Page 23 - CAPE Caribbean Studies Study Guide Sample_Neat

Module 2 Issues in Caribbean development

approached the IMF for loans and had to implement stringent policies such KEY TERM
as raising taxes and lowering government expenditure on welfare programmes
and even subsidies, which hindered development. If taxes are increased, Retrenchment: the forced layoff
consumers’ real disposable incomes are reduced, which adversely affects their of workers by a firm (literally, a
standard of living. cutting back or reducing). This is
usually done to reduce the wage
CASE STUDY bill of the firm.

During the 1980s, Jamaica faced an economic recession that had a
devastating effect on the economy. Prior to the 1980s Jamaica was a
buoyant economy. Rich with bauxite, alumina, tourism, agriculture and Did you know?
manufacturing, it had healthy economic growth and was ranked as having
the second-highest GDP in the Commonwealth Caribbean behind On 1 January 2016, the 17
Trinidad and Tobago. Sustainable Development Goals
adopted by world leaders and the
However, in the 1980s Jamaica had consecutive declines in GDP which UN, officially came into force.
resulted in a high mobility of labour and capital. Many workers left They replaced the UN’s Millennium
the island in search of jobs. There was a need to stabilise the Jamaican Development Goals, and represent
economy, hence the country attempted to acquire a loan from the IMF. a long term international effort to
foster and promote sustainable
On receiving the loan, certain conditions were outlined that Jamaica had
development worldwide.
to follow. These conditions were called structural adjustment policies
or SAPs. The policies put tight controls on Jamaica’s expenditure such
as wage freezes and retrenchment of government workers. Taxes were
raised, such as income tax and taxes on products. Government spending
on health, education and social services had to be reduced. This prompted
more people to leave the island. Another condition was that the economy
was to reduce its barriers to trade and invite foreign companies to set up
production. In order for Jamaica to get the assistance it needed, it had to
follow the structural adjustment policies, which many claimed further
devastated the economy.

Activity

(a) Examine the aims of the 2030 Agenda for Sustainable Development
for the Caribbean.
(b) Identify two Caribbean countries and examine their social and
economic policies.
(c) Asses the level of development likely to be achieved in these countries
as a result of the 2030 agenda.

Key points

■ Government policies can be used to regulate, stimulate and even
stabilise an economy.

■ Policies can either promote or hinder economic development, such as
in the manipulation of taxes and government spending.
■ It has been suggested that structural adjustment policies have
hindered development in the Caribbean rather than promote it.

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