The Dutch Disease in a small economy: the case of Jamaica

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The purpose of this thesis is to determine weather Jamaica has, or has had a Dutch Disease problem and examine what economic policies have been used by the Jamaican Government in order to diversify the structure of the economy. The thesis also examines what effects the high focus on bauxite and alumina production has had on other sectors´ relative competitiveness towards competing countries. The scope for the thesis is based on the Jamaican bauxite market during the time period 1970 to 1999. Applied theories are traditional and modern trade theories, exchange rate theories, and finally the theory of the Dutch Disease. During the time period of this study, it is possible to conclude that Jamaica has not suffered from the Dutch Disease. The Jamaican Governments' attempt to diversify the economy, with help of the bauxite levy revenues, has not been very successful. For Jamaica, in order to become more competitive within the bauxite and alumina industry, productivity must be i...