Yhip Rebuts Peeping Tom, says institutions hold key to escaping resource curse

Jul 24, 2026 Letters

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Dear Editor,

There is not much serious disagreement between my letter of July 15, 2026, and Peeping Tom’s reply of July 22, 2026, on the fundamental argument that strong institutions are not sufficient but necessary conditions for Guyana’s economic development. Peeping Tom might even embrace my suggestion that the stronger phrase “absolutely necessary” may be more appropriate in the case of Guyana at this early stage of her transformation, when there is ample time and I hope also ample human capital to do the right things now rather than 30 years later when the oil is exhausted.

Before I get to my response, let me correct a small oversight in Peeping Tom’s sentence: “Ironically, Mr. Yhip ends his letter by warning against pretending that economic policies can succeed in an institutional vacuum. Yet the only person invoking a vacuum is Mr. Yhip himself.” There is no irony at all, Mr. Tom: the caption of my letter reads, “Economic policies cannot succeed in an institutional vacuum,” and the closing sentence reads, “If Guyana is to escape the paradox of plenty, the resource curse, we must stop pretending that economic policies can succeed in an institutional vacuum.”

While Peeping Tom correctly observes that economic modernisation often occurs outside the bounds of liberal democracy, the commentary “seems”, emphasis on seems, to rely on a precarious correlation error by merging authoritarian control with developmental competence. It is analytically dangerous to support a general proposition by invoking a few isolated examples, as a detractor can always unearth an equal number of convenient counter-examples to prove the exact opposite. Yet, since Peeping Tom specifically mentions the East Asian Tigers and Chile to illustrate that prosperity reigns alongside a “strong state,” it is worth briefly examining these widely studied historical case studies. Peeping Tom is correct that these examples show that economic development is a complex process. No serious economist would question that. But we must proceed with caution to avoid the dual traps of survivorship bias, which isolates only successful outcomes and omitted variable bias (the first cousin of correlation bias). In the case of the Asian Tigers, this bias leads to mistaking the autocratic backdrop for the actual engine of their economic growth. Japan, South Korea, Taiwan, Singapore, and, for good measure, China, share a common Confucian ethos, which fosters a highly disciplined workforce, an institutional reverence for education, and a meritocratic bureaucracy. Pretty close to “institutions,” isn’t it? So whether one wants to call it institutions wrapped up in culture, clearly that is a significant part of the explanation of the “Asian Miracle” puzzle.

Now to Chile. The data does not support Peeping Tom’s statement: “Chile’s rapid economic modernisation under Augusto Pinochet remains one of the most debated examples in modern political economy.” Under Augusto Pinochet’s repressive and bloody rule (1973–1990), the economy grew at a mediocre 1.5% average annual rate in GDP per person; income inequality worsened, and the economy suffered two financial crises. Almost two-thirds of Chileans rejected Pinochet’s October 1988 referendum to extend his rule. The true “Chilean Miracle”, if we are honest enough to admit it, only materialised after 1990 under a stable democracy, economic reforms, and, not least, social reforms that introduced the social safety nets that the Pinochet regime lacked. Under subsequent democratic rule, income inequality has steadily declined. Until the copper boom ended in 2014, growth in income per person more than doubled between 1991 and 2014, averaging 4 percent. For credible reasons, Chile was seen as an example to the rest of Latin America. Institutions significantly account for the real miracle, but I would join hands with Peeping Tom in saying that “institutions” alone were insufficient as a driver.

Finally, in saying that the Resource Curse “originates” as an economic challenge, Peeping Tom overstates his case. The state of a nation, at any given point in time, is the cumulative sum of its historical, cultural, and institutional past, rendering it impossible to isolate a pristine “economic origin” or entry point. For a country like Guyana, entering a resource boom with historically fragile governance and weak institutional guardrails, can anyone dispute that? Ensures that the Resource Curse is, from day one, a serious governance challenge that entirely subsumes the economy. One cannot separate the economic shock of “oil money” from the institutional sieve through which it pours; the two are fundamentally intertwined.

Let me close with something all Guyanese in Guyana and in the diaspora can agree: Economic policies cannot succeed in an institutional vacuum. On this central proposition, Peeping Tom and I are in full agreement, and all other disagreements are merely nitpicking.

Sincerely,

Terence M. Yhip

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• Guyana's economic development, Letters, Peeping Tom, resource curse, Terence Yhip

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