The Cooperative Republic of Guyana, located between Venezuela, Brazil, and Suriname, is South America’s only English-speaking country that shares a vibrant history with the Caribbean region. It is home to rich biodiversity, which includes some of the world’s largest reserves of bauxite and gold. The country has also made significant progress in other sectors and is expected to continue growing for years to come thanks to a hard-working and dynamic population.
Guyana is the world’s fastest-growing economy. With an estimated GDP of $8 billion and a population of 800,000, this former British colony is far from a regional powerhouse. Nonetheless, this small country is expected to become the world’s largest per capita oil producer by 2025, extracting nearly one barrel per citizen per day, three times more than Saudi Arabia! Recent oil discoveries are expected to boost the country’s economy and improve its international standing. Guyana’s economic growth rates were gradual prior to the initial discoveries in 2015. However, the country has used foreign capital to increase exploration and production since then.
The expansion of the oil industry will alter the economic and social landscape of Guyana. It may have a small economy, but with a per capita GDP of around $20,000, it already outperforms many other countries. Because of the expansion of oil extraction, Guyana’s population will most likely enjoy a higher standard of living in the near future. As new oil fields are developed, the World Bank predicts that Guyana’s GDP will rise by 25.2% this 2023 and 21.2% by next year. As a result of unprecedented economic growth, foreign investments are likely to increase. The country’s economic future looks promising, but only if it can avoid the pitfalls that other resource-based economies have encountered.
The good news is that Guyana only needs to look to its neighbour Venezuela on what it should avoid. Economic growth must be followed by political and social reforms. If Guyana is to use petrodollars to modernize its economy and society, it must first establish a strong institutional foundation. The presence of modern and democratic institutions is required for stable and sustainable economic development. The wealth explosion that follows oil discoveries can have unintended consequences. Weak institutions combined with an unexpected influx of funds could create a dangerous situation, jeopardizing the nation’s political stability and economic well-being. The 2020 elections have led to a peaceful change of government as the coalition of opposition parties took power – a powerful signal for foreign investors. The management of a rapidly expanding oil industry requires strong institutions.
Guyana’s leaders have already admitted that producing oil and gas does not guarantee prosperity or long-term development. The Guyanese government has stated its intention to establish the Petroleum Commission, which will oversee the oil and gas industry. President Mohamed Irfaan Ali and his administration have shown a willingness to diversify the economy beyond oil and gas revenues. Guyana has committed to directing one-third of its oil revenues towards development, with the remaining two-thirds going into an investment fund. As a result, the country’s long-term economic prosperity will be ensured.
Although all this does not change the fact that Guyana is still a small country with a modest economy. How can a country like this play a significant role in the region, let alone internationally?
Guyana currently lacks the political, economic, and military resources to have an impact on global politics, but it does have a huge potential to play a significant role. Because of the revenues generated by expanding the oil and gas industry and its projected long-term growth trajectory, Guyana will be able to play a more active role in the development of the region in the near future. Some say that Venezuela has mastered the art of oil diplomacy by offering discounted crude oil in exchange for political support from Caribbean nations. Guyana could implement the same and have a more positive impact on the region by strengthening its cultural and social ties with the rest of the Caribbean.
Recently, Guyana was elected as a non-permanent member of the U.N. Security Council. Seats are assigned to regional groups to ensure geographical representation. To win the seat, the General Assembly must vote with a two-thirds majority. Guyana not only ran unopposed, but also received 191 votes out of the 193 Member States of the United Nations. Guyana is set to use this position to improve its international standing in the times of global turmoil caused by the Russian invasion of Ukraine. The seat at the U.N. Security Council also casts an important spotlight on Guyana, offering it chances to attract more investors. This is a testament to how a small Caribbean country is slowly becoming interesting for the world’s major powers. The ongoing Russia-Ukraine War and the increasingly unstable geopolitical situation in the world offers Guyana an ample opportunity to leverage its newly founded treasure for responsible political influence. In the times of global uncertainty, everyone needs oil, and Guyana has suddenly found itself with an ample amount of it.
The “Land of Many Waters” has a solid potential to become a beacon of stability and prosperity but only if it can build strong institutions and tackle political upheaval. It would serve as an example for many, and its regional and global standing would be greatly enhanced. Whether it will be able to achieve that is in the hands of Guyana’s leadership, but it’s worth noting that they have taken big steps in the right direction. It is without a doubt that Guyana’s economic and political future appears to be bright.
