source: sdnp.org
Wednesday, December 9, 2009
(A) 2005 Bauxite Production (for use with productivity summary and analysis)
Source:http://www.bgs.ac.uk/mineralsuk/commodity/world/home.html
(7) Policy Recomendation
One of the major problems in Guyana is the relatively high percentage of the population that has some form of HIV/AIDS. The government in Guyana has begun to take many steps in the prevention and treatment of people with this disease. They are doing things increasing the access that the population has to treatment and prevention. They are also doing much work to educate their citizens about HIV/AIDS (hiv.gov.gy). With these policies and many other included, Guyana is trying to make a true effort to decrease the commonness of the disease. However, the government has not stepped up and is not taking as big of a role as it should. In order to make the access to treatment effective, the government Guyana should completely fund or at the least partially provide healthcare for its citizens who have AIDS. Many in the country are poor and would not be able to take advantage of these offers without assistance from the government for their treatments. In all cases HIV/AIDS is incurable, so these changes in policy would not be felt until the next generation of children comes of age. This could take up to 25 years. In the short run the effects of new policy could be felt. Human capital will increase due to decreased transmission between adults. Just as the people of Guyana are poor, so is its government and central bank. The funding of these projects could send the government increasing into debt. If they merely print money to pay for these services inflation may occur.
The issue of brain drain also plagues Guyana. In the 70’s and 80’s the country took pride in having one of the best educational systems in the Caribbean; however, many of these very well educated scholars have now left, leaving the country with a shortage of skilled workers. Since then, the educational system has fallen from where it used to be (UN Chronicle). In reaction to this the government has responded by putting more money than ever into the educational system. While adequate money should be spent on the education of their students, Guyana should take a different approach to this issue. Instead of only focusing on raising new intellectuals it should also focus on the building of physical capital. With new and improved facilities in the areas of science and medicine, many of those who choose to immigrate to more modern countries may change their decision. People born in Guyana who wanted to stay, but knew that they had to leave for financial reasons may also return. Results could be seen in as soon as 5 years, but closer to 10, once an entire sector has been updated. As with HIV/AIDS the government may not have enough money to provide treatment, pushing them further into debt. Another problem that could arise eventually is unemployment caused by the abundance of skilled workers if people stay, instead of the little number that exists today.
Guyana is currently saving and investing. They are investing in their human capital. If Guyana is able to stop the brain drain it is suffering they should stop saving and begin spending. Spending money on things factories, laboratories, and machinery could all attract skilled workers. If more scholars are staying within the country the ideas and technology produced by Guyana should become more and more advanced. This spending would in the short run spark the economy and hopefully increase GDP. With a higher GDP and an increased standard of living, Guyana would be able to start a cycle. Those who find the country more attractive due to this increasing GDP would decide to move and develop here, further increasing their GDP and attracting more firms or households. This would take 10 to 15 years.
The country currently is in debt due to the overwhelming amount of imports coming into the country and relatively small number of exports going out. The government does not currently place tariffs on imported goods. If the country decides to keep importing as much oil as it currently is, it needs to develop its technology in the mining of bauxite and gain a comparative advantage in its production. A better policy change would to apply a tariff on foreign goods instead of take advantage of the country’s natural resource of bauxite. With taxes on foreign goods, buyers within the country would lose incentive to by them. This would decrease foreign business but increase domestic business and in turn increase GDP. This process could take 25 years or more to come out of debt. Initially the lack of imports would reduce the standard of living within the country, but in the long run an overall higher GDP could take the standard of living to a higher level than it was before the tax on foreign goods.
There is a great amount structural unemployment in Guyana. This problem like many other problems in the country is caused by the brain drain that has taken place over the last 20 years. The economy of Guyana is primarily agricultural, but the worst instance of unemployment comes from the lack of skilled workers. The government has encouraged students to become skilled in their trade by setting the minimum work age at 15. This set work age alone is not enough. In order to make an attempt to counteract the rate of unemployment the work age should be raised and minimum wage should be different for skilled and unskilled workers. This would lower the incentive for students to drop out, because they would not only be unable to work, but work at a lower minimum wage than the high school graduate would potentially have. This would take around 15 years to be effective. This may cause a surplus of skilled workers in the long run, but this is better than a surplus of unskilled workers. Guyana could anticipate this and attempt to counteract it by investing in capital. Skilled workers could choose to work at a lower level if absolutely necessary and at a moment’s notice. On the other hand unskilled workers would not be able to increase their knowledge without money and time spent to go back to school and learn a trade. The first scenario is more promising than the second.
Works Cited
1. "South America - Guyana." C.I.A. World Factbook. Ed. C.I.A. Web. Nov. 2009.
2. Mankiw, Gregory N. Principles of Economics. 5th ed. South-Western CENGAGE Learning, 2008. Print.
- Guyana (09/09)." U.S. Department of State. Web. Nov. 2009. < http://www.state.gov/r/pa/ei/bgn/1984.htm>.
- King, Kenneth. "Unemployment in Guyana." Guyana Under Siege - Aims to highlight, discuss, and offer ideas and solutions to the problems in Guyana. Web. Dec. 2009.
- Lexadin. "Legislation Guyana ()." Lexadin. Web. Dec. 2009.
- "NationMaster - Guyanese Labor statistics." NationMaster - World Statistics, Country Comparisons. Ed. Nationmaster.com. Web. Dec. 2009.
- "Guyana:HIV/AIDS Programme-HIV/AIDS in Guyana." Guyana National HIV/AIDS Programme. Ed. Ministry of Health. Web. Dec. 2009.
- Critchlow, Donnette. "UN Chronicle | EducationWatch: Advancement of Education in Guyana: A Case Study." Welcome to the United Nations: It's Your World. Web. Dec. 2009.
(6) Currency Summary and Analysis
According the CIA world Factbook, in 2008 $203.86 Guyanese dollars was equal to $1 US. The inflation rate of Guyana which is 8.3% ranks 131st of 222 countries listed (CIA World Factbook). Their money is fiat money given out in bank notes and coins. It is a good medium of exchange, but not a very good store of value (an item that people can use to transfer purchasing power from the present to the future) or unit of account(a measure people use to post prices and record debts) (Principles of Economics). With constantly changing inflation rates on the country’s money, it would be hard to know the true value of the Guyanese dollar. If the inflation raises dramatically those holding Guyanese money would be “taxed” due to the decrease of value of the money they hold. If loans are taken out without taking adjustments for inflation into account, banks could lose money, due to the decrease in true value of the money being paid back. The central Bank of Guyana is in some aspects like that of the United States. It is a last resort lender to local banks. It also controls money supply through the print of bank notes and production of coins. It is closely tied to the government and often supplies the funds that the government may need. The inflation rate has constantly risen from 4.7% to 12.3% from 2002-2007; however, it dropped back down to 8.3% in 2008(Nationmaster/CIA World Factbook). This dip does not fit general trend in the inflation of the country’s currency and cannot yet be taken as a sign of a new general decrease in inflation. Until the constant fluctuation of Guyana’s inflation can be stabilized, its currency should not be considered a good store of value or unit of account.
Works Cited
1. "South America - Guyana." C.I.A. World Factbook. Ed. C.I.A. Web. Nov. 2009.
2. Mankiw, Gregory N. Principles of Economics. 5th ed. South-Western CENGAGE Learning, 2008. Print.
- Guyana (09/09)." U.S. Department of State. Web. Nov. 2009. < http://www.state.gov/r/pa/ei/bgn/1984.htm>.
- King, Kenneth. "Unemployment in Guyana." Guyana Under Siege - Aims to highlight, discuss, and offer ideas and solutions to the problems in Guyana. Web. Dec. 2009.
- Lexadin. "Legislation Guyana ()." Lexadin. Web. Dec. 2009.
- "NationMaster - Guyanese Labor statistics." NationMaster - World Statistics, Country Comparisons. Ed. Nationmaster.com. Web. Dec. 2009.
- Apsana. "Impact of Increased Cost of Living in Guyana - .com." Baiganchoka. Web. Dec. 2009.
- Cox, Eileen. "Stabroek News - The Young Persons and Children Act should be reviewed." Stabroek News - Guyana News, Sports, Businesss and Entertainment. Web. Dec. 2009.
(5) Employment Analysis of Guyana
| Unemployment Rate | 11% |
| Labor Force Participation Rate | 46.63% |
Data derived from the CIA World Factbook and Nationmaster.com
Most jobs in Guyana only require unskilled workers. It is a mainly agricultural and mining economy with 30.2% of the workforce in agriculture and 36.4% in industry (U.S. Department of State). The mining of bauxite and gold are the two most common and widely available jobs. There are not as many jobs requiring skilled workers in the country; however, a shortage of skilled workers in these jobs still exists. This results in frictional unemployment amongst skilled jobs. In agricultural, industrial and service oriented jobs, it is more common for a higher percentage of men to be employed. According to economist Doctor Kenneth King, a key problem causing unemployment in Guyana is that they are no longer holding their educational system to the standard it once was. This lack of education is hurting the population’s level of technological knowledge. This lack of human capital is causing structural unemployment because jobs cannot find qualified workers to fill them.
According to the U.S. Department of State, in 1999 the Guyanese government set minimum wage at $104 American per month. If workers on minimum wage receive $104 American a month, it results to about $3.47 a day during an average month. This is problematic due to the fact that some say as much as 80% of Guyana’s current population can barely if even survive on $5 American per day (baiganchoka.com). Guyana has not put any major union laws in act, but the country set the minimum working age to 15 with the Employment of Young Person and Children Act which originally went into place in 1919 and has been revised throughout the years (Cox). With the lack of unskilled workers in Guyana it is currently focusing on the restoration of its educational system by increasing funding. This in part with their minimum wage law should encourage kids to stay in school longer. In order to increase the country’s chances of gaining skilled workers an increased minimum work age would be effective. Jobs that only require unskilled workers would not suffer from unemployment because of the decline in unskilled. This is because of the fact that an abundant number of these unskilled workers already exist; therefore, a decrease in the number of newly unskilled workers would not hurt this job market.
1. "South America - Guyana." C.I.A. World Factbook. Ed. C.I.A. Web. Nov. 2009.
2. Mankiw, Gregory N. Principles of Economics. 5th ed. South-Western CENGAGE Learning, 2008. Print.
- Guyana (09/09)." U.S. Department of State. Web. Nov. 2009. < http://www.state.gov/r/pa/ei/bgn/1984.htm>.
- King, Kenneth. "Unemployment in Guyana." Guyana Under Siege - Aims to highlight, discuss, and offer ideas and solutions to the problems in Guyana. Web. Dec. 2009.
- Lexadin. "Legislation Guyana ()." Lexadin. Web. Dec. 2009.
- "NationMaster - Guyanese Labor statistics." NationMaster - World Statistics, Country Comparisons. Ed. Nationmaster.com. Web. Dec. 2009.
- Apsana. "Impact of Increased Cost of Living in Guyana - .com." Baiganchoka. Web. Dec. 2009.
- Cox, Eileen. "Stabroek News - The Young Persons and Children Act should be reviewed." Stabroek News - Guyana News, Sports, Businesss and Entertainment. Web. Dec. 2009.
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