Poverty Reduction Strategy in Guyana - Research Paper Example

? Economic Development Project Introduction Economic development is ideally the sustained and concerted actions that are specific to communities, policy makers or countries that enhance the expectation for everyday life and budgetary wellbeing of a specific region. Budgetary growth can basically be demarcated as an increment in living conditions and change of the resident’s self regard, therefore resulting to a simple and unlimited public order. Economic development is a general outlook that involves the development of the human capital, an increase in the literacy ratio, improved health standards conditions and infrastructural development that results to an improvement in the general welfare of a particular society. Due to lack of a single definition of economic development that incorporates all its aspects, it is basically defined in terms of its objectives. As a process, it is understood as an influence on growth with the aim of enhancing the community’s economic good (Ezeala-Harrison, 1996) . Development in the economy incorporates three major areas in any community or country namely; policies that the government undertakes to meet the economy objectives which may include inflation control, employment and having sustainable growth. It also includes programs and policies that are put in place to offer services such as building roads, recreational facilities and provision of medical facilities to the disadvantaged groups in the society. It also takes into account policies and programs that are directed towards improving the business community climate through the right efforts of finance, marketing, business retention, technology transfer and real estate development (Nafziger, 2006). Additionally, economic development is often associated with a number of measures which include: an increase in real GNP is an important measure as it indicates the growth development of a country and may be achieved through rapid industrialization. Increase in real per capita income is also an important measure of and usually is indicated by improved standards of living in a particular country. A rise in the general well being of citizens in a particular country is also an important measure of economic development. An increase in the well being of people in normally reflected through an increase in production and consumption of goods and services. Other diverse indicators of economic development in a particular economy may include :increase in income from agricultural activities ,increase in per capital consumption of energy ,increased degree of urbanization and population levels and infant mortality that are not too high (Arndt, 2009). Generally, the main goal of economic development is therefore the improvement of the economic well being of a community through efforts by the government that maximize on job creation and job retention, taxation structures that favor the quality of life and government incentives to support marginalized groups in the society. Additionally, communities differ in terms of their geographic and the political strengths and weakness thus posing a major difference in their economic development. Each country therefore has a different level of economic development policies, level of economic development and the strengths and weaknesses. In this project I will look at the economic development in Eritrea and Guyana which are develpimg economies (Galbraith, 2004). Relevant characteristics It is an Eastern African country which lies on the Red Sea coastline. Eritrea is bordered by Sudan in West, Ethiopia in South and Djibouti on its South East. Eritrea as a country shares maritime borders with Saudi Arabia and Yemen. The Asmara city is found in the North Western side of the Eritrea highlands. Other major cities are Assab, Kerren, Massawa, Afabet, Tessenie, Mendefera , dekemahre and Barentu. Eritrea has a population of six million persons consisting of Tigrinya -55%, Tigre -30% with the remaining being composed of small ethnic groups. Its Afro-Asiatic population is also divided in terms of religion and language. The Eritrean climate is temperate in the mountains with the lowlands experiencing high climate levels and it’s also has a hot and dry desert strip along the red sea coast. The main natural resources present in Eritrea include gold, potash, salt with possibility of gas and oil upon exploration. The main industries include clothing and textiles, food processing and beverages. Eritrea also has a variety of agricultural products which include sorghum, lentils, vegetables, cotton, tobacco, coffee, sisal, livestock and fish. The government of Eritrea is a single party republican and it’s celebrated its independence officially on May 1993.National elections have been historically scheduled and cancelled with none being held so far. Eritrea is a third world economy in Africa and the world at large (Tesfagiorgis, 2010). Guyana It is a third world country located in the Northern Coast of South America, on the east of Venezuela, West of Suriname and on the North of Brazil. The capital city of Guyana which is also its largest city is George Town which has 132000 persons as per a 2009 population estimate. The country has several physical features with the Akaari boarders on its southern border and several rivers that flow along its borders. The country has a cultivated coastal plain, afforested and hilly interior, and a hot and humid climate with lots of rainfall experienced every year. Most of the population lives along the coastline with majority of the population tracing their ancestry to India with the rest being of mixed and indigenous origin. The Government is governed is governed under the 1980 (Bureau, 2007). GED for Eritrea and Guyana Data Eritrea Guyana US World Continent location E.Africa S.America North America N/A Area in sq meters 117000-total 752000 9.827 510.072water,148.44land Population den/sq m 52.0persons/sq m 3.8 317M/31 7.095B/47.8people Capital city Asamara George Town Wash DC-4.5 M N/A Youth(15-24)unemployment rate 19.5% 24.1% 17.6% N/A % urbanized 20.7% 28.4% 82% 50.5% Annual urban rate 5.2% 0.6% 1.2% 1.85% Male/female ratio at birth 1.03% 1.05% 1.05% 1.07% % children under 15 1.00% 1.04% 20% 26% % adults over 65 1.05% 0.69% 13.5% 8% Life expectancy at birth 54yrs 64yrs 78.5 67.6 3 major religions Sunni muslim-50%.Orthodox Christian-40%.R.Catholic-5%. Protestant-30.5.hindu-28.4%.R.Catholic-8.1%. Protestant -51.R.Catholic-24.unidentified-12 Christian-33.Muslim-23.Hidu-14 Eritrea economic development after World War 2 Eritrea was an Italian colony until the second world war when it was temporarily placed on the hands of the Britain colonialists and was finally federated to Ethiopia through the UN resolution of 1952. During the colonial periods, the economy of Eritrea experience rapid growth especially because of the colonial periods Eritrean ports which provided a ground for high income yielding activities and employment opportunities. The end of the second world war however saw Eritrea into a deep recession especially because of the absence of the Italians colonialists who helped in subsiding most activities and a degree of neglect by Ethiopia. After the Second World War, Eritrea suffered a great deal especially because of its division struggles with Ethiopia. By the year 1991, Eritrea was a country faced by a zero economy, no viable institutions, and lack of viable infrastructure in impotant sectors such as education, health, transport and social services. It was during this period that the Eritrean government put in place an economic development program that aimed at economic realisation and achievement of a prosperous nation. In the first decade after realization of independence, the government spent over a billion US dollars on infrastructure, power supply and provison of social services. The government therefore moved from a centralized development to a rational development program through adopting privitisation and liberal macroeconomic programs that aimed at promoting private investment. Eritrea is a poor third world economy with an estimated annual GPD of 180 dollars per capita income. After the Second World War, the economy of Eritrea was on the rise especially because of the high agricultural production which played a great role in helping it to heal the economic wounds of the Second World War. After this Eritrea entered into a 30 years liberation war which saw a great destruction of the remaining economic and physical; infrastructure as the economy was subjected to a state of complete destruction. The border conflict between Ethiopia and Eritrea between 1998-2000 disrupted this initial progress as it resulted to destruction of economic and social infrastructure and additionally resulted to displacement of thousands of people (Governor-General, 1966). After experiencing the devastating effects of the Second World War and the liberalization wars with Ethiopia, Eritrea has been thrown to a state of poverty which has placed a great task on rebuilding and economic revival. Most of the population in Eritrea survives on a subsistence lifestyle that is normally supported by aids from international funds. The level of GDP following the war was at a high decline of 0.7% per annum, which has placed the basic state of the economy to be totally dependent upon agricultural production. The major industries are cement, construction, food processing ,dairy products, textile and clothing, and leather products which contribute to about twenty six percent of the GDP with. The main mineral reserves being gold, salt, silver, granite, marble, natural oil and gas are also helping Eritrea a great deal in the efforts to revive the economy (Tesfagiorgis, 2003). Trade in Eritrea stood at 64.5 million dollars in exports as per 2004 figures with the major items being skin, meat, live sheep, cattle, textiles, salt and gum which are mainly exported to Ethiopia, Saudi Arabia and iatly. Eritrea imports as per 2004 stood at 622 million dollars and include petroleum products, construction materials and manufactured goods among others. The high number of imports as compared to exports indicate a trade deficit which is a major characteristic in many third world economies. The energy levels in Eritrea also indicate its need to have a more established and dependent economy. Presently, Eritrea lacks a substantive and self sufficient hydro electric power which would be of much help to the economy. The urban economy in Eritrea is characterized by low activity levels and a high reliance on transfer income. The dependency levels in Eritrea among the families is quite high especially because of the high rate of unemployement. Income levels in families is mainly from gifts and transfers which is considered as the main source of livelihood. Eritrea lack of economical self reliance and low level of local activities is seen as a way that Eritrea can deal with poverty reduction (Publications, 2004). Guyana economic development After gaining independence, Guyana took on an economic development policy that aimed at diversifying the economy and expansion of agriculture. A seven year development program was established between 1966 -72 that was aimed at moving the countries away from the heavy independence on rice, bauxite and see an increase in scientist ,vocational ,technical training and education training (White, 2009). There was also a need to see economic orientation through cooperative republic. The government of Guyana moved to a policy that would start on a policy of cooperative socialism and to seek redistribution of national wealth through establishment of cooperatives and to see the economy grow. Over the years since independence, Guyana has seen moderate growth of its economy with the export industry being dependent upon sugar, gold, bauxite, timber, rice and shrimp and accounting for nearly sixty percent of the countries GDP although they are greatly affected by adverse weather conditions and price fluctuations (Gafar, 2006). Over the past year ,Guyana has been on a steady economic growth withy controlled inflation levels which have seen it being ranked as a developing economy. The government debt on stock that had been taken especially for the purpose of supporting the economy post independence sense has been greatly reduced with the level of external dent being less in half than it was in the 1990s. In spite of this economic breakthrough however, the government is still struggling with shortage of skilled labor and a deficient infrastructure which are among the major components of a developing economy. Additionally, the government is still dealing with a large external debt which is accompanied by a need for an expansion in public expenditure. Guyana trade levels slowed rapidly in the recent 2009 recession but saw an improvement in the period between 2010-2011. A second recession in 2012 however also affected the state of the economy which affected its exports to Europe. The GDP purchasing power parity as per a 2012 estimate stood at 6.164 billion dollars with the GDP level at 2.788billion dollars. The real growth rate was also estimated at 3.7% as per 2011 which places Guyana as a developing country (Hogendorn, 1996). Data Eritrea Guyana US MDC PPP GDP/capita $700 $1260 $45,989 $35,768 GDP annual growth rate 8.5%(2010EST) 5.8%(2006EST) 1.7%(2011) 1.6%(2011) Standard HDI rank 177 117 4 N/A Gini Coefficient - 42.2 40.8 N/A Ecological footprint(ha/capita) 0.9 - 8.0 5.9 Co2/capita 0.8% - 3.7tons 2.7t Eritea future development prospects aim at lookig at the falling mineral prices and looking for maens through which the prices can be satbilised through encouraging foreign investmwents in mining actvities. Currently, eritrae is afced by a unsusatinable debt and there is therefore need to amintaing the debt through regulation of public debt which is aminly accounted to miliatry expenditure. The Eritreanm economic planners are therefore looking for ways to minimise military spending which takes more than a quarter of the money directed to public expenditure (Tekle, 1994). There are aslo plans to deal with sustainability in terms of dealing with the current food crisis which has resulted to a state of insecurity that normally translates to economic insatbilty and slowed development. Though the budget deficit has been anrrowing over the years, the government has put in place measures to have it decline further through supporting high yielding industries such as agriculture and mining (Sukdeo, 2010). The main factors that have remained historically responsible for hampered economic development in Guyana are government corruption, weak law to support property ownership and inadequate structural policies and systems. Future plans seek at reforming the currently inefficient judicial systems and free it from political interference and give it sufficient authority to promote property ownership. The reform on the judiciary seeks at a direct reduction of corruption which has greatly undermined entrepreneurship and allowed unfair productive resource diversion (Fund, 2006). The future also aims at reducing the current budget deficit which has placed a heavy tax burden on the citizens with minimal progress of public sector since most of government spending is not directed to economic development. There are therefore plans to reduce the current government expenditure to a level; that is equivalent to the total domestic output (Gafar, 2006). There are also measures to define regulations and therefore design more favorable and efficient regulations that will make it possible for the market of labor to open. Good strategies have also been set to ensure that the government does not wholly regulate prices of state owned enterprises and utilities (Sukdeo, 2010). Comparison of development prospects Being developing countries, Guyana and Eritrea future prospects are majorly focused on policies that help in reducing budget deficits, regulating public spending and allowing for the opening up of the public sector through promotion of foreign direct investment. The future prospects of the two countries also seek at allowing room for open markets where domestic and foreign trade are equally tolerated and promoted (Publications, 2004). In contrast, while Guyana has to deal with corruption and property ownership hurdles, Eritrea’s main concerns are to stabilize their exports and minimize imports to manageable levels. Eritrea development programs and plans also tend to be different from those of other developing countries such as Guyana since its mainly focused on foreign investment rather foreign aid. Eritrea also tends to make use of social, political and economic norms that are quite different from that of Guyana. Eritrea tends to have a competitive advantage on other developing countries on their future prospects based on their relaised political stability, strategic location, low corruption levels and availability of low skilled labour that provide cheap labour for their emerging industries (Publications, 2004). Future prospects are also dependent on the strong will of the people and effective leadership that has helped Eritrea to better her postion and enable her to overcome challenges and therefore plan on major economic sectors such as Agriculture, health and education. The government is also commited towards realization of education for all through building elementary, junior and tertiary education as a way of promoting balanced education for all. Eritrea also seeks to improve its health sector by provison of sustainablre and excellent health services that are effective, efficient, acceptable and accesibe to all citizens. The government also aims at eradication of immunable diseases and lowering of infant and maternal mortality in all areas in Eritrea (Henze, 2001). Guyana on the other hand has taken on macroeconomic policies that are more diverse and that encourage external borrowing to improve its broad economic environment. Unlike Eritrea, Guyana aims at improving its circulation of goods and promotion of an external common tariffs on regions around Guyana (Bossogo, 2003). Guyana also aims at promotion of development of service industries and exports as a way of encouraging their service industry, by using skilled labour and managerial expertise. Guyana also aims at promoting its businesses and opeing up markets (Hilaire, 2000). References Arndt, H. W. (2009). Economic Development: The History of an Idea. Asmara: Eritrea. Governor-General. Bureau, G. M. (2007). Economic survey of Guyana. Chicago: University of Chicago Press. Bossogo, P. E. (2003). 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Economic Development. Cambridge: Cambridge University Press. Publications, U. (2004). Eritrea Foreign Policy And Government Guide. New York: ABC- CLIO. Sukdeo, F. (2010). Trading strategies and economic development in Guyana. George Town: University of Guyana. Tesfagiorgis, G. H. (2003). Emergent Eritrea: challenges of economic development. New York: Greenwood Publishing Group. Tesfagiorgis, M. (2010). Eritrea. Texas: University of Texas. Tekle, A. (1994). Eritrea and Ethiopia: from conflict to cooperation. New Jersey: The Red Sea Press. White, C. (2009). Understanding Economic Development: A Global Transition from Poverty to Prosperity? Camberley: Edward Elgar Publishing. Read More