Economic development plan needed

It is now clear even to the most rabid supporter of the Guyana Government that it needs some help to craft an economic development programme that would lift us out of the slippery slope to recession on which we are careening.

We repeat the advice proffered before – that the Government adopt without reservations the Low Carbon Development Strategy (LCDS) developed by its predecessor and yoke the 17 “Sustainable Development Goals” (SDGs) we signed on to last September. This, of course, would need strong State intervention.

Even though the Washington Consensus made a frontal attack on the idea of an interventionist state starting from 1989, when the chickens came home to roost in 2008, even the US had to jump in feet first to rescue its corporations through massive investments. The sheepish rationale offered was that the failing corporations were “too big to fail” (TBTF). We should not be deterred because the world has now accepted this new paradigm.

After 2008, a much more chastened group of industrialised countries now accept that lesser developed countries would have to go beyond their present frantic “Qualitative and Quantitative Easing” (QE) to stimulate their economies and, in fact, attempt to replicate the role of the State in their early industrialisation. But this has not been achieved without a fight that is still being waged, of which the UNCTAD 2012 meet in Doha is instructive.

In 2008, amid the debris of the collapsed northern economies, the Accra UNCTAD meet had agreed on the need for an “enabling state” – one that would directly intervene into the economy so that specified goals could be achieved as with the Eastern Tigers during the 20th Century. However, four years later in Doha, the new liberals had regrouped and argued for at most an “effective state” – a trope for the night watchman state.

One of the present tragedies of Guyana is that the politicians in the new Government have not indicated where they stand in this debate. They, therefore, ignore the implications of their waffling for not only achieving the SDGs but to even getting started. Their statements on economic development have been ad hoc at best and reflexively anti-development at worst.

Their evident discomfort is their refusal to accept that whether they look at Taiwan, Singapore, South Korea or post-WWII Japan, development means assisting specific businesses to initiate a process of export-oriented manufacturing. And the creation of a class of individuals and families that inevitably became wealthy, whether it is Mitsui in Japan or Samsung in South Korea.

If they are not historically minded, they can look at modern China and note that one -third of the 1.8 billion persons lifted out of absolute poverty to give the Millennium Development Goals (MDGs) some respectability were from China.

In October of this year, China passed the US in the highest number of billionaires sweepstakes 596 to 536. The billionaires in China are not as rich as those in the US, signalling that the gap between the top and the bottom is not as wide.

One scholar offered some characteristics of the development State: “…a set of encompassing institutions where the State is both an initiator of development policies and builder of development institutions…The State provides disciplined support for export-oriented sectors through directed credit and other subsidies. The State also coordinates investment across sectors and within industries. It invests itself in areas where private risk absorption capacity is too low. This is important in building up a national system of innovation in particular. The State also steps in to manage sectoral and macroeconomic crises ensuring a relatively smooth accumulation process to proceed”.

In our country, the Minister directly responsible for “business” always takes time off to criticise the local businessmen for not “investing” without asking whether the Guyanese state – of which his APNU/AFC coalition are in charge for the next five years – was “enabling” that innovation process.