Editor’s note: As part of the newspaper’s contribution in the run-up to the November 28 general election, the presidential candidates of the political groupings represented in Parliament have been invited by Guyana Publications Inc to submit weekly columns which will be carried in the Sunday Stabroek. The series began last week and will end on November 27. The column below was received from the Alliance For Change.
By Dr Tarron Khemraj
Introduction
It was noted in the first column that there are several conventional wisdoms that have been ventilated over the decades by practice and debates among scholars and policy-makers. The AFC is aware of these best practices that have been successfully employed in Barbados, Mauritius, Taiwan, Singapore, South Korea and other economies. These countries have all applied some form of industrial policy – a set of consistent policies that were first written down in a coherent document, the Report on Manufacturers (1791), by Alexander Hamilton, the first Secretary to the Treasury (Minister of Finance) of the United States. Of course, it is important that we apply in the Guyana context universal principles with suitable modifications. Before I outline these Guyana-specific principles, I would like to state that the Action Plan (Manifesto) of the AFC is a significantly more detailed document and gets into policy specifics at a deeper level compared with the newly unveiled PPP Manifesto. Below I present some of the unwritten principles underpinning the AP. There are others but these are some important and obvious ones.
Underlying principles
Principle 1: The idea here is to upgrade or transform Guyana’s production structure. For the AFC this means changing the economy in such a manner that we produce products and services at the high end of the hierarchy of global products. It is well known that a lawyer will enjoy a richer lifestyle relative to an accounts clerk. This is because the lawyer produces a service more valuable. It is no different for a country. This is why the AFC is adamant on renewable energy, culture and art industries, training and education, information technology, aesthetic housing, eco-tourism, agro-processing and manufacturing. They all have one thing in common – as people get richer they want these types of goods and services. We do not necessarily consume more sugar or rice paddy as we get wealthier. When we make this transformation not only do we transform what we produce but how our people get employed. Therefore, the masses are as rich as what the country produces.
Principle 2: The next principle has to do with demand spill-overs. The demand of one sector of the economy is the income of another sector. The demand of one religious group is the income of another. The demand of one ethnic group is the income of another. This is the classic coordination problem that Guyana has to overcome if it is to develop. The Action Plan (AP) therefore proposes interlocking industries that will lead to such spill-overs. The success of one geographic location depends on the success of another – either we sink or swim together. Equality therefore is not just one of moral necessity, but also economic reality. There is no zero-sum approach in the AP. Therefore, the AFC crafted a series of political, constitutional, public service, public procurement, judicial and police reforms all focusing on creating equal opportunities for everyone so we can make demand spill-overs a reality. These invisible institutional reforms are concomitant with production supply reforms, according to the AP.
Principle 3: Nurturing human capabilities. Our people are our most important asset and not the trees as is noted by the PPP’s Low Carbon Development Strategy. This is why the AP has policies specific to youth development, education reform, scientific and engineering investments, vocational training and finance for small business start-ups. We are the only party with a diaspora policy to bring Guyanese back home so they can employ their skills and invest. There is no way the AFC will allow any section of the University of Guyana to be closed as the Pro-Chancellor has been selling in the letter columns. A research-teaching university is crucial for moulding human capabilities. It is a necessity and not a luxury as the PPP seems to believe. Therefore, the AFC has a comprehensive resuscitation plan for UG. The AFC also does not see sports as handing out sporting gear for political purposes. Instead we view sports as something that shape human character and capability and also bring in economic and social returns.
Principle 4: Sustainable environment. We do not need to receive payment in order to preserve our forests, lakes and rivers. This is natural and as a matter of fact the AFC had environmentally conscious folks long before the LCDS came into being. That is why we know we can industrialize and be good to the environment with our carbon neutral renewable energy framework. Energy production also makes tremendous economic sense because of the fact we consume more of it as our income rises. Even if oil should be found we will still implement our renewable energy strategy because we are aware of the resource curse and the problems that come from a pump and sell crude oil model which the PPP seems keen to implement.
Principle 5: Efficiency. The AFC proposes the realistic sequencing of projects and investments so as to maximize efficiency, which results in higher wages and lower taxes for the people. For instance, there is no way the AFC would have placed a floating bridge at the mouth of the Berbice River. This is causing the slow death of New Amsterdam. The AFC will never fork out US$15.4 million to build an access road to a hydroelectricity site when the feasibility of the hydro itself has not been concluded. The One Laptop Per Family would not have been created because it does not lead to immediate job creation. There is no way a Skeldon-like sugar factory will be built under an AFC government. The AFC intends to change up public procurement and outsourcing that are susceptible to overbilling and inefficiency.
Principle 6: Cohesiveness. The AP seeks to promote a caring relationship, shared responsibility, and joint social purpose among labour (and their unions), private investors, government and civil society. We strongly support the entry of foreign investors and diaspora investments, which would form linkages with domestic small and medium-sized businesses, transfer technology and information, and utilize domestic components and materials. We believe small businesses must be complemented by a core set of industrial clusters, without which mini-enterprises will never grow up and compete in the global marketplace.
Principle 7: Linking infrastructure development with industrial development. The housing programme of the PPP was a wonderful opportunity to promote basic import substitution industries. Instead, most building materials, fittings and precision works are imported. Therefore, the AFC sees housing as an opportunity to nurture demand spill-over and inter-industry linkages. Tiger Fall hydroelectric plant will be linked to alumna manufacture in Region 10 as one aspect of a more comprehensive industrial development plan for that region.
Principle 8: Our supply-side or production policies must be done within the context of a stable exchange rate and inflation environment. In this objective the AFC will promote sustainable domestic and foreign debt, maintain fiscal prudence and independence of the Bank of Guyana. For example, untrained politicians will never sit on the Bank of Guyana board. Our proposal of a state development bank will mobilize remittances for lumpy investments at home. Remittances never have to be repaid and they are a stable and reliable inflow. The state development bank will also change up the maturity structure of domestic government debt so that excess liquidity in the commercial banking system can be employed productively in long-term investments to create jobs. This will both increase commercial bank profits and also stimulate investments in physical projects.
