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Jamaica's economy is quite weak and corrupt compared to other financial systems around the world

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Introduction

Jamaica's economy is quite weak and corrupt compared to other financial systems around the world. This weakness is caused by many factors which create a border for the nations economic development. Firstly, the government of Jamaica has quite a large amount of corruption which has so far proven to be unstoppable. It's corruption index is at 74 (1 being the least and 145 most corrupt)1. Since gaining independence from the British Commonwealth in 1962, its political power has shifted between the Peoples National Party (PNP) and the Jamaica Labour Party (JLP). Before JLP took power, PNP, with Michael Manley as prime minister, declared their government socialist even though most of the sectors of the economy were dominated by private enterprises (many foreign investors ceased investment because of the claim that Jamaica was a 'socialist government'). Manley created a land reform program to fight unemployment in which land was redistributed and some business schemes were introduced to the people. This program also nationalized all of the previously foreign-owned utility companies that controlled telephones, public transportation and electricity. Because Manley raised the taxes (to be less dependant on foreign companies) ...read more.

Middle

This sector of the economy does not suffer as greatly from the corruption and high crime rate as the others. Another dominant sector in the Jamaican economy is Bauxite and Aluminum extraction and export. Another interesting index in Jamaica's economy is the high crime rate. Jamaica has the third highest crime rate (per capita) in the world at 0.32 per 1000 people5. This creates a negative impact on the economy for multiple reasons. Firstly, because Jamaicans grow up surrounded by crime, the hard living conditions cause them to leave the country whenever they get a chance to (brain drain). After they have seen life outside of Jamaica, people tend not to go back. Also, the crime rate affects outside investors who want to invest in a safe nation with a low crime rate so that their profits will actually return to them. Jamaica spends somewhere around 4 percent of their annual GDP on crime reduction, which js quite significant considering their GDP is quite low in comparison to the rest of the world. Even though there are so many factors that limit Jamaica' growth and the creation of job opportunities along with crime reduction, there is still hope for this potentially successful economy. ...read more.

Conclusion

This has been proven to work between 1995 and 1999, reducing Jamaica's poverty. One way would be to change the subsidy laws for agriculture. Just like the rich world, Jamaica should be able to subsidize their products. He subsidies will not only decrease the price of food that is produced domestically, but also delete the 'gap' that the government is forced to pay for when relying so heavily on imported goods. As we can see from the above diagram, when the subsidy is implemented (S1 --> S2), he price of the product drops from P1 --> P2 and the Quantity increases from Q1 --> Q2. This shows a positive effect for Jamaica and would encourage Jamaicans to buy domestic goods rather than foreign goods. The fact that foreign goods are more expensive than domestic ones can also be solved by a similar way. If the government would implement a higher tariff on foreign goods then in turn they would increase the prices of those goods and perhaps some of the foreign companies would import less of their goods into Jamaica because it would have too much an opportunity cost. The decrease of this foreign competition can in turn increase the competitiveness of Jamaica's economy. 1 http://www.alertnet.org/db/cp/jamaica.htm?v=poli 2 http://www.cia.gov/cia/publications/factbook/print/jm.html 3 http://en.wikipedia.org/wiki/Economy_of_Jamaica 4 http://en.wikipedia.org/wiki/Economy_of_Jamaica 5 http://www.nationmaster.com/graph-T/cri_mur_cap ?? ?? ?? ?? ...read more.

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