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.
(4) Guyana's International Trade Market
The four main exports of Guyana are sugar, gold, bauxite and alumina. Their economy has grown 3% over the last year (CIA world Factbook). Guyana’s main partners are the United States, Canada and the United Kingdom. Their exports are valued at about $800 million (CIA world Factbook). They import almost all of their resources in the areas of food and machinery. The main imports are manufacturers and machinery from the United States and Trinidad & Tobago. The idea of open trade has remained relatively constant since their independence from the United Kingdom in 1966. Guyana is dependent on their oil imports from other countries as they do not produce any oil but use a considerable amount in their country. One of the most prevalent tariffs in Guyana is that on the exportation of rice. It is in place to encourage those who produce within the country to also distribute within in the country. This is good for buyers, but bad for sellers because it reduces the incentive to sell at the world price due to the government issued tax.
The main factor that is holding Guyana back is its relatively late independence from the UK. With a constitution written in 1980, it is such a young country that they are still struggling to uncorrupt their political leaders. They import much of their food due to the small percentage of arable land. Due to the abundance of bauxite in Guyana they have developed a comparative advantage in this area, not because they produce the most of any country, but that because such few countries can produce it (Minerals UK). This in part with their outward oriented trade policy has allowed them to survive despite their inability to sustain themselves inwardly. The level of development of Guyana will remain relatively constant until they’re able to benefit from their investment in human capital. According to Principles of Economics, it is possible that once this is fixed their growth will at first be rapid and eventually stabilize at a level much higher than the level it currently sits. An increase in the perception of the living standards in Guyana will in the long term increase the reality of the living standard.
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>.
- Ramsaroop, Stella. "Stella says.... Let's turn Guyana 's brain drain into brain gain." The Guyana Groove. Web. Dec. 2009.
- "World mineral statistics." British Geological Survey (BGS) - Geoscience information and advice. Web. Dec. 2009.
(3) Guyana's Savings and Investments
Guyana is currently saving and investing. The biggest investment is in their human capital. Their saving is reflected by their relatively low levels of output; however their economy has been able to continue to grow in this world recession. This hasn’t helped yet in the long run. Although Guyana is highly ranked in terms of the percentage of GDP spent on their educational system, this still doesn’t amount to as much as other countries due to the relatively low GDP of Guyana. Guyana should continue to save, but focus their investments in physical capital instead of human capital. Their investment in human capital has not proved beneficial in their growth of technological knowledge due to the lack of retention of its highly educated population. A focus on physical capital could better the tools without necessarily increasing technological knowledge. With more efficient or newer tools in the mining of bauxite or gold, exports of these items could increase and spark greater economic growth. Their economy is also heavily dependent on a few exports. An attempt to diversify in what they offer could also prove beneficial. At the same time if Guyana were able to gain comparative advantage through specialization this could also be a different, but as favorable route. In its current state, GDP of Guyana is growing, but if the country makes itself more attractive to its scholars they would no longer suffer from the intellectual drain that has put it in a vicious cycle. Ideally the money their spending in the school system would increase their human capital which would then increase productivity through technological knowledge. This would then increase the quality of their physical capital and pool of ideas to choose from.
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>.
- Ramsaroop, Stella. "Stella says.... Let's turn Guyana 's brain drain into brain gain." The Guyana Groove. Web. Dec. 2009.
- "World mineral statistics." British Geological Survey (BGS) - Geoscience information and advice. Web. Dec. 2009.
(2) Productivity Summary and Analysis of Guyana
Determining the well being of a country is often calculated through its ability to produce for itself. Measurements of natural resources, physical capital, human capital and technological knowledge are all key factors when determining a country’s productivity.
According to the CIA world factbook, Guyana’s main natural resources are bauxite, gold, diamonds, hardwood, timber, shrimp and fish. Only 2.23% of Guyana is arable land. In comparison, 18% of the land in the United States is arable. This is equal to 1,500 km² in Guyana and 223,850 km² in the United States. The previous numbers show that agriculture and farming are greater factors in the economy of United States than in Guyana. In terms of capital specifically, Guyana imports much more than it exports. They have built up a deficit of $362 million. They often have to import their machinery from Guyana due to the low amounts of physical capital within the country (U.S. Department of State). Guyana seems to be attempting to support its human capital. The adult literacy rate is currently 99% among educated adults. The country spends a great percentage of its GDP (8.3%) to try to ensure the success of its schools ranking it 13th out of 182 countries. In comparison, the United States spends 5.3% of its GDP on education, ranking it 52nd out of 182 countries (CIA World Factbook). With access to the rest of the world through ports of trade in the nation’s capital of Georgetown, the technological knowledge of Guyana grows with the technological knowledge of its main partner in trade – Canada. Effective developments in the mining of bauxite and gold have increased the production rates in Guyana. The lower standard of living in Guyana is in essence caused by the intellectual drain that the country is suffering. Even though much money has been put into the education system, students who are able to leave the country in search of higher learning often do. Some have even cited the Kaieteur News, a Guyanese news production, stating that as much as 89% of Guyana’s graduates live outside of the country. They know that the economic system of Guyana is faulty due to its vast deficit in exports compared to imports. This is bad because even though the country is spending much of its GDP on human capital through education, it is not receiving the benefits of this new educated work force. If all the country’s focus is kept on human capital no real progress will be made. With no arable land and impractical resources, Guyana is a country that is very dependent on trade.
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>.
- Ramsaroop, Stella. "Stella says.... Let's turn Guyana 's brain drain into brain gain." The Guyana Groove. Web. Dec. 2009.
- "World mineral statistics." British Geological Survey (BGS) - Geoscience information and advice. Web. Dec. 2009.
(1) Guyana's Economic Background
The small South American country of Guyana ranks poorly in many aspects of my study. Its GDP is currently at $2.973 billion, ranking it 174th of 228 in the world. Based on GDP alone, Guyana has a low standard of living in comparison to the World average. Guyana has a GDP real growth rate of 3%, ranking 126th of 217. Its GDP per capita is $3,900 in comparison the United States GDP per capita which is $47,500. 
Life Expectancy in Guyana is 66.68 which is slightly higher than the world average of 66.57, but wanes in comparison the United States’ expectancy of 78.11 years. The population growth rate of Guyana ranks better than its other aspects, the country ranks 185th of 233 countries with a growth rate of 0.181%. According to Gregory Mankiv’s Principles of Economics, rapid population growth is unfavorable due to the stretching of resources and GDP that would occur.
An unusual trend in Guyana is that although they have a relatively low GDP per capita, it is not reflected in their population growth rate, which ranks the lowest of any of its statistics. This is indicative of possible growth. In most cases low GDP per capita corresponds to a high population growth rate, but in this country it is not the case. Most mothers are only having 2 children, so there is no indication that families are depending on family-run production to support themselves. Other reasons that mothers are having relatively few children are the monetary expense that comes with them on education and to support them in general. There are no signs of religion or culture making an impact of family planning. It is hard to say whether the low GDP of Guyana has an effect on the quality of living in this country. With an average life expectancy rate of 67 years, this country does much better than the below average GDP per capita would project. It also has a 98.8% literacy rate among its population. With such low GDP there are substantial gains that could be made in economic growth. Guyana’s high literacy rates, life expectancy rates, and favorable age structure could be a budding sign of growth in the near future. Even with all these good statistics a factor may be being overlooked. Guyana is ranked 26th of 170 in their HIV/AIDs adult prevalence rate, which is 2.5%. The United States ranks 68th in this category at 0.6%. A possible reason for the country’s overall low level of GDP may be this glaring statistic and its high risk level of major infectious diseases. Worker health has a direct correlation between GDP and standard of living. A sick or malnourished worked is often less productive. Human capital is a direct factor of productivity. Holding all other variables the same, when human capital falls so does a country’s overall productivity. A fall in productivity often leads to a lower standard of living. Even with 68.7% of the population of age to work, disease and sickness may be holding their production back from the level that all other statistics would convey. Another factor that may have led to Guyana’s slow growth is the fact that it recently gained dependence and is a young country. Guyana gained its independence from Britain in 1966 and did not establish a constitution until 1980 (CIA World Factbook). With a recently formed political system, those with power in Guyana often have different views on the direction the country should go in. This has been a factor holding the country back. 
| | | Comparison to rest of the world |
| GDP | $2.973 billon | 174 |
| GDP real growth rate | 3% | 126 |
| GDP per capita | $3,900 | 156 |
| Population living below the poverty line | N/A | N/A |
| Life Expectancy | 66.68 Men – 64.99 Women – 69.4 | 157 |
| Adult literacy | 98.8% Men – 99.1% Women – 98.5% | |
| Birth Rate | 17.56/1,000 | 117 |
| Death Rate | 8.31/1,000 | 102 |
| Population Growth Rate | 0.181% | 185 |
| Age structure | 0-14: 25.7% 15-64: 68.7% 65 and over: 5.5% | |
Guyanese Data Table
Data derived from the CIA World Factbook.
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.
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