Inclusive Growth

Jul 15, 2012 Editorial

In a country such as ours that started our developmental thrust from such a low base, there are few who would doubt that much of our worrying rising level of polarised rhetoric in the public realm emanates from perceptions that our economic growth has not been equitably distributed.
There are, of course, always politicians who are willing to exploit such perceptions for political gain. Claims and counter claims about poverty therefore, is the norm in our country and accusations that there has been a growing inequality between the two major ethnic groups abound. Complicating matters have been charges that this rising inequality also exacerbates the gap between the top and bottom sections of our society, inclusive of all groups.
In the absence of conclusive surveys, such as the national census that is about to commence, the discourse has not surprisingly generated more heat than light. The last Household Income and Expenditure Survey (HIES) of 1999 demonstrated that as far as ethnicity was concerned, Africans and Indian Guyanese were quite comparable in their poverty rates, while Amerindian groups had much higher rates. Rural and hinterland poverty rates far exceeded urban rates. The overall poverty rate for the entire country, however, had declined appreciably since 1992 – from 43 per cent down to 36 per cent.
Since that time the country has experienced a sustained period of economic growth, especially during the last five years. It would be very difficult to justify the claim that the poverty rate, measured as the percentage of the population that does not have an income/expenditure of, say, US$2 per day, has increased since 1999.
Going by objective factors such as the number of new houses, cars, telephones (land lines and cell phones) in all regions, it would appear that the growth in the economy has percolated to all sections of the society. On the rural coastland, the sugar industry is being strangled due to a precipitous fall in its labour force: attendance is rarely 50 per cent.
It would appear that the traditional workers can find alternative employment and the wages in the sugar industry, which many had criticised as too high, are not lucrative enough to attract non-traditional workers. Coastal rural unemployment has to be quite low.
In the interior regions, gold mining has skyrocketed and combined with the government programmes, poverty had to have decreased in absolute numbers. While the bauxite industry suffered a tremendous downsizing following its collapse in the 1980’s, many of the laid off workers have found employment in the gold and forestry sectors. With the free distribution of solar panels, cell phones and refrigerators have made significant changes of lifestyles in the interior. It would seem then, from the anecdotal evidence that the overall growth in the economy has led to inclusive growth overall.
But we have to also point out that poverty and inequality are not only about income, and a focus on income diverts our attention from the non-income factors that determine our well-being, perhaps better understood as ‘the quality of life’. Towering over all non-income factors are public goods. Economists see public goods as non-rival in consumption, which renders them egalitarian in their impact on a population. They are important to us as they add to our sense of well-being. Think of roads, pavements, bridges, ferries, parks, water supply and every kind of infrastructure including airports and airstrips; these have all increased significantly in the last decade.
Public goods enter into the economic imagination in the following way. Such goods are defined by the characteristic that access to them cannot be restricted. With unrestricted access they are rendered unattractive to potential private providers guided by the profit motive. Once we comprehend fully the role of public goods we can see why it is necessary to broaden the ambit of the discourse on inclusive growth beyond the customary inter-personal income comparisons.
We can visualise a society with a relatively equal income distribution that is yet short of public goods.
In Guyana, we call upon all stakeholders to conduct discussions and debates about poverty in a less polemical fashion.

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