The nature of a donkey-cart economy

Dear Editor,

Several opinions have been expressed recently in the letter columns ranging from the appropriateness of the Jagdeo Administration’s economic policy agenda (see Mr. Emile Mervin in SN 29-05-09; Dr. Henry Jeffrey in SN 08-06-09), the contribution of remittances to development (Dr. Prem Misir in SN 02-06-09), and the ethnic conflict logjam (Dr. Henry Jeffrey in SN 08-06-09).

I hope to use this letter to synthesize this discussion and situate it within the framework of a possible economic policy agenda for Guyana. I have recently argued that Guyana is jammed in a low-level developmental trap that I have labelled as a donkey-cart economy (SN 25-03-09). In this letter, I wish to formalize the definition of the donkey-cart economy and then briefly propose the policy tool kit that is necessary to get Guyana out from this perpetual low economic status. The letter concludes that the ethnic conflict within the context of a bi-communal society is the primary binding constraint preventing Guyana from progressing from the status of a donkey-cart economy to a corolla economy, to a Camry economy, to an Avalon economy, and finally to the Lexus economy.

The donkey-cart economy has the following characteristics:

1. The production of goods that are at the low end of the global hierarchy of products. In other words, we produce things that people really can do without. Our products are not as special as we would like to believe; not even in CARICOM, let alone the world.

2. Given number 1, it means the income elasticity of demand for the country’s primary exports is small. Meaning as world income (and CARICOM’s income) increases the demand for the country’s products will not rise accordingly. Sugar, for example, is clearly a product that fits the production profile of donkey-cart cart economy. Let’s face it, there is a finite amount of sugar the rich can consume (as a matter of fact, the rich might consume less sugar and sugar-related products as it is one way to stay slim). On the other hand, as the world gets richer we all consume more energy. Therefore, a superior strategy to save the Demerara estates would be ethanol and of course the bi-product of baggasse.

Furthermore, the Jagdeo Administration’s REDD strategy and low carbon development strategy are too narrow and are not likely to impact directly on job creation and industrial development. In addition to the REDD, what the country needs is to develop a bio-energy industrial base with cane sugar as a feedstock for this industrialization. However, the low carbon development strategy should be seen as only one policy measure in a portfolio of industrial policies necessary to raise the welfare of the masses.

3. The production structure of the donkey-cart economy is mainly in the form of low productivity goods and petty services. For instance, immediately after Mr. Hoyte’s ERP the country

stopped producing soaps, toothpaste and similar small consumer items and left it to the local importer in the name of liberalization. The country also destroyed its local plywood making firm and replaced it with a foreign multinational. In a donkey-cart economy it is never a good idea to destroy your manufacturing base no matter how inefficient and trivial it might seem. You have to work with the capitalist class in a industrial policy framework to make the manufacturing base superior.

4. The production structure is made up of products that allow little room for learning by doing, innovation and technological change – the critical ingredients for long-term growth in per capita GDP and higher living standards.

5. Remittances prop up private consumption and create a false sense of success among government officials and the masses.

6. Remittances and underground economic activities indirectly feed foreign exchange into the domestic foreign exchange market from which the central bank (BOG) buys to accumulate foreign reserves (a required target under the IMF’s financial programming). Thus, remittances help to maintain the IMF/WB’s much touted macroeconomic stability (there have been several pro-government letter writers promoting macroeconomic stability as a great achievement). Therefore, a donkey-cart economy can be stable with relatively low inflation (owing to exchange rate stability) as is the case with Guyana. But this notion of macroeconomic stability is narrow, short-term in focus, and does not imply a success on the production/supply side of the economy. This point will take a full academic paper to explicate.

7. The donkey-cart economy imports most of what it consumes. Thus remittances are mobilized by economic actors and are used to make payments for imports of even basic consumer items (some of which we stop producing after the ERP). Therefore, unlike what some IMF/WB literature have argued and have been cited in the local media (see Dr. Prem Misir in SN 02-06-09), remittances are highly unlikely to lead to productive domestic investments in the Guyana context.

8. The donkey-cart economy exports most of its skilled and educated workforce. According to the OECD, Guyana exports 83% of its skilled population (the highest percentage among developing economies). Hence, there is the depreciation of the human capital base, which is a critical ingredient for long-term growth and development. Furthermore, the depreciation of the human capital base also involves the downgrading of the entrepreneurial and risk taking base. Of course, the contribution of human capital to growth (of high quality) is well explicated by endogenous growth theory. Moreover, Guyana is not India and is unlikely to earn the touted brain gain (as Dr. Misir has assumed) as in the Indian case.

9. The government significantly depends on foreign aid and finance from IMF/WB/IDB and bi-lateral aid donors. Even small projects depend on these sources of financing. For instance, the CARICOM building and the Convention Centre were built by grants (with aid-tying I am sure).

10. The government depends on IMF/WB for policy advice and analysis.

Since 1988 – in collaboration with the IMF – the Guyana government has focused primarily on the short-term concept of macroeconomic stability. There has been success on some aspects, however. In addition to price stability, several structural and institutional reforms have been put in place such as financial sector liberalization, the VAT, and several legal reforms to facilitate business activities to name a few. These are the standard policy recommendations from the International Financial Institutions. Implicitly, they are premised on the notion that once the structural and institutional reforms are put in place – along with price stability – the markets and private sector will do the rest on the production/supply side. However, that’s a problematic view and the evidence would suggest that the production structure has not changed since 1988.

Therefore, what is required is a holistic industrial policy framework as outlined by economists like Ha-Joon Chang and Dani Rodrik. It is here where I disagree with Mr. Jeffrey that policy does not matter in the Guyana context (see Jeffrey in SN 08-06-09). An industrial policy framework is fundamentally different from central planning under the Burnham era. It is different from the very general National Development Strategy and certainly different from palliative set of anti-poverty strategies embedded in the Poverty Reduction Strategy Paper. It is very different from Mr. Hoyte’s ERP, which really were standard neo-liberal policies that contributed to the evaporation of the nascent manufacturing enterprises. To outline an industrial policy applicable to Guyana will take an entire research paper.

On the other hand, I agree with Jeffrey that the binding constraint facing Guyana is ethnic politics in a bi-communal setting (Mr. Ravi Dev has explained over the years that there are two ethnic security dilemmas in a bi-communal society like Guyana – the African and the Indian ethnic security dilemmas). While industrial policy is necessary, along with macroeconomic stability, to push Guyana forward and upgrade its production structure, this very policy toolkit will be impeded by the non-cooperative outcomes engendered by the titivated 1980 Burnham Constitution, the PPP’s democratic centralism, and the ethnic security dilemmas in a bi-communal setting. Why? Because industrial policies, which typically involve unconventional measures, will need the support and involvement of all ethnic groups. Therefore, unless this binding constraint is reversed, industrial policy is not likely to succeed, and the status of a donkey-cart economy is likely to linger indefinitely.

Is there a great leader who can pull the country together under a holistic and comprehensive industrial policy framework addressed at reversing the 10 characteristics of a donkey-cart economy so that the Guyanese people can obtain some dignity after all the years since May 26, 1966?

Tarron Khemraj

A cut and paste done by one of the dimwits scum

Tarron; thought he would have been made MOF.

randolph posted:

Thank you Jagdeo.

 Regardless of what the “Beri Beri white mouth would say. Them can’t match your economic stewardship of  Guyana. Put all three of the riggers; Kabaka,Hoyte and Dumbger, their finance czars and BJ will make them look like scum (all fraff and nothing).  

Thanks to the PPP most Guyanese enjoyed the good life and now it has been taken away because of the racist policies and poor vision of the APNU/AFC. Because of the sound economic policies of the PPP and BJ most Guyanese got modern homes with indoor plumbing, could afford vehicles and trips abroad, even the American Ambassador admitted this and said that Guyanese had more disposable income and are issued more visitors visas.

 There is a sense of fear now among the hard working Indo. The SOCU is now turning up at 4day morning to raid people homes, a return of the typical PNC harassment and intimidation. The return of the PNC is in full swing, gradually they will wreck the country and we can see the military leading the way to intimidate and harass hard working people.

 

I have to agree. While Mitwah is cutting and pasting from 2009, those outdated and nonsense articles cannot fool guyanese.

Guyana is in an economic decline.

Crime is our of control.

AFC/PNC cannot implement their own policies, PPP policies are still being implemented.

Rice is Dead

Sugar is Dead

AFC/PNC lied to Guyanese and took Billions in salaries and perks.

Corruption is rampant, contracts are being awarded to friends of the AFC/PNC.

Rape and murders are on an increase.

39,000 thousand Guyanese applied for Visas last year to flee Guyana last year under this AFC/PNC dictatorship.

Indos are being harassed and intimidated by this racist administration.

The media is being intimidated.

AFC/PNC failed to prove ZERO of their lies about CORRUPTION in a court of law despite giving their friends million for audits.

Parliament is now like the Burnham dictatorship era, PPP cannot debate and speak up for Guyanese.

PPP supporters are being attacked at peaceful protests while the police stand by and watch.

Guyana is being militarized, in addition the People's Militia is back in full swing.

Guyanese in Canada an USA are very, very angry with the AFC/PNC.

PNC gobbled up the AFC, The Cummingsbord accord is now like a piece of toilet Paper.

The list goes on and on..................

Randolph, why the exodus of Indians under the Jagdeo democratic centralism if things were that great?

Regardless, Guyana is much better than it was in 1992. The question is where it will go now.

To Mitwah:

"39,000 thousand Guyanese applied for Visas last year to flee Guyana last year under this AFC/PNC dictatorship."

Source: US Ambassador.

randolph posted:

A cut and paste done by one of the dimwits scum

Tarron; thought he would have been made MOF.

 

TK old recycle jackass cyart rant!! Well, so what's new!!

baseman posted:

randolph posted:

A cut and paste done by one of the dimwits scum

Tarron; thought he would have been made MOF.

 

TK old recycle jackass cyart rant!! Well, so what's new!!

Dem AFC/PNC boys ran out of nonsense, cutting and pasting rubbish from 2009 is all that they have left.

Mitwah posted:

Randolph, why the exodus of Indians under the Jagdeo democratic centralism if things were that great?

This is a stupid question Mitwah. Mankind as a whole always strive for better. Just look at the number of moving trucks in your 401 highway indicating that Canadians are constantly moving for better opportunities and lives. While migration continued so did many returned to invest in Guyana. The question is whether those investors will continue now.

The donkey-cart economy (Under the PPP) has the following characteristics: This is what the APNU=AFC inherited.

1. The production of goods that are at the low end of the global hierarchy of products. In other words, we produce things that people really can do without. Our products are not as special as we would like to believe; not even in CARICOM, let alone the world.

Maybe you and your ilk - In other words, we produce things that people really can do without

Since TK did not re post I will leave him alone

BJ can stand the heat in the house so he cut and run, and the other sheep follow blindly.

  Nehru Bai; Ramayyah should shut his crap  - Dem white mout ber beri scum so jealous of the achievements of the PPP that all dem see  is the towering BJ and want to blame him for everything out of jealously because dem damn well know he is the architect of the rise of Guyana.

8. The PPP/C donkey-cart economy exports most of its skilled and educated workforce. According to the OECD, Guyana exports 83% of its skilled population (the highest percentage among developing economies). Hence, there is the depreciation of the human capital base, which is a critical ingredient for long-term growth and development. Furthermore, the depreciation of the human capital base also involves the downgrading of the entrepreneurial and risk taking base. Of course, the contribution of human capital to growth (of high quality) is well explicated by endogenous growth theory. Moreover, Guyana is not India and is unlikely to earn the touted brain gain (as Dr. Misir has assumed) as in the Indian case.

Allyo see what the current regime inherited after 23 years of the PPP/c democratic centralism?

randolph posted:

  Nehru Bai; Ramayyah should shut his crap  - Dem white mout ber beri scum so jealous of the achievements of the PPP that all dem see  is the towering BJ and want to blame him for everything out of jealously because dem damn well know he is the architect of the rise of Guyana.

I cant agree with you more.  However, I hope and Pray that Jagdeo will be correcting his faults. All Leaders make a few mistakes but correcting them makes them GREAT Leaders.

Jagdeo is light years ahead of the PNC incompetent bunch.

Mitwah posted:

BJ can stand the heat in the house so he cut and run, and the other sheep follow blindly.

Actually Jagdeo isn't afraid of the House. He handedly demonstrated that during the last Budget debate. Moses was the one whining and crying.

baseman posted:

randolph posted:

  Nehru Bai; Ramayyah should shut his crap  - Dem white mout ber beri scum so jealous of the achievements of the PPP that all dem see  is the towering BJ and want to blame him for everything out of jealously because dem damn well know he is the architect of the rise of Guyana.

It's funny seeing all these people go crazy after BJ.  Jealousy is a bad thing, it eats you up inside.  The worse crab in a coolie crab, them more bad than sheriga and Buck crab combined!!

Well said Bhai and on the money!!!!

randolph posted:

Maybe you and your ilk - In other words, we produce things that people really can do without

What is it bhai rice,sugar,fruits and vegetables,two of them are produced in the world for less cost.

Django posted:

randolph posted:

Maybe you and your ilk - In other words, we produce things that people really can do without

What is it bhai rice,sugar,fruits and vegetables,two of them are produced in the world for less cost.

Django bai, you eva hear about farm subsidy? Sugah beet subsidy, cane farming subsidy in LA? Tax brakes fuh haile cumpany? All kine ah subsidy deh all ova de wurl.

9. The PPP/C government significantly depended on foreign aid and finance from IMF/WB/IDB and bi-lateral aid donors. Even small projects depended on these sources of financing. For instance, the CARICOM building and the Convention Centre were built by grants (with aid-tying I (TK) am sure). (edited)

Mitwah posted:

9. The PPP/C government significantly depended on foreign aid and finance from IMF/WB/IDB and bi-lateral aid donors. Even small projects depended on these sources of financing. For instance, the CARICOM building and the Convention Centre were built by grants (with aid-tying I (TK) am sure). (edited)

How was the BBce bridge financed?  It's funny reading this.  China and Indian leaned heavily on this institutions to fund their development projects!!

Mit,

If Tarron has so much expertise on Guyana's economy why your coalition gov't. gave him nothing even though he campaigned so hard for Granger?

Billy Ram Balgobin posted:

Mit,

If Tarron has so much expertise on Guyana's economy why your coalition gov't. gave him nothing even though he campaigned so hard for Granger?

Talk aqbout using humans as Toilet Paper.

Nehru posted:

Billy Ram Balgobin posted:

Mit,

If Tarron has so much expertise on Guyana's economy why your coalition gov't. gave him nothing even though he campaigned so hard for Granger?

Talk aqbout using humans as Toilet Paper.

Nehru, 

TK now realized he was dealing with ingrates. 

6. Remittances and underground economic activities indirectly feed foreign exchange into the domestic foreign exchange market from which the central bank (BOG) buys to accumulate foreign reserves (a required target under the IMF’s financial programming). Thus, remittances help to maintain the IMF/WB’s much touted macroeconomic stability (there have been several pro-government letter writers promoting macroeconomic stability as a great achievement). Therefore, a donkey-cart economy can be stable with relatively low inflation (owing to exchange rate stability) as is the case with Guyana. But this notion of macroeconomic stability is narrow, short-term in focus, and does not imply a success on the production/supply side of the economy. This point will take a full academic paper to explicate.

Billy Ram Balgobin posted:

Nehru posted:

Billy Ram Balgobin posted:

Mit,

If Tarron has so much expertise on Guyana's economy why your coalition gov't. gave him nothing even though he campaigned so hard for Granger?

Talk aqbout using humans as Toilet Paper.

Nehru, 

TK now realized he was dealing with ingrates. 

Anyone who can correct their mistakes are good people.

Nehru posted:

Billy Ram Balgobin posted:

Nehru posted:

Billy Ram Balgobin posted:

Mit,

If Tarron has so much expertise on Guyana's economy why your coalition gov't. gave him nothing even though he campaigned so hard for Granger?

Talk aqbout using humans as Toilet Paper.

Nehru, 

TK now realized he was dealing with ingrates. 

Anyone who can correct their mistakes are good people.

After using the man's writings to backup your b.s. now you are ready to toss him out as peripheral and insignificant. What a bastard!!

randolph posted:

Thank you Jagdeo.

 Regardless of what the “Beri Beri white mouth would say. Them can’t match your economic stewardship of  Guyana. Put all three of the riggers; Kabaka,Hoyte and Dumbger, their finance czars and BJ will make them look like scum (all fraff and nothing).  

Thanks to the PPP most Guyanese enjoyed the good life and now it has been taken away because of the racist policies and poor vision of the APNU/AFC. Because of the sound economic policies of the PPP and BJ most Guyanese got modern homes with indoor plumbing, could afford vehicles and trips abroad, even the American Ambassador admitted this and said that Guyanese had more disposable income and are issued more visitors visas.

 There is a sense of fear now among the hard working Indo. The SOCU is now turning up at 4day morning to raid people homes, a return of the typical PNC harassment and intimidation. The return of the PNC is in full swing, gradually they will wreck the country and we can see the military leading the way to intimidate and harass hard working people.

 

Well said Randy.  Well said. And I know you wrote this yourself.  Unlike the cut and paste experts who think they can match wits with you.

As Leader of the Opposition, it is Bharrat Jagdeo's prerogative, and only his, to decide if and when his team must walk out of the National Assembly. Jagdeo is the decider. I do not agree with PM Nagamootoo's statement about "cowardice".

In the last parliament, before May 11, the AFC had walked out too. That was their prerogative. 

Randy, don't run away!

3. The production structure of the donkey-cart economy is mainly in the form of low productivity goods and petty services. For instance, immediately after Mr. Hoyte’s ERP the country stopped producing soaps, toothpaste and similar small consumer items and left it to the local importer in the name of liberalization. The country also destroyed its local plywood making firm and replaced it with a foreign multinational. In a donkey-cart economy it is never a good idea to destroy your manufacturing base no matter how inefficient and trivial it might seem. You have to work with the capitalist class in a industrial policy framework to make the manufacturing base superior.

randolph posted:

Thank you Jagdeo.

 Regardless of what the “Beri Beri white mouth would say. Them can’t match your economic stewardship of  Guyana. Put all three of the riggers; Kabaka,Hoyte and Dumbger, their finance czars and BJ will make them look like scum (all fraff and nothing).  

Thanks to the PPP most Guyanese enjoyed the good life and now it has been taken away because of the racist policies and poor vision of the APNU/AFC. Because of the sound economic policies of the PPP and BJ most Guyanese got modern homes with indoor plumbing, could afford vehicles and trips abroad, even the American Ambassador admitted this and said that Guyanese had more disposable income and are issued more visitors visas.

 There is a sense of fear now among the hard working Indo. The SOCU is now turning up at 4day morning to raid people homes, a return of the typical PNC harassment and intimidation. The return of the PNC is in full swing, gradually they will wreck the country and we can see the military leading the way to intimidate and harass hard working people.

 

wan fuh each paragraph

Gilbakka posted:

As Leader of the Opposition, it is Bharrat Jagdeo's prerogative, and only his, to decide if and when his team must walk out of the National Assembly. Jagdeo is the decider. I do not agree with PM Nagamootoo's statement about "cowardice".

In the last parliament, before May 11, the AFC had walked out too. That was their prerogative. 

Uncle Tom the Housekeeper was born a SHAMELESS, SELFISH and Arrogant Bastard!!!!!!!!!!

Randolph, where did you take your Micro-Economics courses? What do you know about endogenous growth?

8. The PPP/C donkey-cart economy exports most of its skilled and educated workforce. According to the OECD, Guyana exports 83% of its skilled population (the highest percentage among developing economies). Hence, there is the depreciation of the human capital base, which is a critical ingredient for long-term growth and development. Furthermore, the depreciation of the human capital base also involves the downgrading of the entrepreneurial and risk taking base. Of course, the contribution of human capital to growth (of high quality) is well explicated by endogenous growth theory. Moreover, Guyana is not India and is unlikely to earn the touted brain gain (as Dr. Misir has assumed) as in the Indian case.

Gilbakka posted:

As Leader of the Opposition, it is Bharrat Jagdeo's prerogative, and only his, to decide if and when his team must walk out of the National Assembly. Jagdeo is the decider. I do not agree with PM Nagamootoo's statement about "cowardice".

In the last parliament, before May 11, the AFC had walked out too. That was their prerogative. 

So Gilly, would you now declare Moses a hypocrite?

Dondadda posted:

Gilbakka posted:

As Leader of the Opposition, it is Bharrat Jagdeo's prerogative, and only his, to decide if and when his team must walk out of the National Assembly. Jagdeo is the decider. I do not agree with PM Nagamootoo's statement about "cowardice".

In the last parliament, before May 11, the AFC had walked out too. That was their prerogative. 

So Gilly, would you now declare Moses a hypocrite?

This question is indicating that you might be diagnosed with PPD, Paranoid Personality Disorder.

Dondadda posted:

Gilbakka posted:

As Leader of the Opposition, it is Bharrat Jagdeo's prerogative, and only his, to decide if and when his team must walk out of the National Assembly. Jagdeo is the decider. I do not agree with PM Nagamootoo's statement about "cowardice".

In the last parliament, before May 11, the AFC had walked out too. That was their prerogative. 

So Gilly, would you now declare Moses a hypocrite?

All politicians are hypocrites; the nature of the trade. Not excluding BJ. When he was president he gave piecemeal 5% salary increases to public servants. Now, as opposition leader he is calling for a 50% increase for them. Not surprising; that's what politicians do.

randolph posted:

  Nehru Bai; Ramayyah should shut his crap  - Dem white mout ber beri scum so jealous of the achievements of the PPP that all dem see  is the towering BJ and want to blame him for everything out of jealously because dem damn well know he is the architect of the rise of Guyana.

Dah white mouth stuff you keep talkin bout is the kind dat does ooze outta BJ mouth right?

Mitwah posted:

Randolph, why the exodus of Indians under the Jagdeo democratic centralism if things were that great?

Not sure what you mean by exodus. I read somewhere that many who are leaving now are part of the chain migration that continued from the previous administration. I have not seen any research on this, but from what I am being told, those leaving now are leaving out of fear (a difference from the PPP times). Again I have no evidence to support this, but I am basing it on what friends and families are telling me. If this is true, it is a difference why some may be leaving now.