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
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