Jamaica Economy - Manufacturing
Sources: The Library of Congress Country Studies
For a small developing country, Jamaica had quite diversified manufacturing. Sugar, condensed milk, rum, edible oils, cloth carpet, cigarettes, and shoes were some of the more basic manufactured goods. Production also included heavier industrial goods, such as sulfuric acid, detergents, fertilizers, gasoline, petroleum, batteries, and steel. The sector accounted for 15.7 percent of GDP in 1985 and employed 127,000 workers, or 12 percent of the labor force.
During the 1980s, the manufacturing sector underwent its first major changes since independence, reflecting the government's structural adjustment policies, which emphasized labor-intensive, export-oriented light manufacturing. As a result, a growing percentage of manufactured goods, particularly nontraditional items, were produced solely for export. Apparel and sewn products, mineral fuels, and miscellaneous manufactured goods experienced the fastest growth rate.
The manufacturing sector was historically linked to agricultural processing until World War II, when general shortages encouraged import substitution industrialization (see Glossary) in such areas as clothing and footwear. From 1950 to 1968, the sector's growth outpaced all other sectors of the economy, expanding 7.6 percent annually, including over 10 percent growth in the last five years of this period. The growth of domestic industries also relied on generous government import protection in the form of quantitative restrictions beginning in the 1960s and an overvalued exchange rate starting in the 1970s. Chemicals, cement, furniture, and metal products were the most important subsectors to emerge as a result of the import substitution policies.
Two general types of manufacturing firms operated in Jamaica after World War II. The first type was generally foreign owned, capital intensive, and export oriented, usually operating under the Export Industries Law. Some of these firms, however, were labor intensive and commonly called "screwdriver" industries because only a small percentage of the value added was performed in Jamaica. The second type of firm was typically locally owned, generously protected, and domestically oriented. Many of these manufacturers were quite inefficient but did serve to integrate certain subsectors of the national economy.
In an attempt to reduce previous price distortions, the manufacturing sector undertook structural adjustment reforms from 1982 to 1985. The adjustment measures included numerous currency devaluations, unification of the two-tier exchange rate, relaxation of import licensing, reductions in quantitative restrictions, encouragement of foreign investment, and export promotion to thirdcountry or hard-currency markets. During the structural adjustment process, many less efficient producers reduced output or closed altogether. Factory closings were particularly common in 1982. Declines in investment and output were most frequent in the metal, chemical, and domestic apparel subsectors. In 1985 traditional manufacturing's output was 30 percent less than 1984 levels. At the same time, however, investment in new export-oriented industries increased quickly, helping to keep the sector afloat.
As noted previously, the Seaga government defined seven "priority subsectors" in the early 1980s, emphasizing them in terms of investment, factory space, and financing. Of all the priority subsectors, only garments and agro-industrial products had achieved any real success by 1987. In 1985 garment and processed food exports increased 15 percent and 11 percent, respectively, over 1984 levels. Garment factories in particular skyrocketed, totalling 148 companies by 1986, with fifty-six new 807 type firms established from 1981 to 1986. Although roughly 50 percent of these new firms were small and employed fewer than 50 people, 6 companies had over 500 workers. The great majority of production in these priority areas was destined for third-country markets, primarily the United States. Third-country markets' share of exports rose from 47 percent to 74 percent between 1983 and 1985. Simultaneously, manufactured exports to Caricom decreased by 50 percent.
Regarded as the engine of growth under the structural adjustment policies, manufacturing received renewed government attention in the 1980s. Several government-sponsored agencies or activities were introduced or reorganized to provide technical assistance, financing, export promotion, and marketing assistance. New efforts to improve technical assistance to exporting manufacturers were offered by both the JNIP and the Jamaican Industrial Development Corporation (JIDC). In 1985 the Technical Assistance Fund for Exporters was created to provide further aid in new product development. Institutional support for financing exports was available from the National Development Bank, the Trafalgar Development Bank, the Export Development Fund, and the Jamaican Export-Import Bank, all newly organized or reorganized. Export promotion and marketing assistance were provided by the Jamaica National Export Corporation and the JNIP.
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.