Beyond Macroeconomic Stability: The Role of Selective Interventions in Guyana’s Growth

Williams, Joycelyn (2012): Beyond Macroeconomic Stability: The Role of Selective Interventions in Guyana’s Growth.

Abstract

This paper examines Guyana’s growth record 1992 to 2010, against one aspect of the World Bank’s Functional Model of Growth (1993). This model was developed by the Bank following its review of the development experience of several of the high performing Asian economies, many of which are island states. In this model, growth depends on three pillars : a) policies that promote macro-economic stability- that is low increase in price levels, stable currency exchange rates, low indebtedness, b) selective policy interventions, and c) institutional policies such as a technocratic civil service, and wealth sharing mechanisms.

Since each of these three pillars can be the subject of lengthy discussion, this paper focuses on the role of Selective Interventions in Guyana’s growth record since 1992. The paper will discuss how selective interventions were the cornerstone of the Asian Islands industrial policy which allowed them to achieve sustained growth over three decades (1960’s to 1990’s), and then use that basis to discuss Guyana.

According to current development thought, selective policy interventions are the cornerstone of a successful industrial policy. Such interventions includes the following: low interest rates or credit often provided by development banks, focusing credit on the high growth sectors, deliberately giving certain industries tax concessions, and supporting arrangements that will push exports of the favored industries. In keeping with structural change theory, the favored industries tend to be manufacturing and services.

The paper in focusing on Guyana will therefore look at the kind of selective policy interventions that Guyana has used to stimulate growth since 1992. It looks at whether there was a policy using such special interventions, and kind of interventions used. We will also assess the extent to which these special interventions have focused on high growth industries using case studies of sugar and tourism. We offer an assessment of what factors prevented the Government from using the selective interventions to the extent they were used by the island states in Asia.

• Item Type: MPRA Paper
• Language: English
• Keywords: Guyana, Structural Adjustment, Macroeconomic Stabilization, Caribbean Economies
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O10 - General; L - Industrial Organization > L5 - Regulation and Industrial Policy > L50 - General

References

Amsden, Alice. 1989. Asia’s Next Giant: South Korea and Late Industrialisation. New York: Oxford University Press.

Blomstrom Magnus and Bjorn Hette (1984). Development Theory in Transition. London: Zed Books.

Chang, Ha Joon. 2002. Kicking Away the Ladder: Development Policy in Historical Perspective. London: Anthem Press. Chen, Edward K.Y. 1979. Hyper-growth in Asian Economies: A Comparative Survey of Hong Kong, Japan, Korea, Singapore and Taiwan. London: Macmillan.

Da Costa, Michael. 2007 Colonial Origins, Institutions and Economic Performance in the Caribbean: Guyana and Barbados. International Monetary Fund: IMF Working Papers. Growth Commission. 2008. The Growth Report: Strategies for Sustained Growth and Inclusive Development. Washington, D.C

Khemraj, Tarron. 2008. “The Missing Link: The Finance -Growth Nexus and the Guyanese Growth Stagnation.” Social and Economic Studies 57(3 & 4):106-129.

Lall, Sanjaya.2000. Selective Industrial and Trade Policies in Developing Countries: Theoretical and Empirical Issues. Queen Elizabeth House Working Paper Series QEHWPS48, Working Paper 48

Lin Justin et al.2010 Growth Identification and Facilitation: The Role of the State in the Dynamics of Structural Change. The World Bank

Leon, Gene. 2011. Macroeconomic Stability and Sustainable Growth. Paper presented at 5th Conference on Economy, UWI Trinidad

Philippe Eqoume et al. 2003 External Debt Restructuring in Guyana: Experience With Macroeconomic Stabilisation, Structural Adjustment and Poverty Reduction. IMF

Shafaeddin, S.M. Trade Liberalization And Economic Reform In Developing Countries: Structural Change Or De-Industrialization? UNCTAD No. 179: 2005.

Staritz, Cornelia et al. 2007. Guyana: Why Has Growth Stopped? An Empirical Study on the Stagnation of Economic Growth. International Monetary Fund: IMF Working Papers. Su Yanquian. April 2012. The Role and Magnitude of Selective Interventions in the Tourism Sector in Guyana 1992-2010. Unpublished Term Paper, Department of Economics, University of Guyana.

The World Bank. 1993. The East Asian Miracle: Economic Growth and Public Policy: New York: Oxford University Press. Wolf, Charles. 1988. Markets or Governments: Choosing Between Imperfect Alternatives. Cambridge, Mass: MIT Press

The World Bank. 2003. Guyana: Development Policy Review. The Challenges of Governance and Growth.

The World Bank. 2005 A Better Investment Climate For Everyone. World Development Report.

Wade, Robert 1989 “What Can Economies Learn From East Asian Success?” Annals of the American Academy of Political Science 505( 68-79).

Wade, R. 1990. Governing the Market: Economic Theory and Role of the Government in East Asian Industrialisation. Princeton N.J: Princeton University Press.