Coming Full Circle: The Case of Jamaica

Because little time has passed since the start of the almost universal privatization wave, and many countries are still in the midst of their privatization efforts, the evidence of large-scale privatization failures is still scant. Moreover, the possibility of a reversal of the current privatization wave seems remote. While the following case study on Jamaica is certainly unique, it has been selected to demonstrate how the use of privatization as an instrument for short-term objectives can impede reforms necessary for improving the economy’s growth prospects. As a result, the country has come full circle and re-nationalized many of the companies that had been transferred to the private sector only a couple of years ago. Despite the fact that Jamaica started to transfer ownership to the private sector ahead of many other countries in the region, policymakers of successive governments remained suspicious of the private sector. In many respects, Jamaica has been the largest privatization failure so far and provides some insights into the pitfalls of illconceived privatization strategies. It also demonstrates how indicators of the extent of privatization—such as the number of entities formally owned by the government or the number of publicly employed people—can be misleading. It is an especially telling case since the country embarked on its privatization effort early on and was once considered a model case by both the Reagan and the Thatcher administrations.