Guyana 21 ignores the PNS legacy and investment in people
By Prem Misir, Ph.D.
GUYANA 21 is not the age of Guyana! The Reform is Guyana 21!
Guyana 21 is a sketchy macro-development programme, aimed at inducing a Guyana take-off for the new millennium. Comments made here on the Guyana 21 plan are based on a document introduced by Stanley Ming, dated September 1998.
What the plan says
Assumptions made in this plan are threefold, enunciated by the following needs: need to create new housing areas, commercial activities, and recreation, etc.; need for modern infrastructure; and need for alliances with neighbors and CARICOM.
The plan then outlines how these ideas might be achieved, as follows:
The transformation to a mixed agrarian/industrial society and to achieve an aggressive, sustainable growth rate, according to Guyana 21, require seven types of resource: human, knowledge, capital, infrastructure, leadership, political stability, and physical.
In fact, this laundry list reads like the contents of a 'management' textbook. Does Guyana have these requisite skills and expertise in abundance? If there is a paucity of such expertise and skills, how do we correct the situation?
Guyana 21 fails to address these questions. This may be so partly because of an 'overkill' emphasis on physical infrastructures.
Guyana 21 is expected to achieve, among others, the following:
Again, a specific methodology is not in place to make these achievements a reality. In particular, the aggregate of the output of this economy, with the scale at which its resources are employed, with the size of the national income, and with the general price level, including monetary and business cycle issues, must be examined for starters. Projections must have a feasibility ring. We all have wishes, but as the saying goes, if wishes were horses, beggars would ride. I will return in the next few weeks to these concerns as they pertain to Guyana 21.
The PNC Legacy
The contributors believe this plan is a necessary strategy because of the appalling state of the economy. Guyana is presented as being marginal to the global economic hierarchy. The top of this hierarchy controls 80 per cent of the global economy. Guyana is placed in the 6th tier of this seven-tier pyramid, as indicated by Guyana 21.
Its description of Guyana as representing a sorry state of affairs, and, therefore, the need to place the Guyana 21 plan on a pedestal to correct this wretched situation, ignores the burdensome economic legacy of the Burnham/Hoyte years. Some people will say they want to move forward, and that the notorious 28 years should now be seen as a forgotten past.
However, this past can be ancient history only if we are prepared not to unduly and unfairly deride the performance of the People's Progressive Party/Civic Administration. The legacy of the Burnham/Hoyte years has to be factored in to explain the comparative performance of this Government because the PPP/Civic Administration inherited in 1992 a weakened and deteriorating economy.
What was the legacy passed on to the PPP/Civic in 1992? Here are a few aspects.
The PPP/Civic Administration bounced back in 1992 through 1997 with an average seven per cent economic growth rate. The political instability in 1998, El Nino, and La Nina induced a negative economic performance in 1998, and improving to three per cent in 1999. On the balance of payments' side, merchandise trade deficit was reduced to US$25.2 million from US$54.2M in 1998.
In general, the balance of payments strengthened from a deficit of US$22.7M in 1998 to a deficit of US$4.4M in 1999. Inflation was cut to 7.4 per cent in 1999 from 105% in 1991.
The prospects are good in the near future for sustainable economic expansion through maintaining a viable macroeconomic environment (high and positive growth rates, single digit inflation rates, and sustainable balances of the balance of payments); investing in priority areas (health, education, water and sanitation, housing, and economic infrastructure); and improving transparency and efficiency of the economy.
Guyana 21 does minimum justice to the extraordinary efforts of the PPP/Civic Government to reinstate a chronically diseased economy since 1992; the plan explains what it intends to do without addressing the specifics of the 1992 baseline economy that was near collapse. Failing to acknowledge this baseline is tantamount to providing treatment without identifying the complex disease process at work. At any rate, Guyana 21 reads like a Cook's Tour Travel Guide, or more aptly, Guyana 21 represents a package that Santa Claus has brought to town.
Devoid of some economic considerations
Guyana 21 seems to have paid minimum attention to the rate of growth of the population. This first consideration provides information on the behaviour of the population, in terms of age, sex, gender, and other demographic variables. As Sir Dennis Robertson puts it, it is most convenient to have a population that is always growing but never becoming bigger. In fact, the appropriate amount of capital formation, too, may very well be influenced by population numbers.
The population variable is important to consider because the return on human resources, today, seems to have a greater sustainable impact than investment on physical resources. Investment in people to provide skills and expertise in information technology, etc., is what may be needed for Guyana as a priority. The Guyana 21 plan places less emphasis on investing in people.
The plan needs to give a sense of the specific kinds of improvement in standard of living that is touted. The poor should benefit from this change for the better by being able to occupy more space and to have greater personal services at their disposal. A deficiency in both would sustain poverty and stagnate the standard of living.
Guyana 21 has not particularly addressed the varying relationship between capital formation and growth of output. An old view is that an increase in the ratio of capital stock to output, that is, a deepening of capital, has produced spectacular enhancements in people's lives. The plan's focus, apparently, is only oriented toward capital deepening.
A new perspective emphasises capital widening where investment accompanies a growth of total output. Guyana 21 has not demonstrated a sensitivity to this so-called conflict between capital deepening and capital widening. In any case, a serious and credible development plan may integrate both capital deepening and capital widening. The plan fails to marshall this integration process.
A significant flaw of the Guyana 21 plan is that its investment proposal seems grossly inadequate to service the current debt. The plan recommends $2B/5 year investment in infrastructure which may generate a 25 per cent rate of return of $500M; the return will be derisory to service the debt.
The Reform wing of the People's National Congress (PNC) has now elevated the Guyana 21 plan to the political stage where it will be subject to more scrutiny over the next few weeks. The credibility of Guyana 21 is in question, and its vulnerability exposed.
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