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Social Adjustment Programs in Jamaica

Social Adjustment Programs in Jamaica

Ashley-Rose Persaud

on 27 March 2013

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Transcript of Social Adjustment Programs in Jamaica

Structural Adjustment Programs & Their Impact in Jamaica What Are Structural Adjustment Programs? By: Ashley Rose Persaud, Stephanie Vinluan, Jenny Tran, & Nareesa Alli History Behind Structural Adjustment Programs Goals of Structural Adjustment Programs Benefits of Structural Adjustment Programs * Pays off foreign debt

* Stabilizes exchange rates (low inflation)

* Increases GDP

* Creates jobs (corporations)

* Organizes agricultural sectors Conditions for Structural Adjustment Programs Criticisms of Structural Adjustment Programs Jamaica VS The IMF & World Bank Our Working Thesis/The Focus For Our Paper History of Jamaica SAPs & The Implications On Jamaican Citizens SAPs & The Implications On The Jamaican Economy SAPs & The Implications On Jamaican Agriculture Conclusion/Recommendations For The Development of Jamaica Criticisms of Structural Adjustment Programs SAPs & The Implications On Jamaican Healthcare SAPs & The Implications On Jamaican Education * Although structural adjustment programs intended to enhance Jamaica, it sacrificed Jamaica’s economic sectors to benefit donor countries, rather than help Jamaica stand as an independent Nation. * The agricultural sector continues to be important in the Jamaican economy accounting for approximately 7% of GDP and employing about 23%

* Export of traditional commodities, namely sugar and bananas, continues to dominate the sector in terms of foreign exchange earnings.

* Production of some of the traditional crops (cocoa, coffee and bananas) has also been declining with the most pronounced decline occurring in the bananas

*Sugar and banana are exported under preferential trade agreements but have been increasingly challenged at the level of the WTO by non-preference exporting countries.

* Other local vegetables are more expensive than foreign vegetables (lettuce and carrots)

* Machete vs. Machine

* Self-reliance discouraged due to globalization

* EMPHASIS on Bananas and Non-Traditional agriculture, Dairy and beef Figure 1: Jamaica Sugarcane Production (1998-2003) Data source: Ministry of Agriculture. Jamaica(2004) * To eliminate the countries deficit, to help in economic growth

* To create more jobs

* To help with healthcare, education, and social services

* Reduction of inflation * During the 1930's, because of countries' failing economies they raised barriers to foreign trade, devaluing their currencies to compete against each other for export markets, and ensuring their citizens' freedom to hold foreign exchange.

* It was not successful as world trade declined and employment and living standards fell in many countries. The decline in international monetary cooperation led the IMF founders to create an institution charged with overseeing the international monetary system.

* The IMF was to ensure exchange rate stability and encourage member countries to eliminate restrictions that hamper trade. * Poverty, unemployment and inequality rank among the worst in the Americas.

* Harder for Jamaican Citizens to travel to different countries.

* According to a report by the Regional Economic Outlook, Western Hemisphere: Shifting Winds, New Policy Challenges, "Jamaica has the second-highest unemployment rate at roughly 11.8 per cent, and fourth poverty rate at 43.1 per cent compared with 23 regional neighbours."

* The IMF report defined poverty as the share of population earning less than US$2.50 per day which translates to 1.1 million Jamaicans living in poverty.

* Equally concerning is Jamaica's unequal distribution of income, ranked as the second-worst among the 23 listed regional countries in the report. SAPs & The Implications On Jamaican
Citizens (Continued) * Because of restrictions on spending, Jamaica lacks newer hospitals, schools, and infrastructure in order to serve the people.

* Foods grown locally are more expensive than the produce imported from the U.S and Canada.

* Guard dogs & security branches is a growing industry because of high crime rate and lives and properties need to be protected.

* Lots of people dying because of the high crime rate.

* There is no third-world voice in strategies IMF policies. History Behind Structural Adjustment
Programs (Continued) The Bretton Woods Agreement * The IMF was created in July 1944. Representatives of 45 countries met in the town of Bretton Woods, New Hampshire to agree on a plan for international economic cooperation after World War 2. The framework was created to avoid the economic circumstances of the Great Depression. * A shift from growing diverse food crops for domestic consumption to specializing in the production of cash crops or other commodities (like rubber, cotton, coffee, copper, tin etc.) for export;

* Abolishing food and agricultural subsidies (among others) to reduce government expenditures;

* Deep cuts to social programs usually in the areas of health, education and housing and massive layoffs in the civil service;

* Currency devaluation measures which increase import costs while reducing the value of domestically produced goods;

* Liberalization of trade and investment and high interest rates to attract foreign investment;

* Privatization of government-held enterprises. Although conditions of SAPs differ somewhat from country to country, they typically include: Structural Adjustment Policies are economic policies which countries must follow in order to qualify for new World Bank and International Monetary Fund (IMF) loans and help them make debt repayments on the older debts owed to commercial banks, governments and the World Bank. The Structural Adjustment Programs put in place by the IMF and the World Bank are supposed to allow the economies of the developing countries to become more market oriented. This then forces them to concentrate more on trade and production so it can boost their economy and eventually make their economies like those of the western world. * The World Bank focused on making loans to governments in order to rebuild railroads, highways, bridges, ports and other "infrastructure", i.e., the parts of the economy that are not profitable for private companies to build so they are left to the public sector (the taxpayers).

* The IMF was established to smooth world commerce by reducing foreign exchange restrictions and using its reserve of funds to lend to countries experiencing temporary balance of payments problems so they could continue trading without interruption. How the IMF & The World Bank Work Together * FINANCIAL:
Currency devaluation increases imported food prices, lowers wages and increases poverty.

Widespread usage of fertilizers and pesticides can harm soil, water and fish populations. -Increase in deforestation.

Increase in food prices makes healthy eating and living more challenging for the poor.-Young children lose weight from malnutrition; reduces learning readiness. -Low incomes push some children into child labour to help with family income.

SAPs focused on macroeconomics (the performance, structure, behaviour and decision-making of an economy as a whole rather than individual markets).-The rise in debt and fall in export commodity prices cancelled out any positive effects the SAPS might have had.-If micro issues (e.g. social services for well-being of nation) were better understood, policies can then help the poor while developing the nation’s economic infrastructure. Criticisms of Structural Adjustment
Impact on social sector – reduction in healthcare, education and welfare.

Gender needs not considered in policy planning (male-dominated, male decision-making).-In some regions, women’s income pays for food and health; men’s income pays for materials needs. High import prices and cuts in health and education increase the women’s responsibilities in workforce and family care.

Governments forced to reduce their role in economy by privatizing state-owned industries including health care to allow for foreign competition.

Reducing inflation of currency makes buying even the essentials expensive.-Reducing tax on high income earners makes the rich richer and the poor poorer.

SAPs dictate western economic model that does not fit with Jamaica’s needs in reality. * Understand the needs of the poor and incorporate these understandings into development policies to inspire grassroots development planning and implementation.

* Do ground-level analysis of local conditions and needs before implementing policies.

* Currently, development designed for macro-level, but micro-level considerations needed (e.g. social issues).

* Develop an educated and well-trained workforce in Jamaica to establish a more politically and economically stable future.

* Go back to the basic needs for success, including: food, water, shelter, education, transportation, healthcare, employment, democratic participation and a healthy environment. * Educated parents are more likely to avoid health problems for their children than uneducated parents. Similarly, educated parents often value education more and would not want their children's education to be compromised.

* 2010: Due to cuts in education services, there is no money to build schools even though Jamaica needs more classrooms.

* It is crucial to have at least a functionally literate population to ensure the progress of a nation.

* School enrollment begins quite high at ages 3-5, then increases to almost complete enrollment at 6-11 years of age but gradually declines at 15-16 years old and drops significantly to less than 10% beyond age 20. Figure 2: Percentage Enrolment in Schools by Age Group: Jamaica 1990-1999 * Despite high enrolments rates at ages 6-14, attendance rates do not show this parallel. Financial problems is one major inhibitor for poor families to send their children to school.

* Education is an important contributor to wealth. Education should be focused on preparing young Jamaicans for the demanding labour markets at the national and global levels – for long-term economic growth. SAPs & The Implications On Jamaican
* Jamaica was originally inhabited by Arawaks
* Contact with the Spanish was detrimental and communities disappeared in 70-80 Years
* There is no Arawak influence on the development of life on the island

* Jamaica was used as a base for supporting the conquest of Americas, particularly Mexico
* The Spanish settlement was never very large. The Spanish created 'Spanish Town'
* In 1655 Jamaica was captured by the British
* Very little evidence of Spanish town/occupation other then architecture and names of places

* British imported a large scale of African slaves
* Plantation slavery was based on the Triangular trade among England (manufactured goods), Africa (slaves), and the Caribbean (sugar)
* International trade was so important to the Jamaican economy that when the American war of independence disrupted trade between what was then the "North American colonies" and the Caribbean, thousands of slaves died of starvation in Jamaica alone
* In 1838, the slaves were Emancipated and the plantations had to begin paying wages to its workers

* After Emancipation, many of the ex-slaves settled down as small farmers
* In this period, sugar continued its decline, but exports of logwood, coffee, and eventually bananas grew steadily. In this way, the economy began to be diversified away from its traditional dependence on sugar alone.

* Major transformations of the structure of the economy
* Diversified around the export of sugar, bananas and other agricultural commodities, as well as the tourist industry

INDEPENDENCE (Stage 1 1958, Stage 2 1962)
* Jamaica slowly gained increasing independence from the United Kingdom and in 1958, it became a province in the Federation of the West Indies. Jamaica attained full independence by leaving the federation in 1962 According to the WHO, SAPs affect both the supply of health services (by insisting on cuts in health spending) and the demand for health services (by reducing household income, thus leaving people with less money for health). Studies have shown that SAPs policies have slowed down improvements in, or worsened, the health status of people in countries implementing them. The results reported include worse nutritional status of children, increased incidence of infectious diseases, and higher infant and maternal mortality rates. Debt Relief For Poor Countries * During the 1990s, the IMF worked closely with the World Bank to alleviate the debt burdens of poor countries. The Initiative for Heavily Indebted Poor Countries was launched in 1996, with the aim of ensuring that no poor country faces a debt burden it cannot manage. In 2005, to help accelerate progress toward the United Nations Millennium Development Goals(MDGs), the HIPC Initiative was supplemented by the Multilateral Debt Relief Initiative (MDRI). Rough Outline For Final Paper INTRODUCTION:
* Thesis
* Outline of Paper
* Brief History of Structural Adjustment Programs
* Brief History of Jamaica

* SAPs & Implications on Jamaican Citizens

* SAPs & Implications on Jamaican Economy

* SAPs & Implications on Jamaican Agriculture

* SAPs & Implications on Jamaican Education

* SAPs & Implications on Jamaican Healthcare

* Recommendations to the IMF & World Bank on how they can better help Jamaica * Jamaica once had a protected market in which the government was against imports from other countries. This allowed for competition among other Jamaicans

* Once the IMF and World Bank came into play, they eliminated trade barriers, opening up the Jamaican market to the world. Now Jamaica must compete against the world in the global market

* As a result, foreign imports flooded the Jamaican market, and Jamaican citizens purchase these foreign products because it’s cheaper than purchasing local products (due to inflation)

* This is an insult to their dignity and well being that the Jamaican people (especially farmers) cannot produce and sell commodities in their own country

* 52 cents of every 1 dollar went towards interest payments to the IMF. This left 48 cents to fund everything else

* Tommy Hilfiger, Brooks Brothers, and Hanes among other US companies opened factories in Jamaica. These private US companies employed Jamaican citizens (majority being women) to work for them, while being paid very little. (1200 JMD/week = 30 USD/week). Why were they paid so little? Simply because these private US companies could easily exploit them!

* The numbers of unemployed seeking jobs had grown by almost one fourth, despite massive emigration.

* IMF and World Bank using Jamaica's economy to control them. Perhaps a new form of colonialism?
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