Dear Editor,
According to Guyana’s national accounts gold accounted for 40% of Guyana’s exports in 2010 up from 20% in 2006, bringing in US$346M of total exports at US$891M. Commodities accounted for 86% of all exports in 2010. With a global rise in commodity prices the economy is bolstered by this new development, but we must be wary of the risks involved.
This over-dependence of the economy on old commodity sectors and gold is no doubt behind the gist of this year’s budget where diversification is mentioned several times with welcome emphasis.
Selective industrial policy interventions to protect, stimulate or defend new industries is very much alive in the developing and emerging countries to promote and accelerate growth rates. The economics development profession is in full acceptance that such interventions by government in low-growth countries are a necessary part of any development policy that will create accelerating or sustained growth rates. Of all the new sectors which seem to hold promise to earn meaningful foreign earnings, tourism stands out as the best choice.
In 2006 the IDB funded the Tourism Action Plan for Guyana. Based on conservative estimates of per capita visitor spending, direct tourism receipts for Guyana were estimated between US$78.9M to US$116.5M based on visitor arrival of 115,000. With visitor arrivals now exceeding that amount, it means that tourism earns Guyana at least US$150M per annum, and has high growth potential. Given these estimates, tourism receipts for Guyana are exceeded only by gold, and are more than those earned individually by sugar, rice and bauxite. Earnings could grow more exponentially, if the Government of Guyana would provide the policy leadership to make the industry competitive with similar destinations such as Costa Rica and Belize.
In the very 2006 Action Plan, the consultant pointed out clearly that tourism development occurs in two stages: the first stage is the primary factor stage where there is in the subject country an“over dependence on the natural attractions of the country as a lure for tourists.” There is only a certain extent to which a country can depend on this strategy. To become a competitive destination the country must move up to the second stage and have an investment driven strategy. Without doubt, Guyana is still in the first stage, and from the policy statements in this year’s Budget, the Government of Guyana is aware that significant investments in tourism infrastructure are now the sine qua non to making Guyana a competitive destination.
With Guyana having emerged from the huge debt overhang of the 1970s,1980s and1990s, government now has the fiscal space to adopt a more selective industrial policy and back it up with budgetary provisions. When evaluated against other industry options, investment in tourism has the best chance of diversifying Guyana’s economy in the short to medium term, and must be supported in the budget. In 2005 St Lucia expended US$5M on marketing while Guyana was spending about US$70,000. These poor investments by the government in tourism development are being changed to create this new industrial structure.
All those involved in making decisions on industrial development in Guyana should have these policy documents readily available, their contents should be disseminated widely, and the policy implications fully digested so that a national approach can be pursued.
Joycelyn Williams
Lecturer and Consultant
JTW & Associates
Management Institute
