Ever since October 5 1992, I have never been aware that the PPP government has a scientific policy that can engender economic development. There is no publicly available document that outlines the government’s position on science and technology and the critical role these play in long term growth of per capita income.
However, in recent weeks several letters in the press have emerged from Guyanese scientists that can give some hints as to the thinking of the government on this most critical ingredient for economic development.
The letter by Dr. Suresh Narine captioned “Virulent criticism in the media is not the way to go, Drs Beharry and Daljeet can offer their services” (07.10.16) is particularly informative because it gives outsiders like myself information on the status of government’s policy on science and technology. Since there is no transparent and publicly available document, we have to decipher Dr Narine’s letter for the signals it gives on this most important matter.
Before I delve into Dr. Narine’s letter, let me briefly outline what economics has to say about the importance of science and technology for the purpose of economic development. Basically, the modern growth literature says that if a country’s development is focused on only accumulating physical capital (such as the floating Berbice bridge, a Chinese-built convention centre, a Japanese-built Caricom centre, an Indian-built cricket stadium, a six mile four-lane highway and so on), per capita GDP (that is GDP divided by the population size) would eventually stop growing. However, total GDP (but not per capita GDP) would still grow but only at the rate of growth of the population. The name given in economics to this situation is a steady-state. We must also remember what matters for development is not the growth in the level of GDP but GDP per capita. An economy enters a steady-state because the output boost from pure (or raw) capital accumulation would eventually peter out owing to the phenomenon of diminishing returns (which basically means adding more and more physical capital would give a smaller and smaller extra production bang).
But what if the government indeed builds the hydro-electric plant or the Guyana-Brazil road and eventually allows the ethanol investments to save the Demerara sugar plantations? What if there are new large scale factories that would produce bio-diesel?
What if they find oil and decide to pump and sell the black stuff? These are all examples of physical capital accumulation, which would lead to a permanent increase in per capita GDP. In the case of oil it is an example of natural resource extraction, which can also cause a permanent increase in per capita income.
These new investments, therefore, are highly desirable and welcome (although I’m very sceptical about oil as a means of delivering development) because of the fact that income per head permanently increases.
However, these are still representative of physical capital accumulation, although they lead to higher development vis-