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U.S. Program to Boost Caribbean Economies Leaves Jamaica Frustrated

March 15, 1987|SALLY JACOBSEN | Associated Press

KINGSTON, Jamaica — Perhaps nowhere were expectations higher than in Jamaica that the U.S. trade and investment drive for the Caribbean would bring fast results and give a badly needed lift to the economy.

Jamaica was hustling to attract fresh American investment to this lush, mountainous island even before the United States began its own economic program to help the Caribbean and Central America three years ago.

But today, there is a sense of frustration and disappointment, that the results so far have not lived up to their advance billing.

"The expectations which were built up as a result of the political initiative have not been matched by the economic reality," said Delroy F. Lindsay, executive director of the Private Sector Organization of Jamaica, an umbrella group for businesses.

Unrealistic Hopes

V. Corrine McLarty, managing director of Jamaica's National Investment Promotion agency, said, "I thought perhaps we would have had more investments, certainly more American investments."

Carl Stone, a political commentator and pollster, said it was unrealistic to expect a great deal. Jamaica's manufacturing sector, he said, "was not really geared to penetrate the North American market."

Jamaica, the third-largest island in the Caribbean with a population of about 2.2 million, offers a look at how developing countries are struggling to make the Reagan Administration's Caribbean Basin Initiative, or CBI, work.

The Caribbean Basin Economic Recovery Act gave, as of Jan. 1, 1984, duty-free status for 12 years to many products from Caribbean and Central American nations. The program was designed to spur economic development and promote political and social stability in the strategic region.

Jamaica, fighting a host of economic ills, has aggressively courted foreign investment to help its economy grow, bring in more foreign exchange and reduce the high jobless rate.

But the impact has been limited.

"The best you can say is things probably would have been worse in Jamaica without it," said Richard Millett, senior adviser for political risk analysis for the New York firm of Frost & Sullivan, in a telephone interview.

The U.S. International Trade Commission said imports from Jamaica were $267 million in 1985, down from $397 million in the previous year.

According to figures from the investment promotion agency, 612 investment projects were begun from 1981 to this past October. The attrition rate--companies failing, closing down or suspending operations--was 6.3%.

The investments, valued at more than $200 million, have created 37,904 jobs. McLarty estimates that about half were from CBI projects.

Losses Offset Gains

The employment increases, though, have been offset by cutbacks elsewhere in the economy, including in the stricken bauxite-alumina industry. The government also has pared its rolls to save money.

"The gains have not been as apparent because of the losses in other areas," McLarty said.

About one-quarter of the labor force is out of work.

The economy, although strapped by a worrisome foreign debt of $3.5 billion, was expected to grow modestly this year, after a sharp downturn in 1985.

Inflation, through the first 10 months of the year, was 10.4%, compared to 21.6% in the same period a year ago.

Consumers worry about the economy.

Josiah Plummer, 54, a cab driver in the capital of Kingston, said, "A lot of people can't make any money."

"People are not terribly optimistic," columnist-pollster Stone said. "Most voters feel that they are actually worse off today than they were in the '70s."

New investments in Jamaica have been made in garment-making and data-processing operations specializing in the entry of mailing lists, coupons and text copy.

Foreign and local companies also have put money into agriculture, including the growing of cut flowers and ornamental plants, and cantaloupes, tomatoes, sweet peppers and other vegetables for winter sale in the United States.

Return of Leftists Feared

For those investors, key attractions are a large, English-speaking labor pool, low wages, proximity to the United States, developed transportation, power and water systems, and assorted tax breaks.

But Millett in New York said some businessmen worry about the possible return to power of left-leaning Michael Manley and the economic consequences that might follow. Prime Minister Edward Seaga, who has close U.S. ties, defeated Manley in 1980.

"I wouldn't go and invest in Jamaica," Millett said. "I wouldn't advise anyone else to do it."

For Jamaican businessmen, the CBI has provided a way to expand their operations by exporting to the United States, some for the first time.

Lloyd P. Samuels, chief executive of the Ruel Samuels electronics company, landed contracts with New York and Florida firms to make electronic components and assemble circuit boards. His assembly line has grown from 16 workers in 1984 to 200 now.

"The CBI came along at the right time," he said. "We have made it work."

Many believe, though, that their efforts have been stymied by what they see as a movement in the United States to keep out their goods.

Foreign Minister Hugh L. Shearer complained in Washington recently that the CBI program "is now in danger of being crippled by the roadblock of protectionism."

"We are left unfortunately with the indication that what was given with one hand is immediately being taken back with the other," he said.

Jamaica's troubles exporting fuel-grade ethanol are often cited. U.S. concerns challenged its duty-free status and the use of alcohol from Spain in the production process.

The dispute was settled in the U.S. tax-reform law, which limits duty-free treatment of ethanol to the use of alcohol from the Caribbean.

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