Devaluation won't help Jamaica

THE EDITOR, Sir:

I read André Haughton's column 'Tax measures and the way forward' (Gleaner, April 10, 2013). There is a misconception that a devalued dollar helps economies, but that doesn't hold true for Jamaica.

First, economics is not a science, so what works in one place doesn't necessarily work for another country. Jamaica's input costs are high. One reason for this is that the dollar holds no value. Raw materials are purchased elsewhere, so it takes more Jamaican dollars to purchase them.

This disadvantage is exacerbated by the high cost of electricity, as well as meteoric petrol prices.

Rent is very costly in Jamaica. Labour can be controlled, but to the detriment of employees and to the business, with low wages and lost productivity, respectively.

Therefore, Jamaican manufacturers are at a disadvantage to other countries with low inflation.

Devaluation of our dollar doesn't augur well for Jamaica. The effect on the country will be negative. Economic models are based on what happens in select countries and are touted for other nations. However, there is no guaranteed formula.

LISLET BERNARD