Analysis of Guyana’s

Economy
ECON-120 (Principles of Microeconomics)
Lecturer: Mr. W. Bissoo

Group Members:
• Aliyah Ali- 00073060
• Tishuana Jones- 00071954
• Steffan Mansingh- 00073106
• Brittney Siewah- 00072845
• Prishan Singh- 00072384
 Table of Contents
Introduction.....................................................................2
Questions.........................................................................3
Bibliography....................................................................11

1|Page
 Introduction

Guyana, a country located in the Northern part of South America is bounded by the Atlantic

Ocean at the north and bordered by Brazil to the South, Suriname to the east, and Venezuela to

the west. This South American Country is the only one of its kind to have English as its first

language and fortunately enough is a part of the Caribbean Community known as CARICOM.

They gained political independence from the British in 1966 however economic independence

did not follow suit as most of the agricultural and mining enterprises were owned by foreign

companies. Due to the domination of these foreign companies the country has always suffered

economic issues. Later on, Guyana eventually developed companies within the country to utilize

their resources and help build up economic system. As of recently, Guyana showed a more

moderate economic growth based largely on agriculture and the extractive industries. The

assignment goes into depth to explain the economic system, the market structure, and more

details about the economic status within Guyana.

2|Page
 Questions

1. Every country has an economic system which helps them provide necessities for the people.

Guyana follows one that is a mixture of policies from both socialist and capitalist

perspective; it is the Mixed Economic System. In a mixed economy both the private and

public sector co-exist and thus a level of economic freedom so the private sector can decide

the use of capital and seek profits. (Corporate Finance Institute, 2021)

Just like every other system there are benefits and drawbacks that goes with them. This

piece will discuss three benefits and three drawbacks of the Mixed Economic System in

Guyana.

Three benefits are:

 A mixed economy delivers commodities and services to where they are needed–Most

mixed economies preserve standard economic traits (Miller, 2019). Previously, Guyana

was classed as a Traditional Economic System, but those traditions did not guide

productivity since most people are not even aware of their actions. Before in traditional

persons would hunt, fish, plant garden just for those in their family and ones close to

them and therefore would not have had access to some produce however now hunting,

fishing, and going to the grocery store is possible in Guyana. These possibilities in the

country occur because of the now evolved economic system. This shift to a Mixed

Economy assures that products and resources are provided when and where they are

needed in each area, benefiting as many people as possible.

3|Page
  In mixed economies, the private industry is in charge of the activities that generate

goods and services, while states oversee roads, bridges, utilities, and rights to provide

enterprises with the foundation they need to achieve their objectives. In Guyana with the

construction of the new Demerara Harbor Bridge along the Suriname – Guyana Bridge

creates numerous jobs under the private sector and in turn due to this employment

increase money will be pumped back into the economy. The government of Guyana

provides opportunities, where the private entities take maximum advantage and helps to

provide jobs which likewise increases the country’s GDP and the overall improvement

of the economic flow within Guyana.

 A mixed economy safeguards minorities from the prejudices of the majority-The

government's position in the mixed economy safeguards minorities in everyday routines.

Organizations are prohibited from manipulating their employees or creating hazardous

working circumstances by regulations. ‘Every person should have the right to labor and

its free choice in conformity with societal requirements and personal qualifications,'

according to Article 22 of the Constitution of Guyana, ‘He or she has the right to be paid

commensurate with the type, quality, and amount of his or her job. Equal compensation

for equivalent work is a right both women and men have.’

4|Page
 Three drawbacks are:

 • Because the state is responsible for public-sector capabilities that help the marketplace

available to buyers and sellers if it needs financial assistance, a mixed economy

frequently results in significant taxation burdens. The most popular approach is taxation,

in which this market economy charges businesses and individuals at various levels. In

Guyana, income tax is at a rate of 20% and corporate tax ranges from 35%-45% whether

it is non-commercial or commercial, respectively. Even though employment increases

with this economic system, with this increase it leads to an increase in standards of living

and an increase in income and company tax since this is what helps run the country.

 Problems of corruption, Kickbacks, black market, nepotism are quite prevalent in a

mixed economy – Corruption was the highest – ranked constraint identified by businesses

as the most serious obstacle. Since companies are expected to pay taxes and to tender for

certain jobs from the government it was found that several companies were expected to

pay bribes to persons in offices to achieve certain things.

 It may end up leaving less productive members of the population without support –

Because the market economy is a mix of socialism and capitalism, it inherits all of the

downsides of the other methods, including the problem of people in society who are

unable to achieve the same level of advancement or competition. Guyana has the highest

poverty rate in South America, at 36.1 percent, implying that a large proportion of people

5|Page
 are unable to sustain themselves. Because of this imbalance, the affluent get more but the

underprivileged get less.

Because a mixed economy combines capitalism and democracy, it must achieve optimal

outcomes at some level, depending on how it is administered. It still has certain criticisms

when it comes to evaluating the benefits and drawbacks of the mixed economy, but this

approach tries to find places of consensus as often as possible. While a mixed economy is

beneficial, supply and demand and balanced growth of formal and informal parties

should be preserved.

6|Page
2. Every country has an economic system which helps them provide necessities for the people.

Guyana follows one that is a mixture of policies from both socialist and capitalist

perspective; it is the Mixed Economic System. In a mixed economy both the private and

public sector co-exist and thus a level of economic freedom so the private sector can decide

the use of capital and seek profits (Corporate Finance Institute, 2021).

Three benefits are:

 A mixed economy delivers commodities and services where they are needed.

 A social democracy promotes control equality.

 A mixed economy safeguards minorities from the vagaries of the mass.

Three drawbacks are:

 When you have a social democracy, you are likely to have a lot of tax responsibilities.

 Problems of corruption

 It may deprive society’s fewer competing individuals who are with no aid.

3. Guyana’s economy is mainly comprised of agricultural, mining, fishing and recently

developed oil and gas sectors. They are one of the largest manufacturers of rice, sugar,

7|Page
 bauxite, gold, and shrimp, and their economy consists of small- and large-scale companies

and business.

Agricultural

As mentioned before, Guyana produces and exports sugar and rice on a large scale, so you tend

to see larger firms like corporations being the most dominant within their agriculture industry.

For example, the SAJ rice group inc., which is a cooperation and Guyana sugar cooperation inc.

which is another cooperation. There is still the presence of small-scale farming/peasant farming

and livestock rearing but most of the produce is consumed by the farmers and/or their families

and the excess would then be sold.

Mining

Guyana is a large exporter of gold, bauxite, and precious and semi-precious stones, in fact it is

known as “El Dorado” for its gold. Guyana has both small scale and large-scale mining

companies contributing to its exports. For example, TROY RESOURCES LIMITED is one of

the major gold mining companies operating in Guyana and it is a private limited company. The

emergence of small-scale mining is also prevalent within the island, but these firms are now

subjected to more stringent and protective measures as they have contributed to a high

percentage of mercury poising etc.

Fishing

8|Page
The fishing sector plays a reasonable role within Guyana’s economy and as mentioned above

Guyana is an exporter of shrimp and seafood by extension. Guyana has many seafood plants

along its coastlines and rivers, which are dominated by large corporations like BEE GEE

ATLANTIC SEAFOOD INC as well as PRITIPAUL SINGH INVESTMENTS INC.

Oil and gas

Guyana’s recent oil discovery has led many international companies to its shores. Esso

Exploration and production Guyana ltd. is one of the multinational limited companies that has

started operating in Guyana.

After close examination of Guyana’s major sectors, it can be concluded that Corporations and

Limited Companies are the most dominant firms within their economy.

4. Guyana's economy is a mixed economy, with oligopoly and monopoly as the two primary

market systems. To begin with, when a firm and its product offers dominate a sector or

9|Page
 industry, it is referred to as a monopoly. A monopoly is a legal word that refers to a

company that has complete or near-complete control over a market. Monopolies are an

extreme form of free-market communism, and they are commonly used to characterize an

entity that has complete or near-complete control over a market. Oligopoly describes a

market structure in which only a few enterprises can restrict anyone else from exerting

significant influence. The number of companies in an oligopoly has no definite upper limit,

but it must be small enough that the activities from one firm have a considerable impact on

the others.

Examples of a monopolistic market structure is as follows:

Restaurants- Food quality is as important as price when it comes to restaurants. Setting up a

new restaurant has relatively minimal barriers to entry. Also, restaurants make a normal

profit long term, but it can be deemed as transcendental profits in a short term.

Hairdressers- A service that will assist businesses in establishing a reputation for providing

high-quality haircuts. Hairdressing is classified as monopolistic competition since there are

so many businesses and there is complete flexibility of entry and exit.

Examples of an oligopolistic market structure is as follows:

Energy- Guyana's newly established energy sector has a well-known oligopoly market

structure. The global oil output business, often known as oil refining, is controlled by the

“seven sisters” of international oil giants such as BP, Shell, and Exxon.

10 | P a g e
 Large-scale technology- Smartphone and computer operating systems are excellent

examples of oligopolies on a large scale. This industry is dominated by main companies

such as Apple, Android, and Google. These companies have a major influence on

technology in a large scale and is interdependent. To enter this industry is more than

challenging as there are relatively high impediments.

11 | P a g e
5. It is fair to assume that they have a great competition dominant market structure because

there are no known constraints on access to the market, aside from health and safety and

environmental criteria. For the year 2020, Guyana made a profit of 17.4 percent on oil sales.

Those who argue that it can only be 12.5 percent are stymied by this figure.

According to figures released by Vice President Jagdeo, Guyana made a profit of US$184.9

million and earned a royalty of US$21.2 million. Since royalties are estimated at 2% of

profits, total sales were $1,060 million. As a result, Guyana's profit as a percentage of

revenue was 17.4%. At that time, the breakeven price for a barrel of crude oil was set at $35.

This goes to show the positive impact the oil industry has been having on Guyana also

because of the market structure it is a part of.

Two impacts it had on producers are:

 They were able to gain easy access to this industry because it has no great barriers of

entry hence it made it very simple for producers to become a part of the oil industry.

 Producers were made to divide the profits between the company and their country

Guyana because they use their machines to pump oil from the country of Guyana

12 | P a g e
 Two impacts it had on consumers are:

 They are fortunate to choose between the various oil companies because there is not

only one but various companies, this means if ever a pricing fluctuates in one

company there is always another company that will gain the customers, but this is

highly unlikely to happen

 There will be lots of job opportunities due to the amount of oil companies there are

present in Guyana

13 | P a g e
6. The Covid-19 virus, a respiratory virus that originated in Wuhan, China, sparked worry

among many medical professionals and resulted in an inflow of people, putting a strain on

not only the health sector of most countries, but also the economies of those countries. On

March11,2020, the Covid-19 pandemic was officially declared a pandemic. The good and

negative effects of Covid-19 in Guyana will be identified in this section of the review.

Two negatives of the virus on households were

 The Covid-19 virus did indeed negatively affect the markets of Guyana

 The Covid-19 has also negatively impacted the livelihood of the country’s

population in which it resulted in person’s losing their jobs, and flexibility to do

their essential errands.

Two positives of the virus on households were

 One of the many first positive impact is the change of Guyana’s population food

source.

 Also, due to an influx of cases into the country, this resulted in bulk buying

increasing the supply and demand chain within the country producing additional

income to households and larger firms and industries of Guyana.

Bibliography

14 | P a g e
Hayes, A. (2021, April 26). What Are Current Examples of Oligopolies? Retrieved from
Investopedia : https://www.investopedia.com/ask/answers/121514/what-are-some-
current-examples-oligopolies.asp#:~:text=National%20mass%20media%20and
%20news,and%20News%20Corporation%20(NWSA).
Pettinger, T. (2019, February 27). Monopolistic Competition – definition, diagram and examples.
Retrieved from Economics Help :
https://www.economicshelp.org/blog/311/markets/monopolistic-competition/
Akeel, M. M. (2011, June 17). National Labor Law Profile: Guyana. Retrieved from
https://www.ilo.org/ifpdial/information-resources/national-labour-law-profiles/WCMS_158900/
lang--en/index.html
CARICOM. (2020, August 14). Guyana. https://caricom.org/country_profiles/guyana/
Corporate Finance Institute. (2021, January 31). Mixed Economic System. Retrieved from CFI
https://corporatefinanceinstitute.com/resources/knowledge/economics/mixed-economic-system/
Guyana. (2021, March 26). The Commonwealth. https://thecommonwealth.org/our-member-
countries/guyana
Heritage Foundation. (2021). Guyana Economy: Population, GDP, Inflation, Business, Trade,
FDI, Corruption. Retrieved from Index of Economic Freedom.
https://www.heritage.org/index/country/guyana
Jaayfer, O. (2020, September 23). 5 Facts about Poverty in Guyana. Retrieved from The Borgen
Project. https://borgenproject.org/poverty-in-guyana-2/#:%7E:text=Guyana’s%20last%20official
%20poverty%20measurement,were%20living%20in%20extreme%20poverty.
Miller, K. (2019, December 20). 22 Advantages and Disadvantages of the Mixed Economy.
Retrieved from FutureofWorking.Com. https://futureofworking.com/8-advantages-and-
disadvantages-of-the-mixed-economy/
Taxes. (2020). Retrieved from Hughes, Fields & Stoby.
https://www.guyanalaw.net/practice/taxes/
Pasha, S., Bollers, E., & Wenner, M. (2018, April). Constraints Affecting Guyana’s Private
Sector: Survey Results. Retrieved from Inter-American Development Bank.
https://publications.iadb.org/publications/english/document/Constraints-Affecting-Guyana-
Private-Sector-Survey-Results.pdf
Staff Reporter. (2021, January 4). The private sector and development. Retrieved from Guyana
Chronicle. https://guyanachronicle.com/2021/01/04/the-private-sector-and-development/

Hayes, A. (2021, April 26). Monopoly . Retrieved from Investopedia :

https://www.investopedia.com/terms/m/monopoly.asp

15 | P a g e
Team, I. (2021, May 17). Oligopoly . Retrieved from Investopedia :
https://www.investopedia.com/terms/o/oligopoly.asp
Wikipedia. (n.d.). Prime Minister of Guyana. Retrieved from Wikipedia:
https://en.wikipedia.org/wiki/Prime_Minister_of_Guyana
Editor, S. (2017, July 29). A Celebration of Guyanese Culture. Retrieved from Stabroek News:
https://www.stabroeknews.com/2017/07/29/photos/a-celebration-of-guyanese-culture/
MacDonald, S. B. (2021, February 4). Guyana and the next economic wave. Global Americans.
https://theglobalamericans.org/2020/10/guyana-and-the-next-economic-wave/
United Nations World Food Programme. (2020, May). Caribbean COVID-19 Food Security &
Livelihoods Impact Survey. Amy Chong. https://docs.wfp.org/api/documents/WFP-
0000115925/download/
Richardson, B. C., & Menke, J. K. (n.d.). Guyana. Retrieved from Britannica:
https://www.britannica.com/place/Guyana/Resources-and-power
Global Monitor. (n.d.). Guyana Agriculture Market Trends, Statistics, Growth, and Forecasts.
Retrieved from Global Monitor: https://www.globalmonitor.us/product/guyana-agriculture-
market
Bobby Gossai, J. (2019, June 9). Guyanese energy market outlook and the new philosophy.
Retrieved from Oil Now: https://oilnow.gy/news/guyanese-energy-market-outlook-and-the-new-
philosophy/
Graphics, A. (2014, October 13). Animated Flag of Guyana. Retrieved from YouTube:
https://www.youtube.com/watch?v=XqYPvWLCuiQ
James, S. (2021, April). Flag of Guyana. Retrieved from Pinterest:
https://www.pinterest.com/pin/398568635748797226/

16 | P a g e