Overview

The Government of Jamaica has opened up their country to foreign investment in virtually all sectors.  Joint venture projects are preferred, although 100 percent foreign ownership is allowed.  Jamaica has incentive programs for foreign investors.  The incentives are typically granted to companies that earn foreign exchange, use Jamaican raw materials, create employment opportunities, or introduce new technology.  Tax incentives include tax holidays and duty-free entry of raw materials and capital goods for approved incentives periods.  Tax holidays are also extended to business locating in less developed regions.

FDI in the development of ICT in Jamaica

Foreign direct investment (FDI) is of pivotal and growing importance to the development of the information and telecommunication industry in the developing countries.  While the information and telecommunication sectors offers tremendous possibilities for growth in knowledge and globalize conditioned world.  Foreign direct investment in the information and communication technology sector is not only an instrument that can increase the prospects of short term returns, but can also give full expression to the overriding centrality of the longer term efforts to generate, disseminate and apply knowledge to invigorate the innovative ideas of industries and businesses.  (31)

Emergence of Competition

In the developing world, one-third of their total inward FDI goes to services away from their traditional manufacturing and primary sectors.  One of the many reasons for this has been the liberalization and privatization of the service sector, which enable greater inflows of FDI.  This has stimulated large investments into financial services, telecommunication and utilities.  This trend also reflects the increase role services now play in the economic life of countries.  Several new services have emerged, such as software, development, back office operation, call and data entry centers, among others.

There is therefore an increasing scope for international trade and the relocation of facilities from the first world.

The expansion of international production is driven by:

§      liberalization, opening up national markets and the allowance of varied FDI’s and new equity arrangements;

§      rapid technological change with increasing cost and risks, which make it imperative for firms to tap world markets and share costs and risks

§      heightened competition which forces firms to explore new ways of increasing efficiency by extending their international reach to new markets and by shifting production.

International production has taken on creative activities to reduce costs, and consequently have struck new ownerships and contractual arrangements, by locating new activities abroad.  Jamaica has recognized these trends and has set about to use them to their advantage.  (31)

Importance of ICT to Jamaica’s Socio-Economic Development

The main development goals of Jamaica are as follows:

§      Creation of conditions to promote and facilitate economic growth in a sustainable manner

§      Initiate policies and programs to reduce poverty and improve quality of national life

§      Design policies and programs to reduce inequality and ensure the maximum participation of all citizens in the economic, social and political life of the country.

The principal strategy for achieving growth and employment in Jamaica is investment in the ICT sector.  The objective is to create a knowledge-based society premised on businesses whose production requires a high intensity of educated labor, and less on exploitation of natural resources.

ICT the Catalyst

The ICT industry has therefore been designated the principal industry for attracting investment and generating employment over the next three years.  Furthermore, the industry is also considered to be the major route to improving productivity and efficiency in other sectors, as well as, the better delivery of a wide range of services, especially those of an information and intellectual variety.  Information and communication technologies are therefore being seen not only as the chief elements of an economic sector in itself, but also as the catalyst and innovating force that can improve and create economic and social activities in other fields.  Competition is regard as a key strategy to the development dynamism of the ICT sector.  Training opportunities, educational infrastructure and curricula, attitudes towards technical change, bureaucratic encumbrances and the lagging efficiency, effectiveness and attitude of those who deliver government services, are targeted for urgent improvement.

FDI in Jamaica

Foreign Direct Investment in Jamaica has increased up to 200% over the last five years.  Based on the 2002 World Investment Report, Jamaica now stands 26 internationally and fifth in Latin America and the Caribbean for FDI inflow performance in 2001, despite the global slow down of economic growth in the year.  (31)

Conclusion

Information and communication technologies offer new opportunities to ensure more sustainable local development.  One which is based on services and innovation than on raw material extraction and primary commodity trade.  The new global production climate has fostered the economic need for new collaborative ventures between the developed and the developing world.  To be poised and ready for these possibilities, facilitating domestic ICT policy is being promulgated and training, infrastructure development and research are being fostered to provide the basis for attracting both domestic and FDI’s.