IMF Working Papers

Guyana: Why Has Growth Stopped? An Empirical Study on the Stagnation of Economic Growth

Author/Editor:

Judith Gold ; Ruben V Atoyan ; Cornelia Staritz

Publication Date:

April 1, 2007

Electronic Access:

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Summary:

After a period of exceptionally strong economic performance, Guyana's growth has stagnated since 1998. The paper tries to identify the factors that can explain this dramatic deterioration in economic performance. The paper first attempts to explain the decline of growth with a growth accounting exercise which shows that there was a significant swing in total factor productivity, and than uses a panel regression framework to analyze the growth impact of changes in various factors. Finally, through a series of cross-country exercises, the paper shows that the primary reasons for the divergence between the economic performance of Guyana and other Caribbean, HIPC, and PRGF-eligible countries in 1998-2004 are a substantial decline in share of net foreign and private domestic investment in GDP, a decline in the labor force, and a less favorable political and institutional environment.

Series:

Working Paper No. 2007/086

Subject:

Capital formation Foreign direct investment Labor force Private investment Public investment and public-private partnerships (PPP)