Dear Editor,
The PPP likes to parade economic growth as if it contributes to it in any significant way when it doesn’t. Guyana’s economy improved marginally under the PPP. Guyana has developed in the past 20 years in spite of the PPP. The PPP’s economic performance cannot be assessed using childishly elementary analysis from the PPP spinners where they present Guyana’s GDP per capita of US$509 in 1992 and US$2869 in 2012 and the US $2360 growth in 20 years as evidence of the PPP government’s superior performance. That is facile reasoning simply because every single free market economy not upstaged by war, famine or other biblical catastrophe has grown in the past 20 years. The real question is not one of growth but the extent, type and nature of that growth. Doing so requires comparison against the world economy. The Guyana economy grew 71.686% since 1992 at an annualized rate of 3.584% per year. By contrast, the world economy grew 70% over the same 20-year period for an average annualized growth rate of 3.50%. The PPP’s Guyana from 1992 to 2012 outperformed the world economy by a miserable 0.084% every year. That is a shameful performance for a country with Guyana’s distinct advantages of (1) small population, (2) high debt write-offs, (3) significant per capita natural resource allocation, (4) English-speaking population, (5) cheap labour, (6) proximity to Latin American, Brazilian, South American and North American markets and (7) significant remittance inflows. We missed out on the commodity booms and instead cocaine became our strongest export in the past 20 years.
Now that we know the PPP’s dismal economic performance in relation to the rest of the world, we must consider the type of economy inherited by the PPP. The PPP operates Hoyte’s economy without any significant alterations over the past 20 years. Hoyte handed the PPP an economy that grew by 6.026% and 7.758% in 1991 and 1992 respectively. The PPP got a booming economy from the PNC, ready for takeoff in a free market system.
The economy has sputtered since. The PPP’s claim to fame as an economic rejuvenator is bogus. Its lifelong excuse of inheriting a broken economy from the PNC does not fly any more. The following countries all had decrepit socialist and communist economies – USSR, China, India, Vietnam, Albania, Angola, Bulgaria, Czech Republic, Hungary, Cambodia, Mongolia, Poland, Romania, former Yugoslavia republics, Ukraine, Belarus, Algeria, Indonesia, Nicaragua, Seychelles and Suriname – and they have all outperformed the PPP’s Guyana. The lawful and non-remittance economy has barely improved under the PPP. Remittances have grown significantly to currently account for 25% of the GDP. Dr Clive Thomas calculates the underground economy as being anywhere from 30% to 60% of the entire economy. Using the median of 40% for the underground economy plus the 25% for remittances, approximately 65% of Guyana’s economic growth since 1992 has been propelled by remittances and illegal activity. Thus, 35% of the economic growth is from legitimate and non-remittance activity. 35% of 71.686% is 25.09%, which divided over 20 years produces annualized legitimate real GDP growth of 1.254% for the past 20 years – a shame. Even if we estimate legitimate non-remittance economic growth at 50% of 71.686, we are at annualized growth of 1.792% over the past 20 years, a pathetic figure.
With the exception of mining, and farming to a lesser extent, the indigenous lawful economic production model has only marginally improved. The economic growth under the PPP has come largely from increased remittances and the underground economy. The legitimate economy’s growth has come from primarily direct foreign investment in the mining and forestry sectors. Local legitimate capital growth has been miserable. Less than half of mined gold is declared with the rest smuggled overseas, costing the country billions in taxes and royalties. The resource grants have been sold or leased at bargain basement prices further limiting the return to the nation. 35% lawful and non-remittance economic growth from a GDP per capita growth of $2360 over 20 years equals US$826 in 20 years at US$41.30 per year. If the underground economy and remittances are excluded and only lawful economic growth is counted, Guyana’s GDP per capita would have been around US$1335 today, placing it 135th out of 177 in 2011 according to the World Bank. These painful numbers likely explain why the drug trade and underground economy were allowed to flourish under the PPP. After all, ignominious economic performance always leads to being voted from office. Some simply cannot entertain the loss of power and will do anything to preserve that power.
Yours faithfully,
M Maxwell
