Introduction
Jamaica is an attractive place to set up or expand a business for foreign investors. Having emerged from the crisis, the country’s economy has received stable development, and the tourism industry is actively attracting foreign capital. However, non-intervention of the state in private enterprise and a high level of corruption can hinder the organization of business in this country. When planning business investments in Jamaica, private entrepreneurs should take into account the most profitable sectors of the economy and rely on independent long-term planning.
Economy
One of the main factors influencing the organization of business in Jamaica is the country’s economy. Jamaica has a mixed economy based primarily on the service sector (Buckland & Campbell, 2022). The country’s economic development has been uneven since independence. The mining industry was of primary importance for economic development, followed by agriculture. At the moment, the economic development of the country is mainly influenced by private entrepreneurship. Despite the current instability, the economy continues to develop and grow.
Industries
The main industries of the country, in which the most successful private businesses are observed, are tourism, agriculture, and mining. The tourism industry represents the country’s main source of foreign exchange, accounting for 30% of Jamaica’s gross domestic product (Mathieson, 2019). Tourism also provides a significant number of jobs in the country. The tourism business, based on the country’s wealth of natural beauty, is attractive to both local and foreign businessmen. An important sector in which private entrepreneurship is successfully functioning is agriculture, which provides up to 7% of the gross domestic product (Mathieson, 2019). An important engine of the economy is the mining industry, in which private business flourishes. The mining industry covers up to 4% of Jamaica’s gross external product (Mathieson, 2019). The country’s richness in minerals, which have so far been developed to a small extent, has a significant impact.
Government
The state plays an important role in determining the situation and conditions of business in the country. Jamaica, which gained independence in 1962, is a constitutional monarchy (Wiseman, 2019). The state acts as a regulatory body for the economy, but private business structures are of the greatest importance in Jamaica. Having dominance in most sectors of the Jamaican economy, private entrepreneurs provide the population with the necessary services, making a significant contribution to the development. Serious intervention in the private sector was required in the 1990s when the country was going through a period of economic crisis (Wiseman, 2019). Subsequent development became more stable, and the state transferred the decisive economic power to private entrepreneurs.
Insecurity
The most serious problems that have a significant impact on business in Jamaica are crime and corruption. According to the 2021 World Corruption Index, Jamaica ranks 70th out of 180 countries (Ubfal et al., 2022). State non-intervention in the private sector led to an increase in crime after the economic crisis, which resulted in more difficult conditions for private and foreign entrepreneurs. Additional difficulties arise from the imperfection of the judicial system, which can investigate cases for decades (Ubfal et al., 2022). As a result of this Jamaican problem, foreign investors cannot be fully confident in investing in the country’s business.
Culture and Innovation
Culture is a significant factor influencing the business sector of any country. Cultural and Creative Enterprises are administered by the Jamaican Ministry of Culture, defining cultural development and equality of opportunity (Kiss, 2020). Companies that contribute to the development of the country’s cultural industry may receive financial benefits, such as a reduction in productive contributions (Kiss, 2020). The state acts as a stimulating body to encourage enterprises that promote the local culture. Government programs also offer small cash injections to creative entrepreneurs to boost economic activity, which ultimately helps them bring their innovative ideas to market.
Cultural Features
The tool presented by Hofstede Insides offers a universal model for the study of cultural characteristics that affect business in a particular country. Appendix 1 presents findings on power distance, individualism, cultural masculinity, uncertainty avoidance, long-term orientation, and indulgences in Jamaica. A basic understanding of business culture will be provided by the factors of power distance and uncertainty avoidance, since these parameters have a direct impact on the accepted business model in the country. Not all key definitions of business culture have been reported for Jamaica.
The power distance parameter is associated with the criteria of the position of people in society and the availability of resources for business for the general population. Power distance is also associated with the degree to which a society accepts the accumulation of wealth in the hands of a few. Jamaica has a score of 45 on this parameter, which indicates that the country needs a hierarchy of power for public order, society develops freely, and power is decentralized (Hofstede Insights, 2022). This parameter is also confirmed by the non-intervention of the state in the private sector of the economy. For business, this position in the power distance is characterized by the need to rely on one’s own strength, not count on state support but, at the same time, expect freedom of action.
The dimension of individualism explores the relationships between members of society. Jamaica scores 39 on this dimension, indicating that it is a collectivist society (Hofstede Insights, 2022). Loyalty to the community is essential for doing business in this country. Private businessmen must rely on the paramount importance of reputation and choose to provide services that benefit the largest part of the population. Jamaica scores high 68 points on the parameter of masculinity, which indicates the important role of force in resolving conflicts and orienting society towards permanent work (Hofstede Insights, 2022). For businesses, this high metric means that they need to prioritize establishing authority in a particular industry.
Uncertainty avoidance on the cultural scale influences whether entrepreneurs prefer long-term planning or predominantly rely on chance. Jamaica scores 13 on this dimension, which means that the country is not avoiding uncertainty (Hofstede Insights, 2022). In such societies, practical experience is considered more important than potential risks. For business, this means that one must independently choose the optimal planning horizon. There are no data on the parameter of long-term orientation for Jamaica, but according to the previous parameters, it can be said that business in the country is aimed at short-term planning. For the parameter of indulgence, which affects the impulsiveness or restraint of the business sector, there are also no data for Jamaica.
Business in Jamaica and the Rest of the World
The strongest relationship between businesses in Jamaica can be traced to the United States. American companies are looking for potential partners in Jamaica to expand international ties. Almost 50% of Jamaica’s foreign trade is with the United States, which remains the main direction of agricultural exports (Haughton & Ivey, 2023). Other important trade relationships in Jamaica include China, Brazil, Japan, and Turkey (Maffioli et al., 2020). Jamaican consumers and businesses source from the US because of their solid reputation as reliable partners. The highest demand is for goods and services related to tourism and the renewable energy sector (Gordon, 2019). Much of the trade between Jamaica and the US is the result of established economic ties (Gordon, 2019). American exporters, in turn, find Jamaica attractive because of its proximity to the United States, political stability, trade links, and the prevalence of the English language.
Analysis Factors
The factors for analysis were the state of the economy, the development of industries, government intervention in the private sector, security, and cultural characteristics. These factors play a critical role in determining the position of a business in a country and outlining the risks that future investors may incur. Important to consider was the analysis of the position of Jamaica in the international market to trace the established trade relations. Based on the analyzed material, it becomes clear that a foreign investor must take into account all the above factors in order to organize a successful business in Jamaica. It is necessary not to rely on the public sector, to build a strong reputation, to independently create a long-term oriented plan.
Conclusion
Jamaica is a profitable country for organizing business, especially in the field of tourism. Established trade relations with the United States allow one to organize a private enterprise with successful functioning. When planning a business, it is necessary to take into account cultural characteristics, such as a low level of power distance and a lack of a tendency towards long-term planning. Non-intervention of the state in the economy and the impact of crime on business must be taken into account in strategic planning.
References
Buckland, S., & Campbell, D. (2022). Agro‐climate services and drought risk management in Jamaica: A case study of farming communities in Clarendon Parish. Singapore Journal of Tropical Geography, 43(1), 43-61. Web.
Gordon, L. R. (2019). Impact of correspondent bank de-risking on money service businesses in Jamaica. Journal of Financial Regulation and Compliance, 27(4), 479-493. Web.
Haughton, A., & Ivey, W. (2023). Overcoming productivity challenges in small countries: Lessons from Jamaica. Cham: Springer Nature Switzerland.
Hofstede Insights (2022). Country comparison: Jamaica. Web.
Kiss, L. B. (2020). The importance of business partnership on the World Wide Web. Business Ethics and Leadership, 4(1), 68–79. Web.
Maffioli, A., McKenzie, D., & Ubfal, D. (2022). Estimating the demand for business training: Evidence from Jamaica. Economic Development and Cultural Change, 71(2), 1-49. Web.
Mathieson, J. A. (2019). Struggle against dependence. Routledge.
Ubfal, D., Arráiz, I., Beuermann, D. W., Frese, M., Maffioli, A., & Verch, D. (2022). The impact of soft-skills training for entrepreneurs in Jamaica. World Development, 152(1), 1-61. Web.
Wiseman, B. (2019). Jamaica. Weigl Publishers.
Appendix. Country Comparison: Jamaica
