To begin with, December 21, 2018 marked an unprecedented event in Guyana’s political history, wherein the no confidence motion brought against the sitting Government by the Opposition was carried, paving the way for fresh elections early in 2019. This columnist wishes to congratulate the Opposition on this achievement, and asks for all of Guyana to respect the outcome of this process going forward.
Turning now to today’s discussion: With the potential huge growth in GDP in the first decade, transforming the economy into a trillion- or potentially a two-trillion-dollar economy on account of large sums of oil revenues, it does not necessarily mean that the quality of life on a broader spectrum will be improved and/or betterment experienced by a wide cross section of the Guyanese people. This does not guarantee real economic growth against the background of the human development paradigm – with respect to poverty reduction in particular.
Case in point: with the largest retrenchment in (recent) Guyanese economic history of some 10,000 sugar workers having the far reaching implication of further adversely affecting about 40,000 dependents, it is a huge, real blow in this regard. This outcome has in effect taken away approximately $10 billion in income distribution from these workers and the broader economy annually. This means that the economic and social wellbeing of these people is going to decline rather rapidly, and oil revenue would not necessarily create direct employment for them. There are a number of Government programmes, nonetheless, aimed at re-engaging these people in productive income-generating activities, such as training with new skills, namely carpentry and plumbing etc. But these measures, though designed with good intent, will not compensate for the economic loss incurred, neither would they give rise to stability and progressive growth in the income distribution of these thousands of retrenched people.
There may be various reasons for “economic growth lopsided” nations; those are they which have high rates of GDP growth relative to improvement in human development indicators, including low social expenditure, government corruption, or inequitable distribution of incomes. The resultant effect of such cases suggests that good economic growth not accompanied by increases and/or improvements in human development may prove to be ultimately unstable.
Economic growth is the most powerful instrument for reducing poverty and improving the quality of life in developing countries. Both cross-country research and country case studies provide overwhelming evidence that rapid and sustained growth is critical to making faster progress towards the Millennium Development Goals – and not just the first goal of halving the global proportion of people living on less than $1 a day. Growth can generate virtuous circles of prosperity and opportunity. Strong growth and employment opportunities improve incentives for parents to invest in their children’s education by sending them to school. This may lead to the emergence of a strong and growing group of entrepreneurs, which should generate pressure for improved governance. Strong economic growth, therefore, advances human development, which in turn promotes economic growth.
But under different conditions, similar rates of growth can have very different effects on poverty, the employment prospects of the poor, and broader indicators of human development. The extent to which growth reduces poverty depends on the degree to which the poor participate in the growth process and share in its proceeds. Thus, both the pace and pattern of growth matter for reducing poverty.
A successful strategy of poverty reduction must have at its core measures to promote rapid and sustained economic growth. The challenge for policy is to combine growth promoting policies with policies that allow the poor to participate fully in the opportunities unleashed, and so contribute to that growth. This includes policies to make labour markets work better, remove gender inequalities, and increase financial inclusion.
Asian countries are increasingly tackling this agenda of ‘inclusive growth’. India’s most recent development plan has two main objectives: raising economic growth and making growth more inclusive, policy mirrored elsewhere in South Asia and Africa. Future growth will need to be based on an increasingly globalised world that offers new opportunities, but also new challenges. New technologies offer not only ‘catch-up’ potential, but also ‘leapfrogging’ possibilities. New science offers better prospects across both productive and service sectors.
Future growth will also need to be environmentally sustainable. Improved management of water and other natural resources is required, together with movement towards low carbon technologies by both developed and developing countries. With the proper institutions, growth and environmental sustainability may be seen as complementary, not substitutive.
