Jamaica’s economy has a persistent low-growth problem. For five decades, growth has remained stuck at roughly one per cent annually, while comparable economies have expanded at two to four per cent. The Inter-American Development Bank’s (IADB’s) 2025 report on competition in Latin America and the Caribbean shows that economies with weak competition grow slower, innovate less, and are less productive. Jamaica fits this pattern.
Jamaica’s business environment has become increasingly oligopolistic, with highly concentrated firms facing limited competition. Workers have weak bargaining power, and low wages are often substituted for innovation.
UWI’s Professor Densil Williams has argued that Jamaica’s growth problem is one of productivity, requiring improvements in skills, technology, and institutions. But productivity does not improve in the absence of competition.
Jamaica’s low-growth trap is a market competition problem. A highly concentrated economy, dominated by a few firms, faces little pressure to innovate or reduce prices. With access to cheap labour, firms underinvest in technology while consumers pay more and smaller businesses struggle to grow. The result is a stable but stagnant economy.
OLIGARCHIC STRUCTURE
Concentration of dominant players and high prices is the cause of low growth. The energy, banking and poultry sectors reflect the kind of protected market structures the IDB identifies, where small producers are not encouraged by government.
Electricity remains a single-provider market. Jamaica’s grid is served by one utility while countries such as Panama, Costa Rica, and Guatemala have multiple providers. Electricity costs are over US$0.40 per kWh, and are among the highest in the region, constraining manufacturing and reducing household disposable income.
The banking sector is similarly concentrated, with five institutions controlling over 90 per cent of the assets based on Bank of Jamaica asset reports. The IADB notes that such concentration limits credit availability, widens lending spreads, making loans more expensive, and weakens the transmission of monetary policy. Despite the BOJ reducing its policy rate to 5.5 per cent, Governor Richard Byles has had to use moral suasion to urge commercial banks to lower lending rates — an indication of weak competition. The result is limited credit expansion, constraining growth and investment.
The petroleum market is also concentrated, with a small number of firms dominating importation, storage, and distribution. Recent oil price shocks led to diesel shortages and price spikes, with local increases of up to 70 per cent, far exceeding regional trends.
Bread production is also concentrated among three bakeries, while poultry production is dominated by two large firms. In contrast, the IADB showed that comparable countries across the region typically support over 10 poultry producers, creating far more competitive pressure and lower prices. Jamaicans pay over US$6.50 per kilogram for chicken, compared to roughly US$3 to US$5.50 in the Dominican Republic, Panama, or Guatemala, and as low as US$2.50 in the US. Even basic items such as sardines often retail for up to US$2 per tin locally, versus under US$1.50 in most Caribbean markets. The issue is low efficiency and high margins.
This raises a broader question: why do small firms remain small? Institutions such as the Development Bank of Jamaica must be more effective in enabling market transformation.
LABOUR ABUSE
Concentrated markets suppress the labour market. If firms faced competition, they would compete for both workers and customers. But, in Jamaica, labour competition remains weak.
Jamaica’s minimum wage, at roughly US$420 per month, is comparable to Guatemala’s and Mexico’s. Yet, Jamaican consumers pay significantly more for bread, chicken and electricity. Meanwhile, higher-wage economies like Panama and Costa Rica, with minimum wages around US$650 per month, often have lower food prices. This highlights a structural problem: high costs in Jamaica are not driven by wages, but by limited competition and inefficiency.
Calls to weaken labour protections by groups such as the Montego Bay Chamber of Commerce are therefore misguided. The IADB says that predictable wage increases can support planning while encouraging firms to adopt more productive business.
GROWTH POLICY
The World Bank finds that productivity growth in emerging markets has weakened since the 2007 global financial crisis because of declining global investment, slower technological adoption, and limited labour movement into more productive sectors. This trend is compounded by shocks such as hurricanes and pandemics.
Recent initiatives like the IADB/DBJ BIGEE programme and the government’s MSME Business Roadmap and Boot Camp Programme aim to strengthen firm-level capacity. These programmes improve skills and support innovation; they do not address the deeper issue of market structure and finance with policies. SMEs will continue to struggle to grow.
COMPETITION REFORM
First, minimum wage policy must support predictable wage increases that encourage productivity improvements rather than wage suppression.
Second, banking reform must promote competition. Loan portability, like Brazil’s model, should allow borrowers to easily switch lenders, lowering rates. Government should spread deposits across smaller banks. Stronger credit systems can expand lending and support investment.
Third, competition institutions must be strengthened. The Fair Trading Commission and the Consumer Affairs Commission require greater resources and investigative capacity, while trade enforcement must prevent substandard imports without enabling domestic monopolies. For instance, we have a serious problem with electrical wires and devices.
Fourth, government must support technology adoption and digitisation. While some industries have upgraded, many still rely on outdated systems.
Fifth, infrastructure costs must fall. High electricity prices undermine every productive sector and must be addressed.
Competition is central to economic growth. Economies grow when firms compete and consumers have more disposal income from lower prices. Jamaica cannot build prosperity on high prices, concentrated markets, cheap labour, and weak productivity.
Dr Christopher Burgess is a registered civil engineer, VP of engineering for the Jamaica Institution of Engineers, climate scientist, land developer, and managing director of CEAC Solutions. Send feedback to columns@gleanerjm.com
