In the year 1972, post elections, policies pertaining to the economy of the country did not actually bear fruit. The reason being that the price of oil in the country increased and recession ruled most of the economies of the world. The macroeconomic indicators implied that the country was being drawn into a state of crisis.
The major negative changes, which resulted as a result of economic reform in the country included rising rates of inflation, widening of the fiscal gap and external balance became very uncertain and unstable. What was required to be seen was the aftermath of economic reform and poverty in Jamaica.
Studies revealed that inequality was controlled since the year 1970. This meant that distribution of unequal income was also not rampant in the country and the people received more or less equal income in the country. This was in comparison to the other adjoining nations, where income was still unequally distributed.
Studies reveal that approximately 1/3rd of the people are poor and malnutrition is something, which haunts 9% of the children in the country. Crisis pertaining to balance of payments may be avoided by devaluation of the Jamaican currency. This is regarded as a short term goal of the government.
On the contrary, assigning resources in an optimum manner may be regarded as a long term objective of the economic reform policy in the country. Be it the resources assignment or balance of payments, what matters is the exchange rate. Resources are usually assigned to those sectors, which produce goods that can be traded. Economic reform and poverty in Jamaica are closely related because of devaluation. The reason being owing to devaluation, there is an income redistribution to the tradeable sector from the non tradeable sector of the economy. If it so happens that the poor people fall in the category of manufacturers of tradeable goods, they would be benefited in the process.
There is another method by which economic reform and poverty in Jamaica are related and that is through liberalization of trade. However, what needs to be seen is if there is devaluation of the currency, it leads to the increase in the rate of inflation and a high rate of inflation is a threat for a less privileged. Fiscal policies impact economic reform and poverty in Jamaica to a great extent. Fiscal policies in the country determine the extent to which basic amenities like health care, public utilities and educational facilities are rendered to the poor people of the country. As per observations of the World Bank, Jamaica has always supported the growth of the social segment in the country. Early records prove that during the 1980s, the poor people enjoyed better status pertaining to health care facilities and basic education. However, these facilities did not last for a long time because the government in Jamaica soon minimized these amenities with a view of reducing budget deficits in the country. It has been observed that inequality in the distribution of public services is less as compared to the expenses as well as income. In case these public service utilities are funded by a progressive tax rate, poverty would be less pronounced in the country. However, impact of economic reforms on poverty in Jamaica cannot be ignored because reform policies adopted in the year 1980 adversely impacted the poor in the country.
A policy reform introduced in the country referred to as the “food stamps program” did no good to the poor and was unable to meet the needs of the poor people in Jamaica.
In a nut shell, we can come to the following conclusion.
Devaluations help tame poverty to some extent.
Adopting stringent fiscal policies affect the poor in a negative manner. Majority of the poor population reside in villages or rural regions. Due to stringent fiscal policies, infrastructural maintenance would decline thereby harming the poor in the country.
Since the poor people do not engage in the civil sector, civil sector reform will not impact the poor to a great extent.
It has been felt over the years that maintaining a stable economy is very essential to effect reorientation as well as adjustments in the Jamaican economy.
Last Updated on : 26th June 2013