Making predictions in a complex and non-linear world often involves identifying initial conditions and then sequentially reasoning (or solving) forward. One way of knowing how well Guyana will do with its newfound oil and gas resources is to consider the initial conditions that exist in the country today. In this column and future ones, I will identify several of these prevailing initial conditions.
One such initial condition is the very limited policy-relevant research capacity in the public service and quasi-government organizations. I have no doubt that this deficiency, coupled with the indifference of several Guyanese politicians as it relates to intellectual input, played a role in the lopsided contract with ExxonMobil subsidiaries. In an ideal situation the central bank and the Ministry of Finance ought to house these research departments that would collaborate with the University of Guyana and far afield. These researchers would have access to data bases, software, fast internet and literature that would help them to identify and figure out policy-relevant questions. The politicians will need to ask the right questions as well. The Central Bank of Barbados, for example, has traditionally researched all kinds of questions pertaining to Barbados such as monetary policy, debt management, fiscal policy, green economy, tourism, public sector management and many others.
The Ministry of Natural Resources seeks a consultant or a guest speaker (usually a foreign politician) every time it needs to find out something about the oil and gas sector. However, Natural Resource Economics and Energy Economics are branches of standard applied microeconomics, which has the same core content whether it is being taught at Harvard University, University of Cambridge, University of the West Indies or University of Guyana. Understanding basic physics, particularly with some rudimentary calculus, will make a fine policy-relevant energy economist. However, it’s still 90 plus per cent applied microeconomics.
