Export prospects are a major concern for Guyana, given the world move to free trade and the country will have to quickly improve its overall competitiveness, says Bank of Guyana Director Dr Gobind Ganga.
In a presentation to participants at the Caribbean Monetary Conference last week at the Hotel Tower, Dr Ganga said improving competitiveness would have to be achieved by: maintaining a responsive exchange rate which would facilitate the reallocation of resources toward the more productive sectors; strengthening the external balance and improving economic performance; lowering overall costs of production by keeping labour costs in line with productivity gains; obtaining and using appropriate technology; developing human capital; promoting both domestic and foreign direct investment; making institutions that influence trade efficient and ensuring the overall efficiency of economic activity; as well as having reliable physical infrastructure and efficient public utilities in power and communication.
In the longer term, he said Guyana would need to adapt its economy to more liberalised international sugar markets and lessen its dependence on sugar and other traditional exports which would carry declining export prices.
In reallocating human and capital resources to new areas of activity to sustain economic growth, employment and exports should complement current efforts to be competitive. This would require, Ganga said, a deepening of adjustment measures to diversify the economy through the production and manufacturing of a variety of agricultural crops for exports, the promotion of high growth industries such as tourism and the establishment of free zones.
He said there was need for increased efforts in the form of tax incentives, market intelligence and research and extension services to help diversify the agricultural sector.
He noted that Guyana's external competitiveness might have deteriorated over the past few years because of a real appreciation of the exchange rate and higher unit labour costs. Ganga said it was clear that wages in the last ten years have increased substantially in most sectors, except bauxite. During 1996 to 2000, wages in the government services increased by 128% while those in the sugar and distribution sectors rose by 60 and 62% respectively. The increase in the rice industry was 40% while wages in the bauxite sector remained unchanged.
He said greater competitiveness could come about through lowering overall costs of production with the use of appropriate technology, while keeping labour costs linked to productivity gains.
He noted that in recent years Guyana has experienced significant shifts in the composition of its export of goods with a move away from some of the major traditional exports, rice, bauxite and sugar towards other non-traditional products. Those three in 1995 contributed 57.4% and by 2001 this was down to 44.9%. Non-traditional exports increased steadily from 14.1% of total exports to 22.4% from 1995 to 2001 with large increases in fish and shrimp production.
In addition to the price and cost indicators of competitiveness, Dr Ganga said that non-price factors have also contributed to the cost of doing business in Guyana. He noted that the Guyana Telephone and Telegraph company, even after 10 years of privatisation, is yet to provide services comparable to that of some CARICOM countries. Guyana Power and Light provided inadequate, inefficient and expensive services that are determined by a non-competitive monopoly.