Tell us what it's going to take for you to return to Guyana.

Thursday, February 08, 2007

Thoughts on Developing Guyana

A group of people were given a set of pages randomly torn out of a phone book. They were told to circle the phone book entries that had surnames that matched the last name of a personal acquaintance. Most people were able to circle about the same number of entries. A small minority of the people present were able to circle a number of entries that was many times greater than that what everyone else was able to circle. They simply new so many more people. It turns out that people are like that. Most have similar abilities to know people and remember their names and generally make friends. this trial mentioned in a book called 'Linked' and a few other trials is part of an emerging realization that the world isn't nearly as random as people and even geniuses once thought. At least a century of thought is being turned on its head.

One of the latest examples that indicates that the world is full of Scale-free (random) networks is the partial attempt of the author to map the Internet. He admitted that he wasn't able to get even close. What he figured out though, was that the Internet is not random at all. A few big sites serve as hubs leading to a disproportionate share of web pages. Most web pages have only a few links to other pages. Some pages have no links at all.

We are finally beginning to see what Pareto, the Italian Economist saw nearly a hundred years ago and we're applying it to things we never before thought to apply it to.

He saw what we now know as the power law distribution. He called his observation the 80/20 rule. 20% of the Italian population made 80% of the national income. Sales books claim that 30% of sales reps make 70% of the sales and that 80% of sales are closed after 5 closing attempts, and most sales reps stop at 2. 90% of the US national income is made by 10% of it's population. 20 or so US counties make most of the money in the US per share of population. A small handful of countries control a drastically disproportionate amount of the world's capital resources. If one were to plot the curves that would result from specific data provided concerning these phenomenon, you would see what it known as a power curve distribution. It would look like the graph at this URL:

A small number of the studied subjects display an abnormally high incidence of the measured phenomenon while the greatest majority display a small incidence of the same measured quantity.

What does this have to do with Guyana and prosperity?

Thomas L. Friedman wrote a book called 'The world is flat' stating that geography simply doesn't matter anymore, at least not nearly as much as it used to. The truth is far different from the content of his book. John Agnew, celebrated political geographer at UCLA corrected him stating: The world is spiky. Geography DOES matter, only now it's cheaper to overcome than it was in ages past.

What I got out of studying Economic Geography is the following: Most countries and cites aren't very connected to the rest of the world at large. Very Few countries and cities within those countries are so connected that they are called 'hubs'. These hubs are where most of the world's economic activity takes place.

Follow this line of reasoning:
Initial conditions can make a place more suited to human activity than other places. These initial differences yield human activity and development. Human activity further distinguishes a place as even better than the places that weren't chosen. In other words: Differences in places yield results that are further differences.

Relating this to Guyana, if a place like Guyana is passed by for so many different things, then other places become increasingly better suited for even more things that Guyana doesn't have.

What makes a place suited for heightened Economic Activity? The island of Manhattan had the advantage of being easily defensible and it had access to good ports. It's located where the Atlantic Ocean meets the Hudson River which acted as a highway into the interior of what's now NE USA. That's just where it started. Now it has many more advantages over other places when it comes to attracting people and money.

Once a place becomes a hub it usually remains a hub, becoming ever more connected and being everything to ever more people, unless its fitness as a hub decreases. Many big and important cities will remain such for a long time. Many backwaters places will remain as such for a long time.

Geography matters for American entrepreneurs who want to attract investment money from venture capitalists. A rule that many of these same investors follow is the 20 minute rule. Business start-ups must locate their operations within a 20 minute drive from the office of the venture capitalist or they can all but lose hope of getting funded. Why? A venture capitalist wants to see the faces of the people he is handing money to. Tech start-ups in Silicon valley where most of these venture capitalist firms are located have a high propensity for failure, thus they need lots of direct 'face time' with the experts to increase their chances of success.

Places like New York and Silicon valley and Even India's new high tech corridor show us that a sort of economic ecosystem forms around these hubs of activity. Because of whatever civil, financial and/or business practices characterize each respective hub, it somehow becomes worthwhile for businesses to pay the higher cost of operating there because the benefits outweigh the cost or potential savings of going somewhere else.

What kind of human ecosystem surrounds Guyana? Does Guyana have any strategic advantages? Does Guyana do anything better than anyone or at least comparatively better than most?

If a country doesn't exploit it's natural initial advantages, then it can't also exploit the results of such exploitation that could yield further advantages. In the same way that huge cities like New York create an inertia of growth that doesn't seem to change too much. Guyana and many other countries are simply inert in stagnancy.

Human experience life along networks of all kinds; roads, air networks, telephone networks and TV networks, the Internet and so on. The more a place is networked, the most it channels money and commerce. Networks=more money and more money means more networks. It's akin to the chicken and the egg conundrum. Where does a country start? If you look at the world's networks, you'll notice that most networks have been built around Guyana. Guyana isn't a very networked place at all. It's nowhere near to being a hub of any sort. This is a result of a state of lackluster everything and barriers, seen and unseen that have been erected.

I refuse to believe that Guyanese are inherently much different from other people. They are just like anybody else. An article in the New York Times underscores Germany's huge problem. They too have a brain drain. Germans are migrating to other parts of Europe and also to North America in huge numbers. This is because of a myriad of reasons ranging from careers mobility to taxes and so on. These Germans go to other places like London and the US and make much more money and for the most part, they have much more fulfilling careers. Germans and Guyanese respond to incentives and go where the possibilities are.

If a country wants to keep it's brightest people and attract investment and dynamism, it must do something at the level of excellence or at least offer opportunities that are excellent. Oftentimes this can be achieved with smart planning. Oftentimes it can be achieved by getting the government to get out of the way. It's hard to break this inertia. Unless people in Guyana realize that Guyana needs to represent something special to enough people or it will always remain a backwaters, then it will always remain so. I've got ideas flowing daily, but, as I said before. Sometimes I feel that people in Guyana are wearing blinders.

If Guyana is going to be part of the world economy, it needs to be better networked. For networks to be built, their needs to be investment. For investment to pay off there has to be a plan. For any plan to work, enough people have to benefit from it to be able to create the required synergy and focus that gets things done.

Jared Diamond made famous what is known as the Anna Karenina Principle. It quotes a line from Tolstoy's book of the same title: Happy families are all alike; every unhappy family is unhappy in its own way.

Developed, prosperous nations have many things in common. It's safe to say that these things allow them to become and remain prosperous. Guyana is the way it is for its own particular reasons.

Jeffrey D. Sachs found out at he engineered the economic recoveries (however short-lived or permanent) of several nations, including Poland and Bolivia, that each nation has its own solution. Simply conforming to the way that the IMF (USA) says that a country must be run isn't always the answer........and even it can be the wrong answer. Each sick country needs a customized diagnosis. When Guyana figures out how to take it place among prosperous countries, it will have to do so under its own terms, so the people can claim a part of the victory. We need a Guyanese solution for a Guyanese problem. I just hope to be a part of making that happen.


1 comment:

daretothinkfree said...

`One of Guyana's unique qualities, something that sets it apart from the rest of its mainland neighbours in South America,is that by virtue of its colonial past it happens to be the only english speaking country on the mainland of South America. Insignificant as that might appear, it has to count for something in these days of commercial outsourcing married to computer technology. The problem with exploitation of this advantage is the neglect of the educational system by the Government.

One would have thought that a Government attuned to the fact that they had to be innovative would have deemed it expedient to adjust the educational system to focus on training people in technology geared towards the outsourcing industry. Guyana sitting next to Brazil would be an ideal location for data centers processing info for the huge Brazilian Customer Market that is done in places like Boulder Colorado at the moment. A tape operator in Colorado is probably paid about 17 dollars an hour for a job that might pay 5 in Guyana and is low skill sufficiently to be feasible. About the only problem would be reliable electrical power.

The customer service outsourcing market would be a boon for Guyanese because of the fact that english is our primary language and our educational system is largely British old school. In areas like medical transcriptions and so forth we could be serious players. But the Government is too busy trying to cleanse the public and civil service of those who do not make up its base, and to dumb down or imprison their kids.