By Joycelyn Williams
There is not an adequate amount of national conversation on the need for manufacturing and industrial production in Guyana to accelerate. The conversations on governance and security have overshadowed and crowded out the critical need for continued national discourse on key policy initiatives and interventions that are required to push manufacturing and industrial development which are absolutely vital to stimulate higher growth rates of the Guyanese economy. An annual average of 5% growth over the last 5 years is an achievement given tepid global performance, and our low per capita GDP needs accelerated performance to catch up. Both the National Development Strategy and the National Competitive-ness Economy identify with this absolute need, but apart from that, there has not been any vigorous national commitment to implement the policy measures agreed on. Since 1992, Guyana’s manufacturing sector has been on the decline, from about 14% of GDP to 6.9% in 2010. This is a fact that President Ramotar candidly observed at the GMSA’s 50th Anniversary dinner in 2013 at the Pegasus Hotel, when he said concerning the importance of manufacturing in the economy, “in fact it has fallen”.
A growing manufacturing and services sector (sometimes referred to as industrial development) are widely accepted as the core content of the process of structural transformation of an economy. Economists have conducted statistical tests which suggest strong links between high GDP growth rates for countries with a growing manufacturing and industrial sector. Starting with Nicholas Kaldor, a British economist who sought to find out the reasons for slow growth of the British economy, strong links have been found between high growth and manufacturing (called Kaldor’s growth laws). As one writer puts it “there is something special about industrial activity that makes it the ‘engine of growth.’” There are many obvious reasons for this fact: a) as incomes rise persons spend more of those increased income on manufactured goods and services-usually called income elasticity]. There is only a certain amount of income that consumers spent on food and necessities but as global incomes rise consumers think of which sophisticated household furniture, personal items such as phones, computers, cars etc and where will the next vacation to be spent. The technology used in these sectors tend to make labour productivity high. So that countries which want to experience fast rising GDP produce these goods with high value and high demand and not just the limited demand for unprocessed food.
Second, manufactured products are more diversified and sophisticated. Just as a business which is more diversified has greater opportunity to survive grow and expand, so it is that countries which expand their manufacturing sector have greater scope to grow. Manufactured goods come in all shapes, sizes, colours and variations, presenting more scope for allowing a country to sell a wider range of gadgets. Increased manufacturing production has significant spillover and positive linkages effects on other sectors in the economy such as services and agriculture, as manufactured products use the raw material from agriculture, forestry, fishing and the land and requires services for finishing into final products. The end result is that growing manufacturing sector has powerful effects on the rest of the country as no other cluster can have.
Very often when taking overseas visitors around Guyana I have been asked the questions: Where are the hotels? Or where are the factories? Even more searching, a Trinidadian visitor who I drove around the country asked me “So what do Guyanese do for a living?” I explained to her that gold, rice, sugar and forestry and fishing are the industries we depend on.
Guyana’s National Development Strategy (NDS) had roundly recognized the need to grow manufacturing. The NDS clearly identifies three aspects to this broad objective: a) First, the strategies should seek to promote a rapid increase of production and employment in the manufacturing sector; b) Second, to stimulate a judicious degree of diversification, in keeping with Guyana’s current and potential comparative advantages; c) And third, they should lead the wider utilisation of relevant and adaptable modern technology. It further envisages the overall roles of the manufacturing sector to enhance the vertical integration of principal resource-based sectors and to produce a constantly more diverse and widening stream of goods.
Manufacturing and agro-processing are defined in Guyana’s National Development Strategy as “the application of technical knowledge and processing equipment, in alliance with capital and labour, to the transformation of locally available or imported raw materials and/or intermediate inputs, into final or intermediate products. These include agricultural (marine, forestry, livestock, crops), industrial and mineral materials.
“This means not only expanding outputs such as millwork, furniture, doors and mouldings, veneer, etc., and industrial diamonds, processed gold, polished semi-precious stones and jewellery, it also means reviving former traditions in sectors such as metal working and textiles, building vigorously on the rich base of non-traditional agriculture to produce a variety of processed foods, and introducing over time the manufacture of entirely new products.”
The NDS further sees the private sector as a key partner in the execution of these strategies to accomplish the growth of manufacturing.
Joycelyn Williams is a Lecturer in the Department of Economics at the University of Guyana and a Consultant
