From breadbasket to basket case

Sep 18, 2017 Features / Columnists, Peeping Tom

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There is a whale of a difference between GDP growth and per capita income. And even though there is a correlation between GDP growth and per capita income, a country can enjoy a high GDP growth, for examples, such as what China and India are doing, and yet have a very low per capita income.
This is true both for countries with large populations and countries with small populations in which there are high levels of GDP.
China and India are large countries that have been enjoying astronomical growth rates over the years. But these are large countries, and despite the impressive strides they have made, the per capita income of both of these countries remain depressing. Yet both are spoken of as emerging technological powers in the world. The same is said of Brazil.
In Guyana, unfortunately, we do not wish to face reality. We prefer to play politics with our economics and assume that with high growth rates, Guyanese will overnight enjoy the standards of living that have been achieved by countries such as Trinidad and Tobago.
It is not going to happen. Guyana would need to have a rate of growth disproportionate to that of Trinidad and Tobago for it to have any chance of catching up with that country’s per capita income.
And even so, it will take many, many years for this to happen if there is a large differential between the growth rates of both countries, with Guyana enjoying the better performance.
When the Carter Center facilitated the National Development Strategy, the then leader of the opposition, Desmond Hoyte, did not wish to support the plan and objected to it on the basis that this was a plan which was put together by the Carter Center. Never mind that hundreds of Guyanese put a great deal of work into the exercise.
It was ironic that Hoyte, who himself had capitulated to the West and had embraced a development programme that was crafted by the IMF and World Bank, could be making such an objection.
The Carter Center wanted to ensure that democracy was not derailed and it felt that this could only happen within the context of an open economy.
Thus, the Carter Center wanted to have a national consensus, which was all part of its ideological agenda which did not link political freedom with economic sovereignty.
As far as the Carter Center was concerned, the democracy which it was promoting could only be sustained within a free market system and this was its political agenda after the free and fair elections of 1992.
A compromise was brokered with the PNC in which the original national development strategy was revised under the guidance of Dr. Kenneth King.
The PPP had no problem going along with this suggestion because it too had capitulated to the West and was not prepared to even debate in the National Assembly the original NDS, because the IMF and World Bank had their own agenda and had developed a conservative development model which tied funding to growth rates which were moderate.
The revised NDS, which came up with unrealistic growth rates, argued that Guyana’s economy could grow as high as nine per cent per annum. Now this was wishful thinking, because there is no way that a small economy like Guyana with limited absorptive capacity could sustain for any length of period such high growth rates.
Such growth rates were possible when the economy was recovering from a sustained decline. It was possible in the period 1990-1997, because Guyana’s production had plummeted in the years before 1997.
For example, sugar production in 1989 was under 100,000 tons and since sugar production carried a heavy weight in our national accounts, once sugar production and rice production began to recover things would look rosy if one considered only the growth rates, without considering what existed before and what was the country’s per capita income in relation to its Caribbean neighbours.
I like to call it hurricane economics. But whatever name is given to it, we must never forget that there was a time when Guyana was looked up to by the rest of the Caribbean.
The rest of the Caribbean is now looking down on Guyana and they will continue to look down on us because there is no way that Guyana’s growth would, within the next thirty years, allow it to surpass the per capita income of Trinidad.
Guyanese will therefore continue to run from their country. They are running, however, not from the problems created after 1992, but from the inability of the local economy to catch up with the rest of the region because of what took place under the under the PNC when Guyana, which was supposed to be the breadbasket of the Caribbean, was reduced to a begging bowl.

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