then a world war came from 1914 – 1918. It was a brutal part of human history and many lives were lost. Countries stagnated and others rose during this period such as America who realized that war was profitable.
France and United Kingdom were able to recover comfortably during this period but Germany was devastated, their economy fell by 27%. inflation rose through the roof, there was a power vacuum needed at that time.
Hitler at that time seemed like the right guy for the job. Years later he was pivotal to the second world war. World War 2 was fought between 1939-1945, yet again America benefited from a profitable war, shipping weapons across the world and protecting “allies”.
A year before World War 2 had ended something interesting happened, IMF (International Monetary Fund) was created. The overall vision seemed noble, they wanted to rebuild the economies of the world. While at the same time stabilizing the dollar and opening up trade. Let’s take a trip on a brief past of our little Jamaica.
Post-Independence
After Jamaica had gained independence, the economy was growing and relishing the returns of bauxite mining which helped us immensely post-world war. As a country, we were quite comfortable compared to others that were in the Caribbean.
It wasn’t all doom and gloom. Within the 1950s to 1960s the real GDP growth averaged around 4.5 percent.
This benefit from bauxite mining was short-lived as the aluminum industry went through a recession. Other factors such as an oversupply of aluminum worldwide decreased profits and caused multinational producers to flee the country as the interest was dwindling.
Tourism also declined during the 1970s but had a resurgence in the 1980s. The 1970s and the 1980s were an interesting era in Jamaica in every facet that we could imagine.
It helped shaped the country, everyone has their own basic interpretations of what happened, but from an economic standpoint, it wasn’t a disaster. Jamaica at the time post-independent was a one-legged stool and it proved to be a major catalyst for the country’s development.
Still for a brief time within the 1970s and 1980s Jamaica had the second largest GDP of the commonwealth, behind Trinidad and Tobago.
To put things in perspective, Trinidad and Tobago is an oil-exporting country. In 1985 Jamaica’s GDP per capita was US$1.7 billion US$940 per capita. Politically and socially, our skilled Jamaicans left the island and foreign investments dried up and investors weren’t optimistic about the country’s future.
Also, Michael Manley was still in office and was perceived to be sharing communist ideologies by some of the public. Given how close we are to Cuba in proximity, that idea or rumor at the time wasn’t far-fetched at the time given Fidel Castro’s reign and his regime.
Despite the negativity, Michael Manley did initiate plans to create a country where we would not be reliant on foreign capital and fight inequality which is still a burgeoning problem we face today.
It wasn’t entirely a failed project but the elites never agreed with his opinion. Edward Seaga’s popularity around this time was steadily growing and he came into office at the start of the 1980s and tried to grow the economy but his efforts were short-lived.
Throughout the 1980s the country’s GDP went through a period of stagnation and decline. To put things in perspective, Jamaica’s debt in 1986 was US $3.5 billion, it had one of the largest debt per capita ratios in the world.
Knocking on IMF Door Steps
Jamaica joined the IMF initiative in 1963, which is a year after its independence under Sir Honorable Alexander Bustamante who was a political leader at that time.
Donald Sangster was also pivotal in this role pulling the strings and hitting head with the major governmental bodies at this time. The first IMF loan at the time was seen as unnecessary by some as the country never needed the cash to spur growth.
In fact, the country didn’t even use the money at all, it was just a “free lunch” at the time that we didn’t need.
The fact that we were added a year after to the IMF system after independence seems strange but that’s for another day. During the slow economic period of the 1970s, Jamaica drafts up a plan for 2 arrangements with the IMF which was given the green light.
In the latter part of the 1970s, the countries fell into issues with repayment and went into three separate EFFs (Extended Fund Facility). Over the years this constant borrowing has led the IMF and other external agencies to exploit our economy.
IMF as a Political Weapon
The IMF being created after the world war is not a coincidence, a lot of changes happened throughout the world in 1944, a year before World War had ended that was pivotal to the world economy.
America came out of this period the dominant power which is slowly eroding today depending on how you look at it. It’s no coincidence that the US dollar became the world reserve currency in 1944 which was signed off by 44 allies in the Bretton Woods Agreement which Jamaica was a part of as well.
This new changing of the guard from the British to the US shifted the power of the landscape. At this point, the dollar was used as a form of weaponization against smaller countries that don’t have the economic stability.
The IMF used the power they have to impose political changes and economical changes to a country before they even get the deal signed by IMF.
One of their main tactics is to disrupt trade tariffs and promote globalization. This globalization is not exactly friendly for smaller countries that might be at the mercy of large multi-national corporations looking to salvage anything they can from a local economy.
We could easily use Jamaica here as an example when most businesses were beginning to get privatized and not state-owned. All the operations of that business were left up to the individuals working in that organization.
Due to the opening up of the economy to foreign trade, our agriculture industry fell drastically. If you should ask any high official who was involved with the IMF arrangements during this time, each time they borrowed money, they took their little time chipping away at the economy.
Our banana, poultry, milk, and many other important industries for our local market were impacted. Forcing local farmers to cut prices to compete with global companies whose revenues for a quarter is the GDP of most Caribbean islands.
The IMF in sum, gave us the money but at the same time extract more than what they’ve given us in loans to further enrich themselves and their cronies.
Jamaica was now a part of the global economy in every way and if the globe sneezes, we catch a cold. Given our over-reliance on tourism, we are even more deeply entrenched in this system.
The Last Option
If a country is borrowing money from the IMF, it obviously means that country needs to get its stuff together. The IMF should always be the last option after all the other options are exerted.
This is why they can set in place any rules they want within the deals and let you jump through hoops to get it completed before the deal is done.
Being that the IMF is entangled with the US, if your country is not within the US arms for a myriad of reasons, it could face economic sanctions. That’s how it is when a country has the resources and powers to do whatever it wants.
Globalization and the Future of Jamaica
Given the obvious problems Jamaica is facing, there are opportunities for smart young people who are talented and skilled.
It’s going to take a large effort to upskill the industry but it is necessary as we can move away from industries from the past and instead focus on industries where we might have a better chance of competing in.
Tourism is a mature industry within Jamaica and growing but it’s also a very paid industry and is susceptible to a lot of global forces in order to meet the yearly quota.
In order for Jamaica to compete globally and not be reliant upon international bodies to bail us out, we have to take advantage of industries such as robotics, cyber security, artificial intelligence, engineering, and quite and few others to push us into a Caribbean powerhouse.
As countries are growing they will need skills and services from this area and we can compete with other nations if we develop our youth to do so.
At the moment this idea looks dim and is probably a product of my fuzzy imagination while sipping a cup of mint tea on an early morning steering into the sky and thinking about what can happen.
It can be done within the next 50-100 years; countries take a long time to change as most humans don’t want to change the status quo. Another thing is to link with our brothers and sisters over in Africa, as you have economies that are rising and we could benefit from those relations.
Asian countries should also not be left out of the mix as they are experiencing a lot of growth right now, overall, the east is where we should look as the west is in slow decline due to inertia and other issues, it’s common for civilizations to rise and fall, it’s where we stand within the mix of the change is the issue.
We shouldn’t be reliant on America who is at the moment showing systemic weaknesses that will trickle down into our economy that is so reliant on their tourist dollars. We need an economy that is resilient because it’s going to need it going forward as nations rise and fall.
I have a lot of hope in Jamaica and in order to compete not just within the Caribbean and globally, we have to promote not just our sunshine, beaches, and food. We can also show the world what we can offer in terms of ingenuity, innovation, and skills that can help the world.
Sources:
https://www.weforum.org/agenda/2019/01/how-globalization-4-0-fits-into-the-history-of-globalization/
https://eulatnetwork.org/wp-content/uploads/2020/02/Open-letter-banano-feb-20_final-1.pdf
https://study.com/academy/lesson/economic-social-political-consequences-of-the-great-war.html
https://www.britannica.com/place/Jamaica/Economy
https://en.wikipedia.org/wiki/Jamaica_and_the_International_Monetary_Fund
https://www.nationsencyclopedia.com/economies/Americas/Jamaica-POVERTY-AND-WEALTH.html
