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SAP 2.84/WP.143
Structural adjustment and agriculture in Guyana:
From crisis to recovery
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Working papers are preliminary documents circulated informally in
a limited number of copies mainly to stimulate discussion and obtain comments
International Labour Office, Geneva
August 1999
* John Loxley is Chair, Economics Department, University of Manitoba, Canada; Vali Jamal is Rural Sector Specialist at the ILO, Geneva. They thank Dr. Gobind Ganga, Director of Research at the Bank of Guyana, and officials of the Ministry of Health and Labour and the Bureau of Statistics for their assistance with data collection.
E-mail: loxley@cc.umanitoba.ca; jamalv@ilo.org.
The Guyanese economy has shown remarkable signs of a resurgence since the start of this decade, reversing a significant part of the decline that occurred over almost a decade and a half of economic crisis starting in the mid-1970s. Real GDP per capita in 1997 surpassed the level reached in 1976, whereas by 1990 it had fallen by 30 per cent. Agriculture led the recovery doubling between 1990 and 1997, whereas during the 15 years of crisis (1976-90) it had declined by a quarter. The living standards of the Guyanese population have exhibited a similar improvement in the last eight years or so after the dramatic declines during the crisis, though not all sections of the population have shared equally in the growth and an immense amount of work still remains to bring the economy back to its mid-1970s level because of the catastrophic deterioration that occurred in the physical infrastructure, economic institutions and social relations.
This paper seeks to document the decline and rise of the Guyanese economy, with particular focus on the agricultural sector and its contribution to employment creation and poverty alleviation. The demarcation line between decline and recovery is put at 1988 because of the adoption that year of the Economic Reform Programme, although actual recovery only started in 1990. Recommendations are made for a shift in policy orientation towards the smallholder sector. Section I discusses the build up of the crisis between 1976 and 1988, first from the macroeconomic perspective and then from the angle of the agricultural sector. Section II starts with an analysis of the Economic Recovery Programme adopted in 1988. Two years had to elapse before recovery took hold. Subsequent discussion looks as before at the macro aspects of the recovery followed by the agricultural perspective. Section III discusses the constraints faced by the agricultural sector. Section IV shifts gears and analyses the employment and poverty situation of the country. Use is made for both of the Household Income and Expenditure Survey. The employment profile shows the importance of the agricultural sector for future employment creation, while the poverty profile shows its importance from the angle of poverty eradication. Changes in employment and incomes are analysed. Section V presents the conclusions. Two appendices accompany the paper -- one on poverty lines and the other on Guyana's food balance sheet. The former lays the basis for suggesting a new poverty line for Guyana. This poverty line is lower than the existing ones, and thus also the new estimate of poverty. A warning has been expressed in the discussion about the non-sanctity of poverty lines and is worth repeating here: the new lower estimate of poverty in Guyana should not be a cause for complacency, nor be used to calibrate the amount of aid Guyana should deserve vis-à-vis other developing countries.