It would appear with the ExxonMobil oil strike, the quest for growth is being abandoned with the expectation that Guyana is now on “easy street”. Warnings about “Dutch Disease” being contracted have not been enough to move the Government out of their oil tunnel vision. Even as this is being composed, the Government was meeting a group of local and international “wise men” to chart our “oil future”.
It seems to have escaped the People’s National Congress-led Government that a comparable conclave could have been summoned to discuss our “agriculture future” before shuttering four sugar estates and allowing more than 50,000 acres to revert to “bush”. Rather belatedly, the cobbled together Special Services Unit, selling off the sugar assets realised that a going concern will attract higher bids and are desperately trying to backtrack.
But we believe that to avert Dutch Disease – where the rest of the economy outside of oil is allowed to wither away – the Government has to answer the question “How do we increase the size of the economic pie now so that our growth can be sustained beyond oil?” While there has been talk of investing in and improving our “infrastructure”, we need to develop a more focused five-year projection of the Government’s capital expenditure. One area where we have to move beyond rhetoric has been to expand the previous administration’s thrust into ICT4D – Information and Communication Technology for Development.
Up to now, Government’s comments have been directed at the costs associated with the initiative (fibre-optic cable, OLPF etc) and its domestic impact (improving e-governance, competing with Private Sector providers etc). Unfortunately, its potential to alter the structural foundations of our economy by opening up the export of services has been completely blanked. The Government seems stuck in 19th century economic dogma that saw development as a transition from agricultural to industrial production, with manufacturing being the prime ‘engine of growth’. Only material products are suitable for exports, and services are confined to the domestic market in this view.
But towards the end of the 20th century, developments in ICT effectuated a revolution in delivering services across borders. As a platform for growth and development, the phenomenon was encapsulated as the “3Ts” – technology, transportability, and tradability. “Outsourcing’ of services became a catchword as billions of dollars flowed from the developed countries into the ICT-savvy developing nations. Trade in services is becoming increasingly more viable, with many businesses now dividing their operations across the world.
The rapid growth of China and India, which have been driven along two different paths, has rekindled the debate on the drivers of growth and development. China’s growth is led by traditional manufacturing, while India’s growth and exports focuses heavily on services – representing the two different paths towards rapid development. And India has not been alone in exploiting the new opportunity: from 1975 exports in services have doubled from six per cent to 12.6 per cent of world GDP.
It is very unlikely that we can match the economies of scale to compete with behemoths like China in industrial exports but with our comparative advantage of English as our first language and a populace that still has a collective drive for education we can certainly carve out a niche in the ICT service exports. These exports have primarily been in such areas as Information Technology, business-related, transcribing medical records, data services, call centres, education, entertainment production services, etc. These services differ significantly from the traditional services, which demand face-to-face interaction.
But we will not be in a position to exploit this new driver of growth unless we have both the human and infrastructural resources in place to be capable of offering the service. For countries like ours where businesses are stuck in a “trader mentality”, ICT based exports will also ensure that traditional service activities gain in productivity from the 3Ts. Additionally, a host of new service activities will emerge as a result of unbundling and technological innovation.
We must ward off Dutch Disease at all cost.
