ABSTRACT

This chapter demonstrates the government's search for revenue, particularly during the People's National Party regime 1972-1980, caused severe problems for the growth prospects of the economy. It deals with two of the factors retarding growth, the fall in private savings and the deteriorating conditions for foreign investments. Before independence in 1962 Jamaica was an economy dominated by agricultural output, directly or indirectly. The lack of investment funds was thus identified as the basic obstacle to industrialisation. While the development of a manufacturing sector has been a high-priority item in Jamaica at least since independence, it would be incorrect to conclude that the policies towards that end have always been successful. Taxation affects the functional distribution of income. This, in turn, affects domestic savings, since firms and wage-earners have different propensities to save. The change in the volume of domestic savings affects the volume of investment unless the inflow of foreign capital is adjusted to accommodate.