Toolbox

There needs to a breathing space to produce a national industrial strategy for development

Dear Editor,

So our President has out of thin air conceded that Guyana will be willing to sign a goods-only EPA (SN Sep 7, 2008). However, any goods-only EPA must include asymmetric provisions. Guyanese goods just cannot compete under an agreement with full reciprocity. Therefore, President Jagdeo should clarify this.

But what kind of goods are they talking about: sugar and rum? The economy has to move beyond sugar if it is going to industrialize and develop. Any future agreement must codify a clear developmental vision for Guyana, a vision moreover which is embedded in a comprehensive and transparent industrial strategy framework. At a minimum, therefore, any agreement must protect a potentially symbiotic relationship between manufacturing value added and agriculture. The EPA as currently presented requires Guyana to specialize in production activities that will keep it poor while we import the elegant and sophisticated European goods. This is a recipe for permanent underdevelopment.

At least fifteen years of protection for a value-added food processing industry will be necessary. It is important to protect this industry given the fact that Guyana already has a large food market within Caricom, which imports at least US$3 billion annually in food. A goods-only EPA without asymmetric provisions will jeopardize this market and thwart Guyana’s industrialization and development efforts. This country cannot continue to depend on resource extraction and outmoded production activities such as sugar. That is why I believe the world situation presents a favourable circumstance for Guyana to enter aggressively sugar-based ethanol, which can present the initial thrust (and surplus) for that industrialization. Our government, however, is busy holding seminars on ethanol while other small countries have jumped on it.

There should also be protection of at least fifteen years for other kinds of manufacturing such as furniture making and others which I am certain the private sector people can point out.

These are the kind of consultations in which the President should be involved. Instead, there was a charade at the Chinese-built convention centre, a monument of mendicancy and a failed aid-driven economic strategy of the Jagdeo administration. A strategy, furthermore, which is based on the flawed premise that stabilizing the economy alone, building schools (without adequate teachers), pursuing trivial aid projects, etc, will automatically fix the production bottlenecks that exist. Development requires that the country transform its production structures; foreign aid and remittances have not done that and will not do it. Production transformation does not take place automatically when a country is faced with serious market failures and supply-side bottlenecks.

These bottlenecks have to be corrected within the context of a supply-side industrial strategy framework. This President and the PPP government never had one. It is therefore strange that the President suddenly, last year, woke up to the reality that the EPA can be harmful to Guyana’s development. Nevertheless they gambled US$200 million in sugar – a diminishing returns production activity which secures a vote bank of generations of low-skilled workers – which has passed its prime many generations go. But we know that skills upgrading is essential for development, yet the government is keen on preserving sugar which mostly depends on a mass of unskilled workers and preferential prices.

Guyanese have long developed that taste for foreign goods, so imagine what will happen when our market will be flooded by elegantly packaged European goods. This taste pattern has to be disciplined by a well specified industrial policy mechanism. But such a policy framework cannot succeed in an acrimonious political environment; thus therein lies another charade at the Chinese-built monument of mendicancy.

Therefore, I fail to see how one consultation session can address the long-term needs for a proper trade agreement that will affect the lives of current and future generations. The PPP government is responsible for not addressing these concerns during the negotiation stage of the EPA. Was the President too busy seeking foreign aid to spend on dubious projects (to present a sense of success) and advice from economists who believe blanket trade liberalization is necessary for development?

It is well known that aid has not done the developmental trick in the tropics. In Guyana’s case aid (along with remittances) has allowed the government to project a false sense of success and postpone the serious policy decisions relating to long-term economic development. That is why the President is in this dilemma today scrambling to come to grips with the EPA. They never thought about it before last year, fifteen years after taking over government from the PNC.

Trade liberalization has to be sequenced properly; if it is not done properly then Guyana can specialize in being poor while the rich specialize in being rich. In other words, static comparative advantage theory on which globalization is based, is not very good for Guyana’s development. One thing is clear, Guyana is not yet ready to face the competition of European (and Chinese, American, Mexican, etc) goods. It is sad our government did not pick this up fifteen years ago so they could have built these into the EPA of today.

The items that Guyana currently produces will not add anything to development but only maintain the current low real income level (assuming of course zero population growth). There has to be a breathing space in which the government and the opposition can put together a national industrial strategy for development, which is not the same as the pedantic National Development Strategy. I hope this strategy will be reflected in a revised EPA.

I hope the government will finally realize that the skills set required to run a country is fundamentally different from that required to win an election in an ethnically bi-communal society.

Yours faithfully,
Tarron Khemraj

Comments

About Comments

We thank all readers who have contributed to this site since its relaunch. This section of the website is intended to provide a forum for reasoned and reasonable debate on the newspaper's content and we hope that readers make full use of it as many have already done.

The comments section is an extension of the newspaper and what it has become well known for over its history: accuracy, balance and fairness.
In recent weeks a large proportion of the comments posted have contained attacks on other users, slander, coarse language and profanity. Comments of these types will be deleted.
Comments which contain gratuitous and incendiary references to race and ethnicity will be struck.
We reserve the right to edit/delete comments for length, any libel and taste. We moderate all comments so be patient while your message waits to be approved.
Curious about the little images next to each commenter's name ? Go here and sign up using the same email address you used to register for Stabroeknews.com then upload your image and confirm it.

6 Responses to “There needs to a breathing space to produce a national industrial strategy for development”

bgsbny
on September 8th, 2008 9:44 am

…..Pretty well thought-out with robust suggestions about how the PPP is a failure, despite all that the President has done and is continuing to do. Those at Freedom House have as their skills socialist theories, which are not worth a pint of parrot piss in the global economy - hence the reason for the ever deepening abyss that the nation is sliding towards. The reason for the sugar and rum based economy is to keep the mass of unskilled labour as a tool for election.

[Reply to this]
evileyes
on September 8th, 2008 12:04 pm

would you not agree that the unskilled are making a comfy living.the president is right not to sign anything that looks like a fish and smells like a fish coz it stinks when it comes to your europian masters

[Reply to this]
Evan Thomas
on September 8th, 2008 3:39 pm

Very good arguements and pinpointing of the failure of the government. Bharrat Jagdeo, the President, has served for 15 years as chief economic and development czar; this is the result, still arguing and doing nothing.

As the world moves, CARICOM slept and Guyana experimented with arrogance and inexperience and “party control’ in place of visionary and skillful leadership. Mr. Jagdeo is parroting some ‘cold war’ warriors on the subject of the EPA. Why should the EU wait another 15 years for us to put our house in order?

We need immediate assistance to embark on a regional and national industrialization policy that will make us competitive in 25 years…..lets fight the EU to finance our programs for diversifying our manufacturing base.

[Reply to this]
crystal dunkins
on September 8th, 2008 6:21 pm

If I’m not mistaken, the difficulty with a goods only agreement is that it would have to be a collective agreement and, therefore, the other Cariforum member states would have to sign on. This places Guyana on the other side of the spectrum. What about the economic consequences of not signing the present EPA as it is? These will not only affect Guyana but other Cariforum member states as well. How will we rationalize this?

[Reply to this]
Evan Thomas
In reply to the above comment on September 9th, 2008 11:51 am:
Mr. Ramphal rightly recognize that Guyana will be totally isolated by its more progressive sister cariforum countries. so rather than waste time complaining why not come up with strategies to deal with the percieved (justified or not)implications of the EPA. This is a smart recourse given that the initial process was flawed and the same persons who defined the Carifourm negotiating framework and positions, the Heads of States.

People should bear in mind that the Caricom negotiating machinery did not negotiated on their own; they were guided by the heads of Government and reported to that body and requested guidance during the EPA negotiations.

[Reply to this]
Joe Coxall
on September 8th, 2008 7:45 pm

When Jagdeo and other third world leaders are called upon to go in front of these various economic trade tribunals, they are not there as equals to the financial vampires who dictate to them what the “agreement” will be. They are brought there to be told, here is the agreement now you all will agree or else.

To understand what trade is all about and can be all about, we must go back into history when our ancestors from Africa, India ,China and the Middle East came together by the thousands on their camels, horses and elephants laden with precious metals,gemstones, silks, spices and perfumes. They met up in the bazzarrs and market places in Damascus, Cairo, Zanzibar and Timbuktu.

They spoke many different languages but it was no hinderance because they followed a long tradition of meeting, bartering and haggleing, when they came to an agreement it was right there on the spot, a fair exchange of goods and trade and they all went home richer and satisified. This system went on for thousands of years while the Europeans were still cutting each others throats in their customary system of plunder.

There is a tale of an African king who travelled with his caravan to Cairo, he was so generous with his gold that he destabilised the economy of Egypt for a decade.
Where is all that gold today? it is in the meuseums and private vaults of these same merchants of destruction, they stole all of it. So why should we believe they suddenly had a change of heart and now want to trade on a level and fair playing field?

Now who are these people who now dictate to us how we must trade? Do we know them? Yes we do, They were the same ones who after hearing tales of these rich kingdoms to the East came in with their swords and cannons and robbed us of every thing including our cultural identity, they then broke our spirit and our will with the seering pain of the whiplash.

Today they have changed their strategy, but still found a way to bound us to their dollar for interest and to their one sided trade decrees. They have changed their system so that they remain for the most part invisible while still plying their trade of taking all of the worlds wealth for nothing. These are men with no heart and no soul only greed for money.

We all came from once rich societies that knew how to trade, trading is therefore in our genes it is our birthright if not for these bloodsuckers who are now telling us that they are here to help us set up viable trading systems.

Signing that decree is like selling your soul and that of you children to Satan.

Cheer mates

Joe.

[Reply to this]