Last year saw a record expansion in Jamaica's exports to the United States, which accounts for over twenty five percent of GDP. In fact, the U.S. has become the biggest provider of goods and services to Jamaica. For several years ago, Jamaica had only a single high-volume shipping station between Saint Lucia and Barbados, with its port in St Ann and its port at George Town. With these modifications, however, the demand for a consistent source of imported goods from the U.S. that can support the national market has become more and more important.
In the last few decades, the USA has provided Jamaica using a continuous diet of bucks. This has mostly been through direct sales of machinery and equipment, both manufactured and non-manufactured, as well as direct, free trade arrangements with our partners overseas. While this arrangement was responsible for many of the import duties and taxes that have been imposed on goods originating in Jamaica, it was necessary to adjust the present quotas so as to satisfy the expanding demand for our manufactured goods compro cupo dolares. The end result was a 20 percent gain in the annual allocation of bucks to Jamaica's dollar area nations.
The new allocations are distributed between Canada, Mexico, the Dominican Republic, Spain, the Bahamas, Germany and the Bahamas. Despite a continuing increase in the amount of shipments between these very same nations, this degree of inflows isn't any nearer to meeting the growing demand that is now being experienced by Jamaicans. In reality, this shortage is currently being viewed as a severe threat to the continued economic equilibrium of Jamaica. While a recent study by the World Bank has suggested that the adjustment of quotas could be required if growth is to continue as projected, the impact of the policy on national production and employment levels isn't fully understood.
One consequence of this present level of imports is that costs are rising in the national industry. Since the USA has become the biggest source of imports into Jamaica, an increase in the purchase price level has major effects on the Jamaica market. For example, importation of products from the USA requires a 20 percent duty, far higher than the typical duty rates of five to ten per cent cupo dolar. The consequent increase in taxes and other indirect taxes means that the total buying power of the national market will decrease.
These indirect effects are also likely to impact the overseas investors in Jamaica's economy. Given the high level of imports and the drop in the value of the local currency against many of its major rivals, the cumulative impact of these changes on companies operating on the island is likely to be a negative . Consequently, any effort to increase the inflow of funds to the country is going to be met with stiff opposition. The only way that these concerns can be alleviated is by raising the yearly quota of bucks which are given to these foreign investors.
Presently, thirty-seven percent of Jamaica's gross domestic product consists of foreign direct investment (FDI). This figure is forecast to rise if the present trends continue. Even if the percentage raises future amounts will still fall short of expectations due to the rather large level of competition that exists from the dollar area. To offset the reduction in earnings obtained through foreign direct investments, the Jamaican government is required to implement policies that boost productivity and competitiveness. Removing the necessity to pay a foreign direct investor a fifteen percent obligation is one means to do this.