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Good Governance is essential for the success of export-led growth.

Dec 02, 2015 Letters

I would be grateful if you published the following letter in your Letter columns. Thank you.
I wish to thank Ganga Ramdas for his interest in my recommendation of export-led growth as a solution for developing countries.  In short, he posits that export-led growth, a ‘pie-in-the-sky-methodology,’ has failed Guyana, pointing further that there is an inherent inefficiency in it being aligned with sales revenue maximization while ignoring costs.  He broaches the usefulness of a strategic plan and proposes strict adherence to “results-based” financing for education and health as a means of attracting foreign investment into sectors other than our natural resources.
Ramdas also spoke to the failed attempts at getting foreign direct investment to make a meaningful contribution to Guyana’s economic development, surprisingly borrows from the World Bank website ideas which he considers relevant to using exports as a driver of economic development, and summarizes in his last paragraph that ‘Guyana’s export-led economic model has left much to be desired.’
My first observation here is that we shy away from strict definitions of models and instead make use of the ideas which underpin these models.  Economists would generally be quick to point out that economic models are a simplification of real world scenarios, and are intent on promoting a specific idea or ideas.
The principal idea behind the export-led model was that it served to generate much-needed foreign currency, which probably stands among the priorities of our policy goals.  Further, to the extent that goods and services can in fact be successfully produced and exported using this idea, then our products would be cost competitive globally, and this is justification enough for efforts to be made in this direction.
It is noteworthy here that discussions on our economic prospects are hardly the sole domain of economists, but must in fact embrace all other professionals, from our business leaders to our doctors, lawyers, educators and religious leaders, all of whom will contribute meaningfully to the successful promotion and development of the institutional pillars our economy.  In particular, the leaders across our various sectors need to understand the role their sectors/institutions play in promoting economic development.
I had stated in the letter to which Ramdas refers that sound governance, institutional and regulatory systems were among the conditions necessary and integral to the success of the application of export-led growth generally.  Also critical to its success were strong public/private partnerships which understood and shared the focus and goals of this idea.
It is of course easy to miss the point that ‘institutional’ speaks to all the institutions which underpin investment and economic growth and development, covering that of security, education, health and all the other regulatory institutions necessary for the smooth functioning of businesses, from the deeds registry to the stock market.  My objective for these broad criteria was, in addition to building confidence in our economy, to establish a common platform where investment in all sectors with the objective of generating exports would be equally considered, not just our natural resources.
While I strongly support and advocate domestic ownership and investments, it is quite obvious that many sectors and industries could benefit significantly from investment and technology transfers which would accrue from foreign direct investment.   All of this translates into the strengthening of our economic foundation with accompanying strides in our economic welfare.
Finally, efforts at utilizing the concept of export-led growth for Guyana should necessarily be driven by government, which should arrive at such a decision through consultation and consensus.
Craig Sylvester

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