Globalisation and our development

For a small economy like ours there is not much we can do about globalization, just as we could not when it started its present literal iteration after Columbus stumbled across the Americas and Europe realized the world was not flat but was in fact a globe. We were there at the beginning when the plantations of the Dutch and then the English were created through slave labour to supply agricultural products for Europe. As our lands in the “new world” became populated, ‘free trade” replaced the mercantilist policies of the imperial powers and became driven by comparative advantages in production of goods and services.

There was an ebb and flow between protectionism and free trade over the years but in the late 20th century, free trade accelerated to unbelievable levels during the communication and transportation revolutions. The world truly became a village as each country attempted to move up the value chain in its productive capacity so as to deliver improved standards of living to their citizens. In Guyana, however, the PNC-regime after independence embarked on what turned out to be a detour and frolic as far as following that path of development. Rather than diversifying outside the plantation economy in a strategic fashion by picking products that it could export at an advantage and earn foreign exchange to purchase those items it did not have an advantage, it chose an autarkic strategy that was bound to fail because of our extremely small and underdeveloped markets. Burnham’s policies, compared to Lee Kwan Yew’s for Singapore, which became independent around the same time as us, is an object lesson in the importance of strategic decisions in the development of former colonies.

In the latter part of the 20th century, the Far Eastern Tigers replicated Singapore’s success and demonstrated that the export-driven strategy was transferable. Yet in Guyana, we continued attempting to improve efficiencies in agricultural products like sugar in which we neither had a comparative advantage (as say, Brazil) nor did it platform us into new vistas of production that delivered such advantages. This is not to say that such production must be abandoned with no consideration of the social impact but that those social considerations would be better addressed by moving Guyana into higher value-added products.

Presently, we have also taken the lead within the region for food security and made a commitment to reduce CariCom’s US$6billion food bill by 25% by 2025. Now while this is a good strategic choice in one area where we do have a comparative advantage – land/agriculture– by coupling it with new crops like soya and corn and rearing cattle, this is necessary but not sufficient to take full advantage of globalization and move up the development scale. For this to occur we must at each stage use the technology that we have mastered and move to a higher level. By focusing only on agriculture we will inevitably reach a point of diminishing returns and stagnating horizons.

As such our burgeoning oil industry offers us a platform for moving us strategically into a higher quantum level of development. Take, for instance, the gas-to-shore project on which the government has embarked, and which has been severely criticized by some elements putatively on “environmental” grounds. This initiative offers us the opportunity to develop manufacturing skills and expertise by Guyanese to an intermediate level – such as manufacturing urea from Natural Gas – which has been tried and trusted for a hundred years so there is not much risk involved. Within a few years – before our oil has run out and at which time, we should control a bulging Natural Resource Fund (NRF) that can then facilitate us moving to a higher level of production and continue onwards and upwards on a virtuous cycle.

 That globalization has presently stumbled because of supply-chain issues precipitated the COVID -19 pandemic and then the Ukraine war has exposed its downside, but it will be resolved to continue its inexorable march. We have no choice but to exploit its opportunities.