Oil may guarantee rapid GDP, but not human development
– Professor Suresh Narine reminds that more elements needed to unlock the good life
By Kiana Wilburg
Angola, Tanzania, Nigeria, Uganda, Sudan, Yemen, Papua New Guinea, South Sudan, Chad, these are all oil producing nations. Due to substantial oil finds over the years, the GDP of these nations looks incredible on paper. (Attached to this feature is a chart showing further details on the 2016 GDPs of each country.) At first glance, some might deem these nations and their experience with oil to be a huge success; an economic bonanza! And the same is projected to happen here.
But let’s consider another measure of growth: The Human Development Index (HDI). The HDI was created to emphasise the point that people and their ability to live a better life should be the ultimate criteria for assessing the development of a country, and not “economic growth” alone.
In fact, the oil producing countries mentioned earlier were all flagged as places of low human development in the latest HDI report. Guyana on the other hand, with its $3.4B GDP is in the medium human development bracket.
On this basis, one can surely understand the notion that oil alone does not guarantee the “good life”. This very point was recently hammered home by scientist and head of the Institute of Applied Science and Technology (IAST), Professor Suresh Narine.
At the Guyana International Petroleum Business Summit (GIPEX) which was held last week, Professor Narine asked, “Will Guyana simply shoot to the top of the HDI by simply becoming producers of oil? And for how long shall we maintain this good life, if we are able to attain it? Will it only be over the lifetime of our reserves? The answer to these questions lies not with our partners such as ExxonMobil, but from within.”
Professor Narine articulated that if one closely examines the countries currently at the top of the HDI list such as Norway, Canada, the United States, Australia, etc., there are deeper implications. He stressed that none of these countries suffer from access to food, clean water, healthy environment and individual freedoms.
He emphasised that energy on its own doesn’t guarantee the good life. The world renowned scientist noted however that it can unlock the good life in the presence of all the very things that makes life good – the things that feed our bodies and our souls in an environment of peace and security.
According to Professor Narine, Guyana can help unlock the good life only if it focuses petroleum-generated capital on these factors in a manner which guards against haphazard, reactionary investment; in a manner driven by multi-stakeholder policy interventions.
“How we manage this industry, how we deploy the proceeds from it, our enablement and careful stewardship of sustainable industries and attention to the sustenance, promotion and protection of our marvelous environmental and cultural diversity is entirely within our hands.”
“Not only must we ask what the emergence of this industry will mean to our current generation – we must envision the Guyana we wish for the next and future generations and lay the groundwork now, as many of the decisions we make now will only affect the next generation in 25 years or so.”
Additionally, the IAST Head said that while reports in the press are heavily focused on the Production Sharing Agreement that the Government of Guyana signed with ExxonMobil and its partners, there are certain matters which he believes should also be given due prominence. In this regard, he said that oil and gas conversation should be about Guyanese positioning themselves to understand and then determine how the proceeds from this industry can be used to further Guyanese ambitions and goals. He said that this topic is the essential fulcrum on which rests a collective approach to the nation’s development.
“In 1776, Adam Smith wrote the evergreen treatise on development economics, the Wealth of Nations. As valid then as it is now is the essential tripod for development and growth – Land, Labour, and Capital. The Caribbean region receives less than 0.3 percent of the World’s Foreign Direct Investment, not counting the recent investments in Oil and Gas in the Guyana Basin.”
“As a result, Guyana’s immense potential for large scale and specialty agriculture, value-added processing and manufacturing, eco-tourism, sustainable energy development and the knowledge-based economy, especially the wealth of knowledge that resides among our Indigenous Peoples, remain latent. The advent of the Oil and Gas discovery and development will generate immense capital, as Minister of Natural Resources, Raphael Trotman had indicated.”
If managed in a corruption-free, responsible manner, Professor Narine articulated that oil capital can transform Guyana’s sustainable sectors. As a latecomer to the Oil and Gas party, he noted that the examples of a lack of attention to diversification of the economy of oil producing nations into sustainable productive sectors are as glaring as they are terribly sad.
“One of the things that I am most against is for us simply to hand monthly checks to all Guyanese, as we begin to receive proceeds sometime in 2020. This is tantamount to handing our people a fish rather than teaching them how to fish and very importantly, how not to overfish.”
“However, the timescale and cumulative size of the capital injection and its growth and stewardship in vehicles such as a Sovereign Wealth Fund are essential elements of ensuring that capital from the petroleum industry is available at a scale and timeline commensurate with the demands of our educational and sustainable sectors, in order to develop a sustainable and resilient economy. Statistically, once the key to solving timing of migration to timing of trap is established, historically in other basins, new discoveries follow quickly.”
If and when this occurs in Guyana, Professor Narine said that citizens need to begin to think carefully of the pace of development and the role policy will play as a tool to regulate runaway inflation, measured capital inflows, on demand capital injections into sustainable industries, emergence of a local vertically integrated petroleum sector and workforce, and generational educational needs as we transform from a commoditised into a value added economy.
Professor Narine concluded, “It is time that we begin to debate draft policies in agriculture, science and technology, renewable energy, taxation and investment, crop insurance, enabling infrastructure and a myriad of other crucial enablements. It is time, also that we have a Ministry of Innovation and Industry. For it is only through ensuring that we have access to good health, a clean environment, good food and nutrition, security and individual freedoms that we can use petroleum to unlock Guyanese access to the upper echelons of the Human Development Index.”