DaCosta 2007 - WP/07/43 Colonial Origins Institutions and...

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WP/07/43 Colonial Origins, Institutions and Economic Performance in the Caribbean: Guyana and Barbados Michael DaCosta
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© 2007 International Monetary Fund WP/07/ 43 IMF Working Paper Research Department Colonial Origins, Institutions and Economic Performance in the Caribbean: Guyana and Barbados Prepared by Michael DaCosta 1 February 2007 Abstract This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. The countries that were once British colonies in the Caribbean share a common language and a colonial history of slavery, dominance of a plantation-based sugar industry, and broadly similar government and administrative traditions. Following independence in the late-1960s economic strategies and performance across the region diverged. However, by the end of the 1980s, in the face of economic collapse Guyana had abandoned its strategy of “cooperative socialism”, and its economic policies converged with those generally supported by the IMF and World Bank. Despite this policy convergence and shared colonial origins, economic performance and social indicators in Guyana and Barbados have continued to diverge. The paper explores some of the origins of this divergence, and, in particular, the deep seated factors that derive from the countries’ history, geography, and demographics. In Guyana, while the focus on sound macroeconomic policies and donor support has been important, the most pressing requirement for sustained progress is to strengthen domestic institutions and build consensus on the country’s future direction. JEL Classification Numbers : D02, F54, N16, O43, O54 Keywords: Caribbean, Guyana, Barbados, Institutions, Economic History Author’s E-Mail Address: [email protected] 1 I am grateful for comments and suggestions from Simon Johnson, Ebrima Faal, Judith Gold, Samuel Itam, Masahiro Nozaki, Rodney Ramcharan, Selwyn Ryan, Arvind Subramanian, and Mary Zephirin, and participants at seminars held at the IMF and the Central Bank of Trinidad and Tobago. I am also grateful to Zhaogang Qiao for excellent research assistance, and Christy Gray, Verona Itam, and Maria Orihuela-Quintanilla for editorial assistance.
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2 Contents Page I. Introduction .......................................................................................................................... 3 II. The Colonial Period ............................................................................................................. 5 A. Early Settlement ........................................................................................................ 5 B. The Post-Emancipation Period ................................................................................ 11 C. Labor and the Evolution of Political Parties ........................................................... 15 D. A Stock-Taking at the End of the Colonial Period ................................................. 17 III. Divergence in the Post-Independence Period .................................................................... 20 IV. The Return to Orthodoxy in Guyana 1989–2005 .............................................................. 24 V. Conclusion ......................................................................................................................... 29 Bibliography ............................................................................................................................ 31 Figures 1. World Sugar Prices (U.S. Cents per pound), 1800–2004 .................................................. 11 2a. GDP per capita—Guyana, Barbados, and sub-Sahara Africa ............................................ 23 2b. GDP per capita—Guyana and sub-Sahara Africa .............................................................. 23 3. Guyana and Barbados: Post Independence Performance ................................................... 28 4. Caribbean Region: Income and Institutions ....................................................................... 28 Boxes 1.
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