Digest
Even though the waiting might be over, Guyanese will still need to digest the implications of the election results for themselves and the country as a whole. Invest-ments that were known before the elections still need to be evaluated for value to the different stakeholders, especially the unemployed. The economic emphasis of the new administration has to be improving the condition and quality of life of the people. It is a goal that must involve all relevant stakeholders: workers, private investors and those involved in developing and executing public policy. It is certain that Guyanese will have to continue looking for work or better incomes if that is not the case with them now. The success of their efforts will depend on the response of the administration and the needs of the private sector. The need for developing and retaining critical skills in engineering, science and technology, medicine, and business still has to be addressed. Two issues are worth considering: fiscal incentives for education and training and the ‘One Laptop’ programme.
Absorb
The view that targeted fiscal incentives could play a key role in stimulating investment and job creation is not novel but its widespread use is not apparent in the Guyana economy. The general tendency seems to be to offer such incentives to large start-up businesses. The beneficiaries of Guyana’s fiscal incentives are usually foreign investors since they are seen as being able to create a much larger impact on the economy at a faster rate. According to the Bank of Guyana, foreign investment has grown in value from US$167 million in 2006 to US$269 million in 2010. Despite the positive expansion, the size and nature of these investments have not generated the kind of job growth needed to absorb the sizable number of trained students emerging from the University of Guyana and the various technical institutes. The Tax Act of 2004 creates room for local investors to benefit from fiscal incentives that are in place.
Unlocking
In looking to the future, the issue is how best to use the tools available to convert the potential human energy into kinetic energy. Guyana might be undermining its economic prospects by failing to market the fiscal incentives to all locally inspired investments that could possibly take advantage of existing favourable fiscal incentives, particularly as they impact education and training. Large investors in Guyana are encouraged to take advantage of the fiscal incentives and actually do so. What is not obvious is the extent to which smaller investors who are seeking to start or widen their operations are encouraged and enabled to take advantage of the fiscal incentives. Unlocking the potential human energy could arise from stimulating the investment of domestic investors. In their case, the menu of fiscal incentives that is offered to existing businesses should also extend to smaller ones where practicable. Human development that involves positioning Guyanese to compete for jobs locally and abroad creates the conditions for sustainability and personal development.
New business and technical schools that seek to develop critical thinking and alternative technologies ought to be encouraged. These schools would become important sources of employment. A number of tax benefits and special incentives could apply to the integrated efforts to speed up the development of the human capital. For example, the provisions of the Income Tax (In Aid of Industry) Act could extend to the business and technical schools, irrespective of location, that hire staff with Bachelor’s degrees and construct training centers. Special incentives could also include duty free concessions and the exemption from VAT for technologies, equipment and building materials used in constructing schools, research laboratories and the development of instructional material used in those schools.
Distortions and
efficiency
The timing of the One Laptop per Family (OLPF) programme has not given sufficient opportunity to discuss the likely economic impact of this initiative. The discourse on this topic brings to light many issues of merit and concern which might have been missed in the heat of the political debate around the design and development of the initiative. In addition to issues of access, equity, fairness and accountability, the policy raises concerns about market distortions and efficiency. Computer models for laptops and desktops keep changing and without a common standard, technical support for such items could be hard to obtain. With many different brands of laptops offering different system and computing specifications in rapid succession, the laptops were likely to be obsolete rather soon.
The varying specifications also mean that technical support for laptop computers is likely to be diffused and fragmented. This market fragmentation keeps the price of computers and the cost of computer repair and maintenance high. The outfitting of 90,000 families with one brand of laptops could help to overcome the problem of a common standard since services, including the provision of accessories, were likely to gravitate towards that brand to meet the specifications with which the laptops come.
The problem with a policy of this type though is that, while it speeds up access to computers, it distorts the domestic market. As concentrated and targeted as it is, the spending by the administration on the laptops might benefit one or two companies but undermine the computer retail industry. Meeting the demand for computers for 90,000 families is no small matter. The policy meets the demand for about one-third of the working population and, with four being the average family size, nearly half the Guyanese population. This is a sizable chunk of the domestic market which will be monopolized by one supplier who will also have a guaranteed demand. The policy therefore would not ensure cost effectiveness unless the competition for this government-induced demand was fair, transparent and equitable.
Beyond the
boundary
As regards the impact of the One Laptop programme on human development, this effort focuses on the individual without necessarily providing the critical infrastructural support of internet access or technical support. The OLPF programme is directed at poor families which might not have the ability to afford the monthly internet access fee. In addition, there might not be enough teachers who are computer literate and proficient to assist the children. At the same time, for the OLPF policy to be effective and for parents to help children get the most out of the computers, the parents or guardians themselves would have to be computer literate. The policy was therefore likely to create increased demand for computer education. This development would have positive effects for preparing the human resources of Guyana to compete in labour markets at home and abroad, and should be a target of fiscal incentives.
If future investment in education ignores the aforementioned challenges, future investment might reach their maximum potential faster than needed. Therefore, one can only hope that, going forward, the investment in the human capital of Guyana would look beyond the traditional boundaries of the school system.
