Many researches have been conducted on the influence that the increasing exchange rate has on the trade balance deficit in developing countries. This paper contributes to the literature by investigating and testing whether the J-curve phenomenon exists in Jamaica.
Meade (1988) stated that, because of the exchange rate rapid decline so much since early 1985 in the US and because the monthly trade statistics has been examined so thoroughly for any sign of a turnaround in the nominal trade balance, the J-curve phenomenon has received much attention. The statistics often implies that the negative effect of depreciation is reflected in the J-curve as the continuation of nominal trade deficit. Between early 1985 and 1988, the exchange value of US dollar in terms of currencies of other countries, registered a sizeable depreciation. The deficits recorded in the trade account were mirrored in the current account deficit. Meade depicted the significance of the exchange rate to the trade account as well as current account through the use of the J-curve highlighting that the phenomenon is used as a long-term goal to curb the deficits, however in the short-run, depreciation will increase the nominal deficits accumulated by a country.
More recently, Bahamani-Oskooee and Ratha (2007) gave a synopsis of the J-curve phenomenon, the expectations and effects that will occur under this phenomenon. They stated that due to lag structure, currency devaluation or depreciation is said to worsen the trade balance first and improve it later resulting in a pattern that resemble the letter J, hence the J-Curve phenomenon. This phenomenon tests the short-run dynamics of the post-devaluation or depreciation time-path of the trade balance. While exchange rate ...
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“Jamaica’s a country of great dichotomy. On the one hand you have a tourist industry with great beaches and resorts, but on the other you have such great poverty and the violence that goes along with that.”(Michael Franti) In this paper, I will talk about the geography, the history of Jamaica, the people that live there now and that lived there in the past, the lifestyle of the society, and the society, like the government and economy.
The Caribbean is comprised of a group of island. Jamaica is one of the greatest Antilles. It has a tropical climate. Each country has its own culture, Jamaicans is not an exemption, and they have an assorted and distinctive one. “Their culture is a complex mixture of African, Arabic, European, East Indian, and Chinese roots combining together to create a rich, dynamic heritage” (Gall, 2009).
All but four countries in the world has external debt (“Country Comparison: Debt External”). Having a debt is almost as common as having a mortgage. Since its establishment, The United States has always been in debt (“Historical Debt Outstanding – Annual”). The US national debt has had five sharp increases previously in its history. The reasons include civil car and the two World W...
POHI 333: Globalization Stephanie Black’s documentary film, Life and Debt, was made in 2001 to show the effect economic globalization had on a developing country, but specifically Jamaica. The film examines the social and economic impact from the World Bank policies, and the International Monetary Fund. Throughout the film, there are several interviews with farmers, business owners, Rastafarians, activists, the former Jamaican Prime Minister, and many others. The former Prime Minister Michael Manley, criticizes how Jamaica is failing economically especially since the IMF and World bank were created without the approval or support of the developing countries. Manley in the 1970’s made a decision that changed Jamaica drastically when he signed the loan agreement by the IMF and the World Bank, where the country went over four billion dollars in debt.
Jamaica is home of the phrase “be happy, don’t worry,” and is a popular tourist spot that foreigners escape to for a temporary slice of paradise. Given the success of the tourist industry, it is easy to mistake Jamaica as a thriving country with the locals living blissfully in paradise; the clip from “Life and Debt” completely dispels these notions and introduces the negative effects that have developed from free trade policies that were recommended by the International Monetary Fund. International Monetary Fund representatives in the clip present globalization and free trade as a form of economic liberation that would bring Jamaica economic success despite its small size. An IMF representative in the clip states that, “Jamaica is a very small
A way to measure a country’s economy is to look at its gross domestic products. This tells the total value of the goods and services that a country produces. In Jamaica, the economy has always been the main problem for the people. It is based primarily on agriculture, tourism, and bauxite mining. The country is very dependent upon tourism, its main source of foreign exchange. Bauxite mining is the principal source of revenue for the country. Most people do not have the opportunity to go to school and also there are not enough jobs for everybody. On the contrary, the United States is wealthiest in terms of economy. They have abundant natural resources, a well-developed infrastructure, and high productivity. Moreover, people have more chances of going to school, and there are more job opportunities for those who graduate as
Life and debt is a documentary portrays an example of the impact economic globalization can have on a developing country such as Jamaica. When most Americans talk or think about Jamaica, they think about the gorgeous weather, the beautiful beaches, and friendly people that make it a wonderful vacation spot. This documentary displays Jamaica in a different element, by showing an increasingly big problem, debt. The everyday survival of many Jamaicans is based on the economic decisions and actions of the United States and other powerful foreign countries. We have read in lecture 5.1 that dependency is a big factor with countries that rely on outside nations or regions for goods.
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World Bank (2005). Economic Growth in the 1990s: Learning from a Decade of Reform. World Bank, Washington, DC.
Situated just south of Cuba in the Caribbean Sea, Jamaica is well known as a popular tourist spot and the birthplace of reggae music. Populated initially by native Arawak Indians, who gave the island its name, “land of wood and water (Jamaica).” However, this beautiful land’s almost pristine beauty was shattered by outbursts of violence surrounding the 1980 political elections. This fighting was sparked by the people’s mistrust of the ruling socialist party at the time. The reasons for this fighting and this mistrust are not simple, they are intrinsically tied to the island nation’s history from the beginning of its colonial period five hundred years before.
The documentary Life and Debt portrays a true example of the impact economic globalization can have on a developing country. When most Americans think about Jamaica, we think about the beautiful beaches, warm weather, and friendly people that make it a fabulous vacation spot. This movie shows the place in a different light, by showing a pressuring problem of debt. The everyday survival of many Jamaicans is based on the economic decisions of the United States and other powerful foreign countries.
The stability of currency values plays a significant role for economic and financial stability. It is not difficult to see the exchange rate fluctuations are widely regarded as damaging. As the movements of the exchange rate have significant and large effects on the trade balance, resource allocation, domestic prices, interest rate, national income and other key economic variables. Then can exchange rate movements be predicted by these fundamental economic variables?
In 1996, the US current account and emerging market plus developing country current account were each about zero. In 2008, US current account was in deficit by $ 600 bn, the emerging market/developing country current account in surplus by $ 900 bn. (sect. 1.1)
What makes economic growth so interesting is that it enables a country to do so much more than they are financially capable of to date, through economic growth a country can also help to lower the countries deficit. To date The Bahamas government have invested millions of dollars into the economy such as new roads and highways, schools, hospitals, hotels etc. If an economy makes an investment it is to improve and encourage growth within their economy. In my opinion economic growth is beneficial to any economy although there are a number of hurdles that must be crossed to really feel and see the economic growth. This research paper is to enable a better understanding of the economic growth and how The Bahamas has grown and investments that they have made to sustain the economies developments.
The Caribbean remains fragmented both economically and politically as a result of competition and conflict among the European powers. Fragmentation is in part the product of a long history as separate colonies of a metropolitan power or powers. It is also in part the psychological effects on people of separation by sea.