Oil, Government Take & Spending: Navigating Guyana’s Developmental Challenges – 4

Introduction

Because of the amount of material I still have left to cover and the usual space limitations, today’s column is confined towards advancing the discussion of the Governance Curse. This topic is third on the list of the top-ten development challenges, which Guyana’s raising and spending of Government’s Take obtained from the petroleum sector has to navigate. Last week’s column had indicated there are four remaining features to the challenge posed by the Governance Curse, which remain for consideration. Three of these are dealt with in today’s column: 1) the dangers of “regime entrenchment;” 2) the adverse impact of both rapidly rising and volatile petroleum revenues; and 3) the adverse effect of rent-seeking behaviour on the economy. The fourth top-ten challenge, the rule of law, sometimes alternatively labelled in the literature as governance matters, will be addressed next week.

1: Regime Entrenchment

The term regime entrenchment has been reserved for those governments which happen to hold office at the time petroleum wealth first comes on-stream (that is, starts production and export) in petroleum abundant developing states. As I had earlier indicated: “Such entrenchment refers to the observed phenomenon, whereby the Government in Power “wins the lottery” of the country’s resource wealth coming on-stream during its stewardship. It is observed that all too often the tremendously enhanced revenue flows lead to regime spending on benefits for its “supporters.” Such supporters include: constituents, political party members, cronies, and indeed the ruling elite itself. This spending invariably results in the waste of national wealth because it is spent on garnering support for the ruling regime instead of advancing overall national development. These ideas are much further developed in Paul Starr’s work, Three Degrees of Entrenchment, Power, Policy, Structure. I shall elaborate on this in the paragraph below.

Starr has proposed a “framework for analyzing the mechanisms and conditions for entrenchment.” In other words, he identifies the process that mediates social relations, beliefs, and governance. He highlights this process through “three degrees” or dimensions of entrenchment. These are: 1) power entrenchment; 2) rules entrenchment; and 3) structural entrenchment. The first encapsulates the mechanisms that preserve the power of members of the incumbent regime. The second encapsulates the preservation of policies/rules/regulations in the periods after their originators lose power. And the third encapsulates the conversion of practices, policies, and beliefs into regime legacies. These legacies survive the loss of political power. Further, the mechanisms of regime entrenchment involve “changes in the rules of change, costs of change, and choice-sets of actors.”  In addition, regime entrenchment is revealed as “an inter-temporal concept.” That is, it links political conditions over time!….