Since 2009 this column has been sympathetic to the idea of industrial policy mainly because in poor economies like Guyana there is a lack of sufficient financial capital, entrepreneurs and skilled workers. Coordination and market failures are rampant in these economies. Added to rampant market failures is the divisive Guyanese politics. Therefore, a purely private enterprise system will not lead to the kind of investments the country needs for sustained high quality long-term economic growth. There is need for the government to get involved with the private sector to shape some kind of industrial policy taking into consideration the global constraints and legally binding free trade treaties Guyana signed off on. In the past the PPP government has been reluctant to state explicitly whether it is pursuing industrial policy or as free-market critics of industrial policy label it: picking winners.
The government came out last week stating explicitly it is giving preference to medicines manufactured in Guyana, thus akin to picking a Guyanese pharmaceutical “winner”. One can argue that similar industrial policies were done successfully in Japan, South Korea, Taiwan and other ethnically homogenous Asian societies. Some economists have argued that the Asian examples had a fair deal of cronyism attached. Nevertheless, industrial policies have worked very well in the said Asian economies. Some of the big global brands we see today like Toyota, Honda, Hyundai, Samsung, Daewoo and others all benefitted from clever government sponsored industrial policies.
In theory the idea appears sound. But delving deeper one has to ask whether New GPC is indeed a winner that will generate much scientific and technological revolution in Guyana. It turns out that this “winner” is owned by the very good friend of the PPP and more specifically, Mr Jagdeo. Prior to the recent announcement, Mr Jagdeo made it clear that he was
