Part 2
The role of corporate
governance
The previous essay established the developmental context under which we address the essential question of this series: could Guyana escape the natural resource curse? The best measure we have of development is perhaps the Human Development Index (HDI) and its iterations such as the Gender Development Index and inequality-adjusted HDI. At a minimum, escaping the natural resource curse should involve moving up these rankings and not just how many upscale homes are built in heavily guarded gated communities. The World Economic Forum now has an Inclusive Development Index. Although Guyana and Caribbean countries are not yet ranked, improvement in inclusive development would be a great step in the right direction and not just how many new shiny cars appear on the heavily congested roads. Who knows, perhaps Guyana will plan better than Trinidad and Tobago where it takes about three hours during peak driving to get from St Augustine campus, UWI, to Central Bank of Trinidad and Tobago.
In my opinion, whether Guyana evades the curse will depend on three broad scenarios. First, how much money will Guyana actually receive from ExxonMobil? This question is important because Guyana’s hinterland geography and coastal plain will require large sums of money to build infrastructure for serving the small and dispersed population. In other words, the per person infrastructure spending will be very high, particularly in the rural and hinterland regions. This is not a problem a compactly populated country like Barbados, for instance, faces. I argue below that we should appreciate the corporate governance structure motivating ExxonMobil, and multinationals in general, as we ponder how much money Guyana will receive.
Second, how well will the Guyana government spend those monies? The latter question becomes even more important because the Guyana government becomes the conduit of development, collecting royalties and profit shares and spending them. Third, what institutional mechanisms, including a complete constitutional do over, will be implemented so as to minimize the harmful effects of pro-ethnic strategic voting? Since this form of voting will not go away, will there be a new constitution that minimizes the harmful misallocation of resources the present constitution engenders?
