Dear Editor,
The International Monetary Fund (IMF) compiles and releases an annual list of countries and their Gross Domestic Product (GDP) per capita. On the 2015 list, Guyana is ranked 102nd out of 186 countries with a GDP per capita of US$4,125. This puts us below fellow Caricom members, Trinidad and Tobago, St Kitts and Nevis, Barbados, Antigua and Barbuda, Grenada, St Lucia, St Vincent and the Grenadines and Jamaica. In fact, the only full member of Caricom we are not below on this list is Haiti, a dubious accomplishment to be sure.
This poor evaluation of our nation’s economy may not come as a surprise to many but, while acknowledging our underperformance, people tend to shift the blame away from Guyana’s feet. Some insist that we have not had enough time as an independent nation to mature into an economic power; truly great countries take time to mature. This line of thought is damaging and it is with the intent of eliminating said idea that I turn to South Korea.
In 1966, the year of our independence from Great Britain, Guyana’s GDP per capita was US$347.59 and South Korea’s GDP per capita was US$129.30. 50 years on, South Korea’s GDP is now US$25,976.95, more than 6 times our current GDP, so what happened?
What is South Korea’s magic secret? What revolutionary economic policies did they formulate to change their fortunes? None, they simply learned the lessons of basic economic policy. In the late ʼ60s, South Korea began implementing policies that heavily encouraged trade, and after a time used that foreign exchange to purchase investment goods from abroad. South Korea is, compared to Guyana, relatively poor in terms of natural resources, so then what did they trade?
South Korea utilized their comparative advantage in manufacturing and invested in cheap, unskilled labour to produce goods and export them. It didn’t matter that other, larger countries were more proficient in manufacturing; those countries faced an opportunity cost so high that they preferred to focus on other economic pursuits, leaving the manufacturing partly to South Korea and trading for what they needed. Thus, South Korea was able to find its niche in the global marketplace and within 29 years, its GDP rose by approximately 38 per cent. South Korea is now one of the most wired countries in the world and ranks 29th on the IMF’s list.
Implementing economic policies is hard, politics makes sure of that, but formulating them shouldn’t be as difficult. For a country with as many resources as Guyana has, strict adherence to orthodox economics would take us a long way. Our future is in our own hands, if only we knew it.
Yours faithfully,
Craig Campbell
