If one needs an explanation then it is a scam.

MEH NEIGHBA DOES ALWAYS SEH FACTS AND FIGGA NAH LIE!!!!!

Slow Fiah, Mo Fiah and the Guyanese Growth Stagnation

Development Watch

Tarron Khemraj

Posted By Stabroek staff On August 12, 2009 @ 5:01 am In Daily, Features | 

Introduction

In my third column (SN July 22, 2009) I noted that Guyana’s GDP grew at a paltry average rate of 0.86% since 1998.  There are many excuses that have been proffered over the years for this performance.  For example, the global financial crisis was recently proposed by several letter writers even though the sub-prime crisis broke in 2007 and did not start to adversely impact on the Caribbean until 2008.  World prices and adverse global shocks are often proposed as excuses.  Yet another popular apology is the external debt that is said to have prevented the government from pursuing an economic strategy that could have placed the economy on a stronger footing.  The latter argument holds that this debt was so burdensome that it affected the government’s thinking so much so that it could not pursue other developmental strategies concomitantly with the debt relief agenda, which by the way had a global impetus led by the non-governmental organizations (NGOs).

Of course, a now popular alibi is the political protests and violence that emanated from certain elements in the opposition.  It is now clear from the revelations in New York that the violence did not only originate from opposition elements, but also a phantom squad whose leader alleged that he helped the government fight off the opposition fighters. I will use the term “slow fiah, mo fiah” of President Hoyte to represent the latter variable – the violence that emanated from the “Taliban” and the phantom.  The impact of the other explanation on Guyana’s economic growth will be examined in subsequent columns; while this column will be used to examine whether “slow fiah, mo fiah” really had a major adverse impact on the mediocre economic growth performance.

Why is economic growth important?

Economic growth is important for the sustained creation of wealth.  By economic growth I mean the percentage change of Guyana’s real GDP over time.  Indeed, there is no guarantee that the gains of economic growth would be shared equitably or fairly.  However, try sharing a stagnant roti to a growing family!  Sooner or later each member of that family will get poorer even though the father eats the bigger share of the roti. Similarly, without economic growth Guyana would not be able to pay public servants better wages.  Teachers, police officers, nurses, university lecturers would not obtain better wages over time.

The same is true for private sector employees at DDL, Banks DIH, Neal and Massy, etc.  If wages increase in a stagnant economy eventually prices will start to increase.  For those who are unemployed or underemployed, economic growth is essential for creating the jobs. Growth is essential for maintaining the new schools, hospitals, convention centre, stadium that were built by grants and soft loans from abroad.  Moreover, growth is essential to keep the flow of investment going to create the next round of growth.  In general therefore economies that stagnate will have miserable citizens who have to flee to little Caribbean islands to find jobs and to be mistreated.

Some readers would have figured out by now that my columns do not advocate one or two year positive growth from a long and sustained period of poor growth.  The reader should know that growth can come from a low base or poor performance over a sustained period of time – example the 1998 to 2006 period in Guyana; 2007 and 2008 witnessed an increase in growth partly because Guyana was emerging from a long period of economic stagnation (the same can be said about the 1991 to 1994 period).  My columns, on the other hand, advocate growth from structural transformation.  The latter means the production of goods and services that satisfy the following conditions: (i) are income elastic (meaning the rest of the world will buy more of it as their income rise); (ii) price inelastic (meaning the rest of the world cannot really do without our goods and services or there are not that many substitutes); and (iii) goods and services that are not susceptible to early diminishing returns (meaning the productivity of the sector is not declining).  Those who work in diminishing returns sectors, example sugar production, would experience wage squeeze.  I hope sugar workers get the gist of the latter point.

Private investments

A lot has been said that the private sector is the engine of growth.  The government, the IMF and the World Bank have all alluded to the importance of private investments for economic growth.  I agree.  President Jagdeo has even talked about his NEPS – the New and Emerging Private Sector.  Therefore, what is the percentage of private investment relative to GDP? It is easy to track this number as the Bank of Guyana records it in its Annual Reports.  Figure 1 presents the percentage of private investment in Guyana relative to GDP – henceforth this ratio will be called the private investment rate (PIR).  The PIR is shown in the dark line in figure 1 on the right axis.

Since many have said PIR is the engine of growth, I have also included the percentage rate of growth of real GDP (left axis).  The chart shows a clear trend – high PIR is associated with higher GDP growth.  The PIR reached its peak of 39.8% under Hoyte in 1992.  That same year economic growth reached a spectacular 7.9%.  In 1993 the PIR was a healthy 35.8% and GDP growth was a hot 8.2%.  It is clear from figure 1 that Mr. Hoyte was beginning to do something good and the economy was experiencing a return from the dismal years.  The PIR was again a healthy 33% (even though it started to decline) in 1994 and growth was a fast paced 8%.

However, something started to occur to the PIR from 1994.  The rate started to decline and so too did GDP growth.  The chart suggests that the sizzling rate of 39.8% in 1992 was never again repeated for the next sixteen years.  What does this have to do with our independent variable slow fiah, mo fiah? The point is slow fiah, mo fiah did not commence until 1998 but the PIR was already decreasing four years before 1998.  Therefore, there have to be some other explanations for the lacklustre growth of the private sector and not only the political variable.

However, let us focus some more on the political variable for now.  By the jailbreak of 2002, the PIR plummeted to 23% and economic growth in that year was a lukewarm 1.05%.  As the New York trials revealed, the phantoms (the other side of the mayhem) started operations in 2003.  The PIR and GDP growth were 21.5% and minus 1%, respectively, in 2003. There was a slight increase in the PIR from 2006 partly due to the rise in spending for cricket world cup.  As we can see economic growth turned positive from 2007.

 Figure 1, Private investment rate and GDP growth – 1988 to 2008.

 ^[1]

Foreign direct investments (FDIs)

Figure 2 shows the level of net FDIs that flowed into Guyana from 1988 to 2008.  These numbers were taken from the Bank of Guyana’s Annual Reports.  It is clear that there was a first major peak of US$138 million in FDI for 1992.  Subsequently, the rate diminished precipitously and stayed flat during the Jagan years from 1993 to 1997.  Note that this drop in FDIs could account for the declines in the PIR.  Could it be Dr. Jagan’s Leninist orientations that led to distrust for foreign investors and the subsequent decline? In any case, it would seem as though the lack of a clear economic vision of a role for foreign investors was missing during this period.

Figure 2, Foreign direct investments – 1988 to 2008 (US$ million)

 ^[2]

Starting in 2005 the Jagdeo Administration seemed to have changed course as the data shows that the largest inflow of foreign investments occurred from 2005. However, in spite of these inflows the PIR is still lower than the early 1990s.  This is an interesting development that deserves further analysis.  Why have these large unprecedented inflows of FDIs under the Jagdeo regime not contributed to the increase in the PIR and faster GDP growth?  Could it be that the local private sector is decimated from the political problem and the underground economic activities (such as smuggling) that the inflow of foreign investments is not enough to raise PIR?

One potential explanation has to do with the way the FDI numbers are calculated.  For instance, re-investments by incumbent foreign firms to provide for depreciation of machinery, buildings, etc are counted as FDIs; therefore, when Barama spends on new machines or vehicles in 2008 that become part of FDI even though that company was established in Guyana since 1991. The point is if a large part of the spending is of this nature then FDIs are just maintaining current production and not adding to new production – the key for positive economic growth.  However, the latter cannot be the only reason why the numbers are so high by historical levels.

Conclusion

The key point of this article is slow fiah, mo fiah could not be the only reason for the dramatic slow down in Guyana’s economic growth between 1998 and 2006.  We saw that the private investment rate (PIR) began to decline during the years of relative tranquillity and peace in Guyana.  As figure 1 indicates, the PIR started to decline from the time the new PPP government came to power.  While the political problems certainly impacted adversely later, the seeds for mediocre growth were already sown before 1998.

Moreover, the data show a significant increase in FDIs from 2005 yet the PIR remained relatively flat.  The latter is a conundrum that could be explained by the negative total factor productivity growth some researchers have found for Guyana.  I will soon write a column to outline what are some of the social and political conditions that could cause the negative productivity growth in Guyana.  

WHAT A LOAD OF UTTER CRAP!!!

Bai Pavi you can't have "dog donk" in your head expect to understand this. 

Your usual personal views.

Man you have made such a deep and profound contribution there. 

Your neighbour cannot be trusted.

Drugs distorting Guyana economy, causing 30% of homicides – UN report
By Stabroek editor  |  1 Comment  |  Local | Tuesday, November 13, 2012

Drug trafficking here distorts the local economy and has been responsible for 30% of the homicides here per annum. These were among the findings of the United Nations’ Caribbean Human Development Report 2012: Human Development and the Shift to Better Citizen Security. It was the first time that such a report had been done in the Caribbean context. While the report’s findings about the impact of drugs on the economy and murders is not novel, it adds to growing body of work that a serious problem does exist here and needs to be tackled.

The report which was launched in October this year focused on seven Caribbean countries including Guyana. No consultation was carried out in Guyana. The data on this country was obtained through public sources and the UNDP Citizen Security Survey 2010. Drug trafficking was discussed in the chapter of the report that dealt with `Reducing the Contribution of Street Gangs and Organized Crime to Violence’.

Noting that data was scarce for most nations, the report said that anecdotal evidence was relied on for assessing the consequences of organized crime. Speaking about Suriname and Guyana, the report said that local officials note that “the people who are involved in moving drugs are often the same people who will use the same operation for many other illegal activities” such as money laundering and terrorism. The report said that drug-trafficking often results in local drug use problems because traffickers are frequently paid in the product and are therefore required to sell in domestic markets which then feeds into local criminality which includes  youth gangs, prostitution, and violent and property crime related to drug markets.

Further, the report said that drug-trafficking triggers the proliferation of firearms, which are traded for drugs, and the presence of armed groups to protect turf and other illegal property. “Indeed, drug-trafficking has been linked to the rise in execution-type killings, which account for around a third of homicides in Guyana each year. Additionally, it fosters the corruption of public sector employees and law enforcement personnel by drug traffickers, who use their wealth to buy influence and protection from prosecution”, the report asserted.

It added “In Jamaica, similar to Guyana, there is also a strong relationship between the illicit drug trade and the illicit arms trade. The trade in guns in exchange for illicit drugs exacerbates the crime problem because unregistered handguns flow freely into the country, contributing to the high rates of firearm-related crimes”.

Resonance
This section will have particular resonance with Guyana in light of recent developments here. A large arms cache was recently intercepted in Lethem and this was believed to have been destined for the Colombian FARC guerillas who would then have paid for it with cocaine. The interception of the arms is believed to have led to two execution-style murders: those of Ricardo Rodrigues and his bodyguard Marlon Osborne. There has been no charge in either of these two cases. The arms find is also seen as a contributing factor to the death of Jean Le Blanc, a Canadian who had been summoned to Guyana by Rodrigues to assist with backdating paperwork for communications devices after he (Rodrigues) had been arrested in relation to the arms find. Rodrigues was gunned down while at a meeting with Le Blanc. The latter died suddenly in hospital after he had been recovering well from his bullet wound.

The Caribbean Human Development Report also argued that the drug trade distorted the local economy. “In Guyana, drug-trafficking distorts the local economy and undermines legitimate economic activity because the monies derived from drug sales are laundered by pricing commodities and services much lower than the prevailing market rate”, the report said. This is also a statement that would have traction in the local economy. Ostentatious buildings engaged in trade have gone up in various parts of the city with continued questions over the provenance of their investments.

Youth gangs
The report described youth gangs as “any durable, street oriented youth group whose involvement in illegal activity is part of their group identity”. It noted that of the respondents to the UNDP Citizen Security Survey 2010 across the seven Caribbean countries, 12.5 percent believe that gangs are in their neighbourhoods but that perceptions vary by nation. In Guyana, the number was 13.2% while in St Lucia it was 18%, Trinidad 13.9% and Antigua 12.4%. Around 41 percent of residents in Jamaica, 40 percent in Saint Lucia, and 38 percent in Trinidad and Tobago state the problem of crime is a big one because of gangs in their neighbourhoods. Between 26 and 30 percent of residents in Antigua and Barbuda, Guyana, and Suriname report the same. Only about 13 percent of residents in Barbados answered in the affirmative.

The report also said that data clearly show that respondents in Guyana observed the appearance of gangs much later than respondents in most other Caribbean countries. The report said that about two thirds of the observers in Guyana reported that gangs had emerged in their neighbourhoods in the previous three years. While the police in Jamaica identified 268 gangs and approximately 3,900 gang members as did other countries, the report said that “Police estimates of the street gang problem in Guyana, Saint Lucia and Suriname are unavailable, which represents a challenge to policy makers in these nations to have an accurate understanding of the problem.”

The report said that the structure of organized crime groups in Guyana and Suriname is less well known, but is believed to comprise loosely organized networks that support the drug and gun trade. Though Guyanese police did not have stats, the report said surveying citizens is one way of assessing the depth of the gang problem. The UNDP Citizen Security Survey 2010 revealed that  Saint Lucian residents were the most likely to report such gang violence (20.2 percent), followed by Trinidadians (14.5 percent), Antiguans (12.7 percent), Jamaicans (12.6 percent), Guyanese (10.0 percent), Surinamese (8.7 percent), and Barbadians (5.7 percent). Organised crime has also shown an increased nexus with activities such as Trafficking in Persons.

Sex trade
The Caribbean Human Development report said that investigative work in Antigua and Barbuda and Barbados recently unearthed that the majority of prostitutes in the country were immigrant women forced into the sex trade. “The investigation uncovered at least 80 women who were told they would be earning decent salaries as bartenders, masseuses, hotel workers, or dancers. Instead, the women, who were mainly from Guyana, Jamaica and Saint Lucia were forced to serve as sex workers in nightclubs”, the report said.

The investigation also found that that organized crime groups elicited the cooperation of immigration officers and senior officials, who were frequently bribed to permit the women into the country. Even if an individual or group of individuals are arrested, the rule of law can be subverted via multiple avenues. The UNDP Citizen Security Survey 2010 suggested that judicial corruption is pervasive. For example, the report said that 53 percent of residents in the Caribbean-7 believe that politically connected criminals go free; about 50 percent believe that the justice system is graft-ridden; 47.3 percent believe powerful criminals go free; and 37.2 percent believe judges are corrupt.

The report said that while organized crime appears to have undermined the faith of the public in the rule of law across the Caribbean, the problem appears particularly severe in Trinidad. “Almost 70 percent of the residents there believe the judicial system is corrupt and politically connected criminals go free”, the report disclosed. Focusing on the causes and attributes of street gangs, the report said that in Antigua and Barbuda, Barbados, Guyana, and Trinidad and Tobago, respondents who lived in neighbourhoods with gangs were significantly less likely to feel a sense of inclusion. Participation, the report found, was also significantly tied to the presence of gangs in the neighbourhoods of respondents.

“In Barbados, Guyana, and Trinidad and Tobago, residents of neighbourhoods with gangs were less likely to state that they were willing to participate with others to reduce violence or improve the country”, the report found. Contending that street gangs and organized crime contribute significantly to the levels of criminal violence and undercut the rule of law, the report said that street gangs and organized crime should therefore be among the most important concerns for Caribbean policy makers in their goal of improving human development.

“A key first step is to understand the scope and nature of the problem, the causes of the problem, and contemporary responses to the problem if we are to address street gangs and organized crime in the Caribbean effectively”, the report argued. Stating that Antigua and Barbuda, Barbados, Guyana, Saint Lucia and Suriname appear to have street gang problems, but the extent and nature of these problems are unclear because of the lack of information, the report said that data does suggest, however, that “Guyana is experiencing problems with organized crime.”

You are finally recognizing superior input to your inferior ones. 

You are definitely not anyone's superior...not even in your best clown suit.

Whats intereesting is the conclsuion that this articel came to was that economic growth is due to remittances and other activities by overseas Guyanese.  Many of whom are approaching retirement and who realize that their savings will be insufficient to assure them a decent life in the USA, so they plan to live in a cheaper country.

No where is there any description of specific actiions by the PPP to stimulate economic activity based on the productions of goods and services WITHIN Guyana.

So if overseas Guyanese tire of the escalating crime and flee Guyana we can conclude that the economy collapses.

What I am glad that the writer understands is that Guyana is experiencing what is called in the USA gentrification, when people with higher purchasing power move to where poorer people live.  Real estate costs are saoring beyond the ability of many Guyanese, w/o help from their overseas based relatives. 

The savings grace about Guyana used to be its low cost of living which allowed its miserably low wages to prevent complete destitution.  Now that this is less teh case then before how will the ordinary Guyanese survive!

A tawt dah wuz whah de Rev duz seh......

President Donald Ramotar was recently asked about the role of the private sector in Guyana's economic growth and success and what sort of support his government would continue to provide to the private sector. These were the President's comments:

PRESIDENT RAMOTAR:

"My administration sees the private sector as the engine of growth in Guyana. I am convinced that real wealth in Guyana can only be created by innovation and hard work in the private sector.

 

But I am a practical man. I know the private sector can't do it all by themselves. The financial sector has a role to play in Guyana's success going forward, and very importantly the policies of my administration must aid and encourage and incentivise the private sector.

 

I am extremely pleased with the public/private partnership we have in Guyana. We are pursuing a model for development that is unique to Guyana. 

 

We are always willing to learn from the failures and successes of others. But we must develop a unique development brand for Guyana. I am extremely optimistic about the future of Guyana. I can feel the success. Guyana is on the move." President Ramotar

 

Very impresive! Very impressive, indeed! The president clearly understands what it takes to achieve greater success in his country.

Rev

Public-private partnership = code word of oligarchic exploitation.

De man neighhhhhbaaaaa musbe Da Rev. Da FAcks and Figga Liarrr

HAHAHAAAAAAAA!!!! HARRRR DEEE HARRR HARRRR!!!1

As Stormborn again mutters boldly about himself in the storm.

Demerara Man lost his mind again.  What economic success?  It is a daily struggle to survive.  It is a daily struggle for housing,  food, light, transportation, protection against heavily armed banditry and protection against bribe taking/unfair connections exploitation.  Even an uneducated ediot like me can see that.

LET THIS JACKASS BRAY.

Using the Income Tax records of 2010 from GRA one can find that today more than 80 percent of the Guyanese taxpayers still get by on less than a one fifth of the average income of the rich, much as they did more than 40 years ago when we got independence.

Have the PPP and PNC improved our people's living condition?

So explain our economic success again Demerara Man?

Jackass!

The average man did NOT vote PPP as 51% of those who voted supported other parties.  It is to be noted that the PNC GAINED voters in the last election, while the PPP continued its trend of losing voters.

In 1997 the PPP won 221k votes, in 2001 210k votes, 2006 182k votes and in 2011 166k votes.

In  a 14 year period the PPP lost 55k voters!

So please do not tell me that the PPP is this much loved party.  They have failed to make significant break throughs into the African and mixed voting blocs, and are losing support with the core Indian bloc.  Fewer Indians are voting, and more of them are beginning to look at other parties.

What are you saying CaribNY.  The PPP is becoming an Amerindian party like how the UF use to be.
Soon it will be Chief Albert

55k voters -- relative to what?

What happen DG, you forgot what the conversation is about?

No its not.  The Amerindians who voted UF switched to APNU and the AFC in the last election. Please look at the results for regions 8 and 9.  The PNC never got votes in the Rupununi and the AFC won the most votes in 8.

In any case the PPP has lost over 55k votes since 1997.  And every election since then has seen a decline in support.

Moses had a very successful meeting in Berbice. 

Addled by dementia?  

In 1997 the PPP got 221k votes.  In 2011 they got 166k.  The numbers of people living in Guyana remained roughly the same since then.

The problem with the PPP is that they are losing Indian support and not gaining enough non Indian supporters to offset that.

Moses had a very successful meeting in Berbice. 

D-G....here is a simplification for you.

CaribJ wrote this:

In 1997 the PPP won 221k votes, in 2001 210k votes, 2006 182k votes and in 2011 166k votes.

In  a 14 year period the PPP lost 55k voters!

If you take the 221K PPP/C votes in 1997 and subtract from it, the 166K votes in 2011 you get.............(drum roll).......55K.

Who is CaribJ's relative again? Aunty Comsee......

ooops.............didn't see CaribJ's Cliff Notes........edukayshun D-G

No he is probably quite educated.  DG's problem is dementia.  Hopefully he will see my explanation and yours and figure it out.

But maybe not.

Kari ..

1. Every election is a new event.

2. Numbers vary at each election.

3. Non-voters at each election are not the same persons.

Yeah...and then you have trends. 

the next election they will have lot of chinese vote the chinese now have guyanese jobs

===

It is not a done deal. Remember these people are escaping a Communist Party and censoring back home. 

The Chinese are slaves and will be move dto the next project where ever it is.  This is the real reason why they do not want Guyanese.  They probably have these people sleeping under some tree, paying them little, and deducting all sorts of charges, imncluding transportation between China and Guyana.  Most likely these are the seriously impoverished rural folks.

when the ppp crones finish with the ppp party all they will have is a bunch of old racist die hard i can remember when HANUMAN and VICK ODITT advise jagan to close the milk plant so they can bring in power milk they kill the dairy industry so they can make money now today HANUMAN is living in trinidad

What are "crones" and "power milk"?

crones are people like me and power milk is  what i stick in your wife real powwwwer

DG there is very little difference in who votes.  The fact remains that the PPP lost 55,000 votes in 2011 vs 1997.  This means that more of their traditional supporters either left the country, voted for other parties, or just didnt vote.  We also see a pattern.  If the PPP got fewer votes in 2001 than they got in 1997, fewer in 2007 than in 2001, and fewer in 2011 than in 2007 then it is clear that there is a trend.

THE PPP IS LOSING SUPPORT!!!!