As we attempt to lift our country out of its underdeveloped state, which was created by the British and by the PNC dictatorship, we would be foolish not to look at how others were able to create investment opportunities, starting with even greater constraints than we have, and how those opportunities were realised in a sustainable manner. Let theory be guided by successful practice. The history of the world after World War II has demonstrated that the countries that successfully pulled themselves out of the poverty trap – Hong Kong, Singapore, Taiwan, South Korea and then later Malaysia etc. — all followed the example of Japan, where the state was integrally involved in formulating and executing explicit industrial policies.
The central linchpin of Singapore’s success, for instance, lay in Lee Kuan Yew’s articulation of a clear strategy for development, in which his government played the key role. The state enumerated the constraints, identified the opportunities, and methodically set about removing the constraints to achieve the identified opportunities one after the other. The people of Singapore were willing to accept near-term deprivations because they could see the vision slowly becoming a reality. Our people must also do so.
We know that, in Guyana, we had the disastrous PNC experience with state involvement in development, but let us not throw out the baby with the bath water. Not all state actions are negative, and, in fact, there may be the necessity for government intervention when the free market is stymied for one reason or another (market failure). And if we don’t have a market failure here, we certainly have market constipation. We need only to look at our banks’ claiming that they do not have foreign exchange to satisfy local demands even as the BoG insists they do.
After that experience, the PPP in 1992 agreed that the state has to be transformed into one that is as small as possible, but, at the same time, we have to insist that it should be as large as necessary to ensure that we move ourselves out of poverty in as short a time as possible. The PNC’s development plans were driven by state ownership of production (State Capitalism) which destroyed the market forces necessary for competition and other disciplines necessary for sustainable growth.
The socialist dogmas undergirding the then development policies were inimical to the free market, and spawned a culture of special interests seeking to benefit from the state policies (rent-seeking). While we should learn from our experience as to the downside risks of a large governmental role in industrial policy, and act to minimise those risks, we again emphasise the fact that no country in the modern era has risen out of poverty without strong Government intervention.
In this space, we have consistently called for the creation of what has been labelled a “Catalytic Entrepreneurial State” (CES). Such a state would first have to be a responsible state, with a strong demonstrated commitment to Private Sector development, as is presently the case. Unlike the APNU/AFC coalition Government, the incumbent PPP Government has been willing to facilitate Guyanese becoming wealthy. The Government’s relationship with the Public Service is another area of grave concern in the formation of a CES. In whatever endeavour the state engages, much depends on the professionalism of the Civil Servants for success. In Guyana, we will definitely need to insist on new and higher standards for employment, with commensurate remuneration in the Civil Service, and this may necessitate redeploying much of the present staff.
The CES will also have to be a “facilitative State”, as the IMF/World Bank has been insisting. We have no problem with the proposition that the Government will play a regulatory role to restore (and maintain) markets to their proper function (clearing markets).
As the Government is bravely demonstrating against the tide of the dominant neoliberal orthodoxy, it will have to continue to provide quality free education, social services, and healthcare for all citizens, even as it develops our abysmal infrastructure and catalyses industrialization.
