Jamaica Economy - External Trade
Sources: The Library of Congress Country Studies
Trade has always played a major role in Jamaica's economic activity; indeed, the island is one of the most trade-dependent countries in the world. Trade as a ratio of GDP was over 50 percent in the 1970s, a figure that increased in the 1980s as the economy opened further to international trade. Although trade allowed Jamaica to import productive resources and consumer goods, chronic trade deficits generated a long-term drain on government finances. During the first twenty-five years of independence, Jamaica ran a trade surplus in only three years--1963, 1977, and 1978. Trade deficits reached unprecedented levels, in excess of US$500 million, by the mid-1980s. Jamaican exports generally suffered in the 1980s because of unfavorable prices for traditional exports such as bauxite and sugar. Newly developed nontraditional exports experienced rapid growth, but their small volume improved the negative trade balance only marginally.
Total imports in 1985 were valued at US$1.14 billion. Imports were divided as follows: fuels (37 percent), machinery and transport equipment (17 percent), food (15 percent), manufactured goods (15 percent), chemicals (11 percent), and the balance in various other categories. The United States was the major supplier of goods and services to Jamaica, accounting for approximately 40 percent of imports in the mid-1980s. Other major suppliers were Britain, Canada, Venezuela, the Netherlands Antilles, and Caricom. Imports fluctuated throughout the 1980s. The relative price of oil was an influential factor in determining the total import bill and the origin of imports. The Seaga government sought to reduce imports in the 1980s as part of an overall strategy to reduce aggregate demand in the economy. Although the government devalued the Jamaican dollar several times over its 1970s value in an effort to discourage imports, the dismantling of import controls, licensing, and quantitative restrictions actually increased imports, at least in the short run. Import liberalization policies were scheduled to continue into the late 1980s.
Exports were generally broken down into three categories in Jamaica: traditional, reexports, and nontraditional. Traditional exports included bauxite, alumina, gypsum, sugar, bananas, citrus, coffee, cocoa, pimento, and rum. Reexports were goods shipped to Jamaica and then reexported for a profit, usually transhipments. Nontraditional exports were all remaining exports. In the 1980s, the major exports remained alumina, bauxite, and sugar. Total exports averaged US$650 million from 1983 to 1985, or roughly half of imports. The substantial trade gap between exports and imports created large annual trade deficits. In fact, the 1985 trade deficit equaled over a third of total trade. Despite a downturn in the bauxite market worldwide, the bauxite sector still accounted for over half of visible export earnings. Nontraditional exports made up a quarter of total exports in the 1980s, a share that was steadily increasing. Contributing most to the expansion of nontraditional exports were garment and apparel manufacturing, nontraditional agriculture, and mineral fuels and lubricants. The principal markets for exports were generally the same countries from which imports were obtained. As Jamaicans sought to break into new markets with nontraditional goods and services, the United States share of Jamaican exports increased from 35 percent in 1982 to over 40 percent by mid-decade.
In the mid-1980s, Jamaica enjoyed wide access to foreign markets for its exports. As a former British colony, it participated in the Lomé Convention, which provided guaranteed access levels for certain products, often at favorable prices. Jamaican exports to the United States entered under various preferential agreements, including the Generalized System of Preferences, the CBI, and the 807 program. Canada also introduced a trade initiative in 1986 called "Caribcan" that provided preferential access to its market similar to that of the CBI. Access to the Caricom market, the traditional market for Jamaica's manufactured goods, declined in the 1980s; recession, devaluation, and other exchange rate and import licensing policies in Jamaica and Trinidad and Tobago, the two principal members of the community, caused a steady decline in regional trade. Although various bilateral and multilateral accords had been signed and the political support for Caricom existed, increased trade was not a reality in the late 1980s. As a result of its foreign exchange shortage, Jamaica was increasingly involved in countertrade or barter deals that circumvented currency exchanges. The most prominent agreement of that kind allowed Jamaica to export bauxite to the Soviet Union in exchange for Lada automobiles.
Data as of November 1987
NOTE: The information regarding Jamaica on this page is re-published from The Library of Congress Country Studies and the CIA World Factbook. No claims are made regarding the accuracy of Jamaica Section information contained here. All suggestions for corrections of any errors about Jamaica Section should be addressed to the Library of Congress and the CIA.