For a Catalytic Entrepreneurial State

Since independence, there have been two sets of concerns, not entirely unconnected, raised about economic distribution in Guyana – and both have highlighted the issue of distributive justice. Firstly, there have been concerns about the overall economic policy of the Governments favouring their ethnic constituencies at the expense of the “other”. Charges of “discrimination and racism” are once again being made by elements in the African Guyanese community, echoing the similar cries of the Indians during the People’s National Congress’s rule between 1964 and 1992 and 2015-2020.
Secondly, there has been the historical complaint about uneven development geographically – specifically, that Demerara in general, and Georgetown in particular, receives a disproportionate share of the national developmental thrust. And while the rural communities are most underdeveloped, we yet again hear about “partiality”, as the People’s Progressive Party/Civic (PPP/C) Government attempts to rectify the situation. These complaints, which are grounded on a perception that justice is not being served, have been some of the main fuels to the ethnic fire. Development is seen as a zero-sum game.
What we have seen is that in severely-divided societies, governmental policies will not be judged by intentions but by results and even in that case, results will be judged by very subjective criteria. Certain policies, which may appear facially neutral, can have differential ethnic impact. Take for instance, a key plank in the economic strategy pushed by the multilaterals – agricultural development in Guyana. From a standpoint of comparative advantage, this makes sense for Guyana. But because of differential economic specialisation, as was demonstrated in the ‘60s, there will be ethnic concerns raised. It will be futile to argue that it is the most “economically feasible” choice. The economic policy of the Government is, therefore, very important in securing justice, and ethnic peace in Guyana.
The Government will have to create the double-digit growth rates across our non-oil economy in all the regions that is necessary to give us the cushion and breadth of development to “raise all ethnic and regional boats”. And we emphasise the “non-oil economy”, since we will only be receiving 14.5% of the revenues from the oil industry. Most of those revenues will end up in the oil companies’ home countries so we should not become too excited about the touted astronomical growth rates that will supposedly “lead the region”.
To stimulate such a necessarily high growth rate, the creation of a Catalytic Entrepreneurial State (CES) is proposed. Guyana, as with many other Third World States, had a disastrous experience with State involvement in development during the ‘70s and ‘80s, and this has obviously soured the enthusiasm for dirigiste policies. Back in December President Irfaan Ali announced the launching of a “Wales Development Authority, (which) will be tasked with the development of not only agriculture but agro-industries, processing facilities, manufacturing, industrial development and this facility would see special incentives. These include tax and fiscal incentives aimed at attracting investment”.
The incentives are intended to encourage the Private Sector to make the necessary investments. But if these will mostly be coming from “outside”, we will not receive the full benefits. In that case, the Government itself should get involved by utilising capital from the Natural Resource Fund. However, there are already protests from some quarters about the Government’s proposed intervention to go ahead with the “gas-to-shore” project even though the goal is to cut the price of electricity by 85 per cent.
In our estimation, however, the State’s involvement must go beyond mere infrastructural development and consider getting into downstream activities in the O&G industry. For instance, since the natural gas to be brought onshore can be used to manufacture urea, which is needed for our sustainable agricultural development, the Government should consider the feasibility of setting up such a manufacturing facility.
The recently departed People’s National Congress (PNC)-led Government evidently agreed with the neo-liberal position that providing a stable macro-environment will attract enough investment to generate high economic growth. Unfortunately, while necessary, this approach is not sufficient to move us “from Third World to First”.