– the role of the Private Sector in economic development
In last week’s edition of this column, the author posited that there exists in Guyana no major symptom of political instability at this point in time. In that article, the notion of political instability was defined as a situation in which a country experiences politically motivated violence and/or crimes in society, violent protests, workers going on strikes, and so forth.
Political instability is also defined as the propensity of a government collapse, and when growth is significantly lower than otherwise. Poor economic performance, however, may lead to a government’s collapse and political unrest.
Notwithstanding, if one were to consider a few political scenarios; namely, the unprecedented event surrounding the Guyana Sugar Corporation (GuySuCo), the uproar by several commentators and the political Opposition regarding the appointment of the GECOM chairman, the deadlock regarding the making of substantive judicial appointments; these events, one can argue, do constitute some degree of political instability. But in order for these events to lead to a full blown, politically unstable environment – it largely depends upon how the people and the political Opposition react to these circumstances.
So far, as it relates to the nine thousand plus sacked sugar workers, the political Opposition have remained quite calm and engaged in only peaceful protests so far.
In a similar manner, such is the reaction to all the other referenced politically controversial matters; as there has been no extraordinary reaction to these instances by the people and the political opposition in a manner that may destabilise the economy. However, this is not to say that should the economy continue its contractionary trajectory of poor economic performance in the short and medium terms, political instability may not prevail. At the same time, though, such may be an unlikely outcome, with the growing optimism and overly exaggerated hope that are being conveyed to the people of Guyana with first oil in 2020.
That being said, against the backdrop of last week’s topic: “the need for an improved economic relationship between the Private Sector and the Central Government to advance Guyana’s economic development”, this columnist is pleased to note that the very next day after this article was published (incidentally), the Minister of State met with executive members of the Private Sector Commission (PSC) to discuss increased collaboration between the Government and the PSC in the areas of the Green State Development Strategy and the setting up of the Department of Energy. This is very commendable, to begin with.
Turning now to the thematic discussion for today, the international community came together in 2000 to forge a common blueprint for global development, the eight Millennium Development Goals (MDGs). At the highest level, they measure progress with respect to poverty and nutrition, universal education, gender equality, child health, maternal health, HIV/AIDS, environmental sustainability, and global partnership. The goals remain the most important source of international consensus on the overarching objective of development efforts: poverty reduction and improved quality of living. Each goal contains targets and indicators for monitoring progress.
While economic growth is essential to poverty reduction, such growth itself flows predominantly from the Private Sector investment and the job and business creation that follows. Thus there has been growing consensus internationally that reducing global poverty depends on the facilitation of economic growth that includes the poor. It is also recognised that effective governance without strong public institutions, economic growth will be either inhibited and/or proceed in a way that does not benefit most members of a society. Therefore, effective public institutions are necessary to ensure a sound enabling environment for private sector investment, and to manage the relationship between private sector activity and broader societal interests (Allison, 2012).
It is precisely for these reasons that there is a strong universal view that both the private sector and public sector are critical to implementing the vision of long term poverty reduction through inclusive economic growth, driven by private sector activity. The reality of global poverty has also been shifting, such that it is estimated that over two-thirds of the world’s poor people currently live in middle income countries, defined by the World Bank as countries with annual GDP per capita above US$1,000 (Guyana’s GDP per capita is just over US$4,500). Development scholars argue that this is a dramatic change from just two decades ago, when 93 per cent of poor people lived in low-income countries (Allison, 2012).
