With an abundance of resources, Guyana’s potential for Growth and Development is endless

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Guyana, with an area of 83,000 square miles or 215,000 square kilometers, is located on the northern coast of South America. It is said to be home to approximately 800,000 persons.
The total population in Guyana was last recorded at 0.8 million people in 2014 from 0.6 million in 1960, increasing by 43 percent during the last 50 years. (Population in Guyana is also reported by the Bank of Guyana.)
Of this population size, a stipulated 21% or 168,000 people are said to be unemployed. This figure consists of mostly young adults. Scholars have been however suggesting that a country with much labour can grow and develop once smart investments are made.
Guyana is a low income country and the third smallest country in South America after Suriname and Uruguay. It is the third poorest country in the Western Hemisphere, after Haiti and Nicaragua, with a per capita GDP of approximately US$3,763 (2014).
However, Guyana is well endowed with natural resources, fertile agricultural lands, bauxite, gold and extensive tropical forests which cover more than 80 percent of the country. It has one of the lowest deforestation rates in the world and 90 percent of Guyana’s forest remains intact. Most of the country’s indigenous population lives in forests on which they depend for their livelihood. About 90 percent of the population lives on the narrow coastal plain, where population density is more than 115 persons per square kilometer.
With its diverse culture, its people and its abundant resources, Guyana can surely be on the map of success in the near future. There was a time when countries like Guyana were interested in what an economist like W. W. Rostow had to say about development. Indeed, it was quite fashionable at one period in history for newly independent countries to pursue the idea of self-sustaining economic growth as a way of comforting themselves that they could enjoy economic independence.
Those countries that had the courage, actively searched for a way to secure continued economic growth by increasing their domestic savings to finance their own domestic investment. Guyana was one of those countries which felt that the mercantilist policies of the 20th Century were valid policies for achieving economic growth, and shortly after Independence, began to pursue such policies.
Part of this mercantilist policy posture undoubtedly came from an awareness of the stages of growth theory of Rostow as implied by William Demas in his 1965 book entitled “The Economics of Development of Small Countries: With Special Reference to the Caribbean”.

Rostow’s Model

To understand what that means, it is necessary to know the features of the model. The Rostow model consists of five stages of development. In a nutshell, the theory sees the traditional society as the starting point of development. The traditional society is one in which subsistence agriculture is dominant. A country is then expected to develop the preconditions for taking off, and subsequently acquiring the ability to take off.
Being able to take off implies an ability to rely on domestic savings to finance domestic investment so as to achieve self-sustained growth. It is that magical point at which everything should follow even though not necessarily with great ease as the years of war and turmoil among European countries showed.
Once it achieves self-sustained growth, the country begins to mature. There, workers are highly skilled, leadership is more dynamic and the development of the human condition assumes greater importance.
Finally, a country enjoys high levels of mass consumption of a wide variety of goods. Throughout this process, natural resources play a role in the establishment and expansion of industries.
It is easy to see how one could be tempted by the logical progression towards greater industrialization and higher income offered by the stages of growth contained in the theory. And as one reflects on the outcomes that could see huge modern buildings, multi-lane highways, plenty cars on the streets and fast food joints like in the highly industrialized countries, it is easy to be caught by the seductiveness of the theory.
Being aware that the stages of development of countries could be identified by a set of factors given by Rostow, one could ask at what stage of development is Guyana according to that theory?

Guyana’s Stage of Development

With the supposed conditions of development known, it is possible to form an opinion as to what stage of development is Guyana. The initial or traditional stage is eliminated because agricultureno longer holds its position as the consistent dominant pillar of the Guyana economy. The other stages of development are ruled out for several reasons.
A review of our national accounts shows that consumption accounts for over 60 percent of our spending. However, much of this is imported. Additionally, Guyana’s manufacturing sector is the smallest in the economy, contributing an average of six percent in the last eight years to income, and the country does not produce any heavy industrial products. Further, the economy cannot sustain itself without substantial amounts of imported intermediate and capital goods and concessional financial assistance from abroad.
That leaves Guyana at the pre-takeoff stage of development. The Guyana economy was rebased in 2006 where the base year shifted from 1988 to 2006. Gross Domestic Product and agricultural production in the years prior to 2006 were measured using 1988 prices. The subsequent years used2006 prices. From 1990 to 2005, the average annual contribution of agriculture to GDP was 28 percent. However, overall primary commodities were responsible for between 39 to 43 percent of GDP. During that period, the largest contribution from agriculture was 31 percent. On the other hand, from 2005 to 2013 agriculture contributed an average of 21 percent annually to GDP, declining from 24 to 19 percent in 2013. But there was some progress in recent years. 2015 Statistics from the Ministry of Finance show that agriculture’s contributions accounted for approximately 25 percent of the GDP and provided more than 33 percent of direct employment, both rural and urban.
Later years saw efforts at mechanizing the sugar industry, attempts to expand the cold storage infrastructure for perishable agricultural products, efforts to add value to sugar production through the packaging and labeling of sugar with the construction of a packaging plant at Enmore.
In addition, an effort was also made to build a hydropower facility. The mechanization of the sugar industry has stalled with the Skeldon Sugar Modernization project plagued with design and mechanical problems.
The production of other crops still relies on small farmers with unsophisticated technology. Despite the efforts at diversification, Guyana remains a factor-driven economy. Primary production is still responsible for about one-third of the country’s output.
The country’s export trade is dominated by primary commodities which account for 95 percent of total export revenues. Further, government dominates the economy with a contribution of 65.6 percent of the domestic expenditure as observed by Professor Clive Thomas in his publication “Too Big to Fail”.
Guyana generates a large share of its economic activity from agriculture and natural resources sectors. In 1993, the traditional sectors of sugar, rice and bauxite accounted for 30.4 percent of Guyana’s GDP and 57.7 percent of the country’s export earnings. The contribution of the gold sector, which now approximate 10 percent of GDP has doubled since mid-2000s [These sectors provide the largest source of direct employment across the country.] There is a chance therefore for our Guyana to progress over the years once its people are encouraged to look out for their own and make the sacrifices now to have a better tomorrow. Be it skilled, semi-skilled or unskilled labors, all Guyanese have a role to play in making the economy a stronger one and moves are already being made in this regard.

[Infographics compliments of Business Guyana Magazine]

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