Growth of Inequality in Guyana

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Growth, Inequality and Poverty in Selected Caribbean and Latin American Countries, withEmphasis on GuyanaAuthor(s): John GafarSource: Journal of Latin American Studies, Vol. 30, No. 3 (Oct., 1998), pp. 591-617Published by: Cambridge University PressStable URL: http://www.jstor.org/stable/158031

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J. Lat. Amer. Stmd. 0, 59i-617. Printedin the United Kingdom ? i998 CambridgeUniversity Press 59!Growth, Inequality and Poverty inSelected Caribbeanand Latin AmericanCountries, with Emphasis on Guyana*JOHN GAFARAbstract. The statistical evidence surveyed suggests that as an indicator ofdevelopment the Human Development Index is directly related to the level of percapita income; that inequality is countercyclical; and that economic growth ispoverty reducing. In the case of Guyana the data suggest that nearly 43 per centof the population were below the poverty line (approximately US$i per day perperson); that poverty is predominantly rural; that most of the poor seekemployment in agriculture or in the informal (self employed) sector; and thatthere is a direct relationship between the level of education, health and poverty.The Latin American and Caribbean (LAC) countries have historicallybeen plagued with an unequal distribution of income. The i980s havebeen described as the 'lost decade' for developing countries, and, for thepoor, their condition has worsened. This article attempts to pull togethersome of the available evidence relating to income inequality and povertyfor selected Caribbean and Latin American countries, with specialreference to the situation in Guyana.1 It chooses to concentrate onGuyana, as an economy that moved away from a market economy in thei960s to a state controlled economy in the I970S and i98os, but where,since i988, the pendulum has swung again in favour of economicliberalization and market reforms. At the outset, it should be pointed outthat poverty and inequality are not the same. As World Development Report1990 succinctly puts it:Whereas poverty is concerned with the absolute standard of living of a part ofsociety - the poor - inequality refers to relative living standards across the whole

John Gafar is Professorof Economics, C.W. Post Campus, Long Island University,Greenvale, New York 11548, U.S.A.* Theauthorwishes to thankthe editors and refereesof this journal or their incisive and

constructivecomments that have helped to improve this paper.All remaining errorsand interpretationare the author's.It shouldbe stressedthat this articlerelies heavilyon (and borrowsfreely from) WorldBank reports and studies conducted under World Bank auspices. I am not in aposition to generate my own data,and take no credit for the findings by the WorldBank. The aimof this study is to makeaccessibleto studentson LatinAmericanandthe Caribbean ome of the evidence on inequality and poverty in a single source. Iapologise for this over relianceon World Bankdata, but, sadly, the World Bank dataare all that is available.


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592 John Gafarsociety.... This Report defines poverty as the inability to attain a minimalstandardof living.2Amartya Sen has observed that development economics is preoccupiedwith such aggregates as real per capita GDP, rather than focusingattention on 'entitlements', and the 'capabilities' that such a bundle ofentitlement can provide. Poverty, as Sen argued, is the 'failure to achievecertain minimum capabilities'. 3In this article, apart from the usual measures of inequality (i.e. percapita income), broad measures of well being, namely, life expectancy,child mortality and educational attainment will be examined. This articlesets out to examine poverty, inequality and growth in Caribbean and someLatin American countries with specific reference to the experience ofGuyana. It is organised as follows. Section II provides a brief review ofthe relationship between growth, inequality, and poverty. Section IIIprovides some information relating to the basic indicators of development.Section IV briefly examines the trends in inequality and poverty for someCaribbean and Latin American countries. Section V is devoted specificallyto an examination of poverty in Guyana. Finally, there is a concludingsection. One of the conclusions of this paper is that poverty worsens intimes of economic recession and economic contraction, and improveswith economic growth, provided that growth is broadly based.

Growth,inequalityandpoverty relationshipThis section briefly reviews some of the general relationships betweeneconomic growth, inequality, and poverty. The discussion is not intendedto be an exhaustive treatment of the debate regarding the theoretical andempirical link between growth, inequality, and poverty. In an importantand influential publication entitled Redistributionwith Growth,Chenery andhis associates placed heavy emphasis on growth as the appropriate povertyreduction strategy.4 This emphasis on broad-based growth has remained,and quite correctly, the core of the World Bank's approach in formulatingpoverty reduction programmes.5 Unemployment and poverty are directlyrelated. The rationale for emphasising growth is as follows: First, growthis essential to sustain any expansion and improvement in employment

2 World Bank, World DevelopmentReport i990 (New York, I99o), p. 26.3 Amartya Sen, 'A Sociological Approach to the Measurement of Poverty: A Reply toProfessor Peter Townsend', Oxford EconomicPapers, vol. 37, no. 4 (1985), p. 669.' See Hollis Chenery, Montek Ahluwalia, Clive Bell, John Duloy and Richard Jolly,Redistributionwith Growth (New York, 1974).5 For a discussion of the World Bank's experience with poverty programmes, see WorldBank, Poverty Reduction and the World Bank: Progress and Challenges in the s9oos.(Washington, D.C., i996).


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Growth,inequalityandpoverty 593opportunities, living standards, and real wages. However, as Bardhanobserved, if growth is concentrated in capital-intensive or skill-intensiveactivities this may well delay the reduction of poverty of the unskilled andassetless.6 If the pattern of growth is urban-biased, or if it displacesunskilled labour, or if it subsidises scarce inputs (e.g. capital, energy etc.)the incidence of poverty may well increase, even though there is growth.Macro-economic policies that encourage over-valuation of the realexchange rate also affect the poor adversely. This is because over-valuation of the exchange rate represents an increase in the real wage rate(without reference to productivity considerations), thus penalising labour-intensive (agriculture) compared to capital-intensive industries; itsubsidises capital; and it hurts rural development and rural employment,thereby hurting the poor. In addition, economic growth providesgovernments with revenues which they can in principle use to providebasic services (e.g. education, health care, safety nets etc.) that benefit thepoor, the disadvantaged, and the vulnerable groups in the society.7Fishlow has shown that in the I 96os, both income inequality and povertyworsened in Brazil despite impressive rates of economic growth.8 Theliterature clearly shows that while growth is necessary and essential forpoverty reduction, the pattern, character, duration and rate of growth areimportant for poverty reduction. A review of the literature further revealsthat in addition to economic growth, emphasis on human-capitalformation (i.e. education, health, etc.), land reform, access to credit etc.are important elements in any strategy designed to reduce inequality andpoverty.

The Caribbean economies are dualistic in nature. Fields, utilising thetwo sector dualistic Lewis type model, has theoretically demonstrated thefollowing propositions:'(i) Traditional sector enrichment growth results in higher income, amore equal relative distribution of income, and less poverty;(ii) Modern sector enrichment growth results in higher income, a lessequal relative distribution of income, and no change in poverty.In re-visiting the issue of poverty, the World Bank in its authoritativeand highly influential policy publication, World DevelopmentReport 1990

6 Pranab Bardhan, 'Research on Poverty and Development Twenty Years afterRedistribution with Growth' in Michael Bruno and Boris Pleskovic (eds.), AnnualWorldBank Conference n DevelopmentEconomics yy9 (World Bank, i996), pp. 59-72.Montek Ahluwalia, 'Comment on Inequality, Poverty, and Growth: Where Do WeStand?' by Albert Fishlow, in Michael Bruno and Boris Pleskovic (eds.), Annual WorldBank Conference n DevelopmentEconomics 99y, pp. 59-72.

8 Albert Fishlow, 'Brazilian Size Distribution of Income', American EconomicAssociationPapers and Proceedings, ol. 62, no. 2 (1972), pp. 391-402.9 See Gary Fields, Poverty,Inequalityand Development, Cambridge, 1980), pp. 47-50, fora discussion of this point.


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594 John Gafarspelt out explicitly its strategy to reduce poverty.10 This strategy has threeelements, namely, broad based economic growth, emphasis on humancapital formation, and the creation of social safety nets for the vulnerablegroups. The World Bank report also concluded that one of the manypolicy lessons the bank has learned in devising poverty-reductionprogrammes is that '[n]o country has achieved sustained reduction inpoverty without continuing positive economic growth'.11 In a carefuleconometric analysis of the available data for developing countries,Ravallion found a strong negative relationship between consumption perperson (used as a measure of welfare) and the headcount index ofpoverty.12 Ravallion's regression analysis suggests that there is a tendencyfor poverty to rise in zero growth economies, but, that growth alone is notsufficient to reduce poverty, and that growth has not adversely affected therelative position of the poor. Birdsall and Londono econometric resultsconfirm that the poor benefits from growth, and that human-capitalformation and asset accumulation are important factors in reducinginequality and poverty; and that the 'elasticity of income growth of thepoor with respect to overall growth is well above i'. 13Kuznets has suggested that in the early stages of development thedistribution of income would worsen, while at later stages it willimprove.1 This relationship, which has been referred to in the literatureas the 'inverted U Kuznets hypothesis', has been subjected to severalanalyses. Ahluwalia found evidence to support the Kuznets proposition.15Todaro has pointed out that the statistical evidence does not reveal anystrong or obvious relationship between GNP growth and the distributionof income.16 Fields has noted that the empirical evidence for somecountries support the Kuznets hypothesis, while for other countries theKuznets inverted U hypothesis is invalidated.17 Anand and Kanbur have

For a discussion of poverty reducing strategies see World Bank, World DevelopmentReport 1990.World Bank, PovertyReductionand the World Bank: Progres and Challenges,p. I8.12 Martin Ravallion, 'Growth and Poverty: Evidence for developing countries in i 98os',EconomicLetters, vol. 48 (1995), pp. 411-417.13 Nancy Birdsall and Richard Sabot, 'Asset Inequality: An Assessment of the WorldBank's Approach to Poverty Reduction', American Economic Review, Papers andProceedings, ol. 87, no. 2 (I997), p. 35.14 Simon Kuznets, 'Economic Growth and Income Equality', American EconomicReview,vol. 65, no. i (1955), pp. i-z8.15 See Montek Ahluwalia, 'Income Inequality: Some Dimensions of the Problem', inHollis Chenery et al., Redistributionwith Growth, pp. 3-37; and Montek Ahluwalia,'Inequality, Poverty and Development', Journal of DevelopmentEconomics,vol. 6 (1976),

PP 307-342.16 Michael Todaro, EconomicDevelopment5 h ed. (New York, 1994), p. 155.17 The reader should refer to the statistical evidence summarised in Gary Fields, Poverty,Inequality,and Development.


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Growth,inequalityandpoverty 595re-examined the findings of Ahluwalia, and concluded that by makingdifferent assumptions one can get the U relationship, the inverted U, or norelationship at all."8 These authors show that the results supportingKuznets are very sensitive to the measure of inequality, and the choice ofdata. Demery et al. concluded that recent work has found 'little or nosupport' for Kuznets hypothesis."9 In a re-examination of the crosscountry and time-series data, Bruno et al. concluded that based on the datafor the last three decades there 'seems' to be 'no credible support' for theKuznets thesis.20

The only available, reliable and consistent evidence of inequality for theEnglish speaking Caribbean countries is that reported by Henry andWatson for Trinidad and Tobago.21 Watson reported that betweenI97i-2 and I975-6 the Gini coefficient for Trinidad and Tobago fell from0.52 to 0.47. Based on the Household Budgetary Surveys of I97I-2,I975-6 and i98i-2 for Trinidad and Tobago, Henry estimated that theoverall Gini coefficientdeclinedfrom0. 5 I in I 97 I-2 to 0.46 in I97 5-6 andthen to 0.45 in I 98 I-2 as a result of economic growth. For different ethnicgroups, Henry found that the trend in inequality for Trinidad and Tobagowas mixed. The statistical evidence amassed by Morley for Latin Americademonstrates that countries that had declining per capita income generallyhad worsening inequality.2218 Sudhir Anand and S. M. Ravi Kanbur, 'The Kuznets Process and the InequalityDevelopment Relationship', Journalof DevelopmentEconomics,vol. 40 (1993), pp. 25-52.19 Lionel Demery, Binayak Sen and Tara Vishwanath, 'Poverty, Inequality and Growth',ESP Discussion Paper Series No. 70, The World Bank, June 1995.20 The econometric evidence reported by Michael Bruno, Martin Ravallion and LynSquire, 'Equity and Growth in Developing Countries: Old and New Perspectives onthe Policy Issues', Policy Research Working Paper 1563, The World Bank, January

I996 showed that growth reduces absolute poverty. These authors found no sign in thecross-country data to suggest that growth has any significant or systematic effect oninequality.

21 Ralph Henry, 'Inequality in Plural Societies: An Exploration', Social and EconomicStudies, vol. 38, no. 2 (i989), pp. 69-Iio; and P. K. Watson, 'Income InequalityComparisons in Trinidad and Tobago: Some Methodological Issues', ResearchPapersNo. 12, Central Statistical Office, Trinidad and Tobago (i983), pp. 8i-92.22 The reader should consult Samuel Morley, PovertyandInequality n Latin America: PastEvidence,Future Prospects, Overseas Development Council Essay No. 13, (Washington,D.C. I994); Samuel Morley, Poverty and Inequality in Latin America: The Impact ofAdjustment and Recoveryn the 19g0s (Baltimore, 1995); and Samuel Morley, 'StructuralAdjustment and Determinants of Poverty in Latin America' in Nora Lustig (ed),Coping with Austerity, Poverty and Inequality n Latin America (Washington, D.C. 1995),

pp. 42-70.


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596 John GafarBasic indicatorsof development

In order to place the socioeconomic development of Guyana in its properperspective, its basic socioeconomic indicators should be compared withthose for the Caribbean region. Indicators relating to infant mortality, lifeexpectancy and basic literacy have been used, in addition to per capitaincome, to illustrate the state of Guyana's development. The UNDPHuman DevelopmentReport provide statistics relating to the socioeconomicdevelopment of countries.23 Data from various issues of HumanDevelopmentReport reveal the following:(i) Life expectancy in the Caribbean increased from an average of 57years in i960 to 68 years in i992. Life expectancyin these countries isabout 90 per cent of the life expectancy for industrial countries. Lifeexpectancy in Guyana, which is the second lowest in the Caribbean,increased from 56.i years in i960 to 65.z years in i992. (Haiti has thelowest life expectancyaveragingaround 56 yearsin i992).(ii) Between i960 and i992 infant mortality ell from i00 perthousand(an average of 145 per thousand for all Latin America) to 38 per thousand(an average of 45 for all Latin America). In Guyana, infant mortality ratesfell from i00 per i,000 live birthsin i960 to 48 per i,000 in i992.(iii) Total enrollment at all levels (as a percent of age 6-23) increasedbetween i980 and i990 for the Caribbean nd Latin Americacountries.InGuyana, the enrollment ratio for all levels increased from 6i per cent ini980 to 65 per cent in i990; andin Haiti, the enrollmentratio was 30 percent in i990.

(iv) Haiti is the only country with a calorie consumption substantiallyless than the minimum daily requirements of 2,400 calories.

Per capita GDP varies widely across the Caribbean countries. Table ipresentsthe per capitaGDP covering the period i980-94.There are problems in using per capita income: first, non-traded goodsand some wage goods in poor countries sell below the official exchangerate; secondly, in many developing countries the official exchange rate isover-valued, hence, there is the problem of converting national incomestatistics at the official exchange rate; and, thirdly, there is the valuationof non-market activities, the underground economy and illegal activities.In short, therefore, intercountry comparisons of per capita incomes, usingofficial exchange rates valuations, can be misleading since they do notreflect the purchasing power of individual currencies. While per capitaGDP is a good proxy for the level of development, it does not say23 United Nations Development Programme (UNDP), Human Development Report aIl(New York, 1995) and various issues of this report. Some of the conceptual issues andstatistics utilised here rely heavily on the Human DevelopmentReports (HDR).


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Growth,inequalityand poverty 597Table i. Grossdomesticroduct er capita or selectedyearsat 1990 US$)

Average annualper capita growthrate(%)

1970 1980 I 990Country i980 i985 i988 1990 1992 1994 i980 1990 1994Barbados 6iI4 5738 6695 6657 6132 6656 1.7 i.2 -o.8Brazil z6i8 2560 2674 2539 2448 2596 6.9 -o.6 o.6Dominican Republic 908 871 946 896 928 960 6.5 -o.8 1.7Guyana 738 607 5 30 471 566 686 0.2 -3-9 9.8Haiti 5i6 364 341 314 249 208 3.0 -2.9 -9.8Jamaica 1499 1365 1476 i633 i637 i640 -2.2 1.0 0.1Suriname 95 I 892 782 788 82I 703 5 -3 -3-2 -2.8Trinidad and Tobago 6502 5I67 4362 4259 4236 4298 4.4 -4-3 -0.2Latin America 2734 25 17 256I 2441 2502 26I9 3.4 -I.2 i.8

Sources: Based on data taken from the Inter-American Development Bank's annualreport, Economic and Social Progress in Latin America. Distributed by the Johns HopkinsUniversity Press for Inter-American Development Bank (Washington, D.C.), variousissues.anything about the way people live, nor does it capture changes in thedistribution of income and welfare for the broad mass of the people.Human development is a process of enlarging people's entitlements,capabilities, opportunities, freedoms, choices and improving the qualityof life.24 This is reflected in the UNDP's Human Development Index(HDI), which combines real GDP (in purchasing power parity dollars),educational attainment and life expectancy is a better indicator de-velopment than per-capita GDP. For the larger Caribbean countries theHDI in I992 was as follows: Barbados, o.9; Trinidad and Tobago, o.87;Jamaica, 0.7z; Dominican Republic, 0.71; Guyana, o.6z and Haiti 0.36.The data in Table i indicate that there is an association between per capitaincome and the level of development, as measured by the HumanDevelopment Index.Table i indicates that most Caribbean countries experienced negativegrowth rates during the I980s. Growth is essential to reduce poverty, butgrowth should be 'broadly based' and employment generating in order toreduce poverty substantially. One of the findings by the World Bank isthat no country has been able to significantly reduce poverty without'continuing positive economic growth'.25 The data in Table i show thatBrazil, Guyana, Haiti, Suriname and Trinidad and Tobago experiencednegative annual per capita growth rates during I980-90, and for the same24 See UNDP, HumanDevelopment eportvg, pp. I I 2.25 World Bank, Poverty Reductionand the World Bank: Progress and Challenges n the I990s,

p. IO.


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598 John Gafarperiod poverty rates in these countries (see Table 3) increased. Jamaicahad a positive growth rate during i980-90 and experienced a reduction inits poverty rates. The main finding of Morley for Latin America is thatfalling per capita income is accompanied by increased inequality, whichsuggests that inequality is countercyclical.26 Fishlow in a review of theempirical evidence concluded that income inequality is smaller at higherper capita income.27 Gafar reported that there is a positive correlationbetween the growth in the real wage rate and growth in per capita incomefor Latin American and Caribbean countries.28 This lends support to theview that economic growth is poverty reducing. Morley in an analysis of58 observations of a recession (a recession is defined as at least two yearsof falling GDP) in Latin America during the i98os, noted that in 5 5 of the58 cases poverty increased; and that for the Latin American countriespoverty is highly sensitive to income changes, and that it has an incomeelasticity of around minus two.29 This therefore suggests that economicgrowth and pro-growth policies are essential to reduce poverty.

Trends n inequalityandpovertyTable 2 presents the distribution of incomes by quintiles for someCaribbean and Latin American countries. The data demonstrate inunambiguous language the unequal distribution of income in LatinAmerica and the Caribbean. Income distribution can be viewed in threeways: (i) the share of income going to the ist and znd quintiles of thepopulation; (z) the ratio of the income share going to the top 20 per centdivided by the income share going to the poorest 40 per cent; and (3) theGini Coefficient.

The distribution of income in Guyana in I993 is quite similar to thatprevailing in the Dominican Republic, Jamaica and Trinidad and Tobago.The data in Table 2 indicate that the ratio of the income share going tothe top 20 per cent income earners to the poorest 40 per cent incomeearners varies from 2.3 to 8.6, indicating the wide disparities in thedistribution of income. The estimates of the Gini coefficient also confirmthe existence of stark income inequalities in some countries. The main26 Samuel Morley, Povertyand Inequality n Latin America: The Impact of Adjustment andRecovery n the 19o05, p. 46.27 Albert Fishlow, 'Inequality, Poverty, and Growth: Where Do We Stand?' in MichaelBruno and Boris Pleskovic (eds.), Annual World Bank Conferenceon DevelopmentEconomics99j, pp. 25-39.28 John Gafar, 'Real Wages and Output: Some Evidence from Latin American andCaribbean Countries', mimeounpubl., i996.29 Samuel Morley, Povertj and Inequality n Latin America: Past Evidence,Future Prospects,

p. 27.


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6oo John Gafarproblem with the Gini coefficient is that two countries can have differentdistribution of incomes, and yet the Gini coefficient can be identical.Todaro points out that countries with highly unequal distribution ofincome has a Gini coefficient in the range of 0. 5 to 0.7, while for countrieswith a more equitable distribution of incomes, the Gini coefficient is in therange 0.20 to 0.35 .3 Income inequality is the result of many factors.Without pretending to be comprehensive, we list below some factors thathave contributed to income inequality:(i) unequal distribution of land and access to land. The i990 WorldDevelopment Report states that '[p]overty is highly correlated withlandlessness in South Asia, southern Africa, and much of LatinAmerica' 31 In Brazil Alan Riding claims that the top two per centlandowners control 6o per cent of arable land while 70 per cent of ruralpopulation are landless or near landless. In Colombia the top four per centof landowners control 68 per cent of arable land, while 66 per cent of therural population is landless or near landless. And, in Paraguay, the top oneper cent of landowners control 8o per cent of land while 42 per cent ofrural households are landless or near landless.32 Fishlow points out thatsuccessful land reforms have had a positive effect on income distribution,since land reform tended to increase the productivity of many small ruralfarmers.(ii) widespread existence of imperfect factor immobility, and imperfectinformation.

(iii) government policies, in particular the import substitution strategy,and the use of over-valued exchange rates that favoured capital intensivetechniques at the expense of labour intensive methods of production andexports.

By regressing the growth rate of real per capita income of 74developing countries over the period i960-85 on the determinants ofgrowth (such as per capita GDP, education enrollments, income equalityetc.) Birdsall and Sabot concluded that inequality and growth areinversely related.34

The estimates of poverty presented in this paper are based on severalWorld Bank studies. The usual procedure to construct estimates ofpoverty is to calculate the amount of a typical maximum - calorie basket30 Michael Todaro, Economic Development,p. I40.31 World Bank, World DevelopmentReport 1990, p. 32.32 Alan Riding, 'The Struggle for Land in Latin America', New York Times, Sundayedition, March 26, i989, Section 4, p. Ei.3 Albert Fishlow, 'Inequality, Poverty and Growth: Where Do We Stand?', p. 29.3 Nancy Birdsall and Richard Sabot, 'Inequality As a Constraint in Latin America',DevelopmentPoligc: Newsletter on Policy Research by the Inter-American DevelopmentBank, September I994, PP. 1-5.


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Growth, inequalityandpoverty 6o iof food and then define poverty as some multiple of that basket. In LatinAmerica the multiple is generally 2 for cities and I.75 for rural areas, andno adjustment for family composition, whereas for the U.S. the multipleis 3 and the line is adjusted for family composition.35 In obtaining itsestimates of poverty for Latin America, the World Bank took a differentapproach, it 'arbitrarily' chose a poverty line of US$2 per person per day,and for Europe and Central Asia the poverty line is close to US$4 perperson per day.36 This poverty line was converted into local currencyusing the Summers-Heston purchasing power parity (PPP) exchange rateto reflect differences in the cost of buying a basic basket. Table 3 presentsthe estimates of poverty for selected Latin American and Caribbeancountries (LAC). What the data in Table 3 indicate is the number ofpeople living below US$2 per day. Poverty is relative, and a poverty lineof $US2 per person per day is not the same for someone living in oil richTrinidad and Tobago as for someone living in Haiti.Table 3 reveals the following:(i) Poverty in Latin America increased from 26.5 per cent in i980 to 31per cent in i989 i.e. I 3' million people in LAC in i989 were living on lessthan US$2 per day. In Guyana, urban and rural poverty rates increasedfrom 5i.9 and 70.7 per cent in i980 to 79.7 and 98.5 per cent in i989,respectively. The poverty rate in Guyana is one of the highest in theregion.(ii) Poverty rates are higher in the rural areas. Rural life entails the lack(in many cases) of electricity, potable water, proper sanitation, educationaland health facilities, and decent housing.(iii) In absolute numbers, more of the poor in i989 live in the urbanareas. As the World Bank puts it:Poverty in the region is predominantlyurban. The majorityof the increaseinpovertyin the regionover the last I0 to 15yearshas been in the cities.The urbanpoor includea disproportionatenumberof single mothers, parentswith little orno education,and young people for whom there are insufficient obs.37

(iv) The poor (landless and unemployed) and the young are fleeing thecountryside for the cities. Industrialisation, which is urban-biased, ispartly responsible for this phenomenon.(v) Poverty in LAC is not homogeneous; it differs widely acrosscountries. Poverty rates are higher for countries (e.g. Guyana and Haiti)with low per capita incomes. Increases in per capita incomes; and "broad-based", and labour absorbing, growth are necessary to reduce poverty.3 See Samuel Morley, Povertj and Inequality in Latin America: Past Evidence, FutureProspects, p. 8o, footnote IO.36 World Bank, Povertj Reductionand the World Bank: Progressand Challenges n the is9os,p. 5. 37 Ibid, p. 6.


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Growth,inequalityand poverty 603Using a $USi per day per person as the poverty line, the World-Bank

estimated that in 1993, I.3 billion people in the world were below thepoverty line. In the case of LAC, the number of people living below US$ia day increased rom 91.2 million in i987 to i09.6 million in 1993 i.e. theproportion of the population in LAC living below US$i a day increasedfrom zz per cent in 1987 to 23.5 per cent in 1993.38

Poverty n Guyana(i) The extent of povertyThe economy of Guyana is mainly concerned with producing bauxite,sugar and rice, with most agricultural production concentrated on thecoastal belt where most of the population resides. In i966 Guyana gainedher political independence. There are three phases of economic policy.Prior to 1970 the government favoured a private sector economy with thestate intervening in those areas where the market was inadequate to allowfor economic efficiency i.e. the adoption of the import substitution model.Between I970-88 the government followed a set of policies labelled as'cooperative socialism', to wit, state control of the economy. Interventionby the state led to the nationalization of the sugar and bauxite industries,commercial banks, major industrial and service enterprises, and consumerand marketing agencies. Through state ownership, or indirectly throughprice and exchange rate controls, the government controlled over 8o and85 per cent of foreign trade and total investment respectively.39 By i988,with GDP just 74 per cent of 1976 level and a collapsing economy, thegovernment implemented an Economic Recovery Programme (ERP)under the IMF-World Bank auspices. This programme emphasisedeconomic liberalisation, removal of trade restrictions and exchange andprice controls, reductions in fiscal deficits, limits on monetary growth, andprivatization of public sector enterprises.38 Ibid, p. 4, Table i.z.39 See World Bank, Guyana: Strategiesfor ReducingPoverty Report No. 1286A'-GUA, p. I.This section benefited from World Bank, Guyana: From EconomicRecovery o SustainedGrowth, (Washington, D.C., I993) and World Bank, Guyana: Public Section Review(Washington, D.C., 1993) reports; Clive Thomas, 'Lessons from Experience:

Structural Adjustment and Poverty in Guyana', and John Gafar, 'Guyana: FromCooperative Socialism to Economic Liberalization and Growth: 1976-i994', TheJournal of DevelopingAreas, vol. 3 I, no. I (i996) pp. 41-74. Much of this section of thispaper relies on the World Bank, Guyana: Strategiesfor ReducingPoverty: Report No.1286i-GUA (here-in-after referred to as World Bank, Report No. iz86i); and we takeno credit and lay no claim to the originality regarding the findings of poverty inGuyana. I believe, rightly or wrongly, that rather than letting the World Bank ReportNo. 1286i-GUA remain in archives gathering dust, a summary of its findings isappropriate to publish for the benefit of researchers and policy debate.


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604 John Gafar30002750-2500-2250 -

1250 -lll l1965 1970 1975 1980 1985 1990 1995YearFig. i. Gross Domestic Product (GDP) at 198y Prices in SGM: I96I-9y. Sources: Author'scalculations based on data contained in International Monetary Fund. InternationalFinancialStatistics (Washington, DC: International Monetary Fund), various issues; and Bank ofGuyana. Annual Report (Georgetown: Bank of Guyana), various issues.

375035003250S3000-

tq 2750-250022502000. I I ' I ' ' I ' " l " ' ' l '

1965 1970 1975 1980 1985 1990 1995YearFig. 2. Real Per Capita GDP at iD9S Prices in $G: I96I-I9~9. Sources:See fig. i.

Figure i illustrates the trend in real GDP during 196i-95; and Figure2 depicts the trend in real per capita GDP during i96i-65. The trend inreal per capita GDP and real GDP tells the evolution and performance ofthe economy, and what has happened to living standards. Growth in realGDP averaged 2.3 per cent per annum during 1961-9; minus o.6 per centduring 1970-80, and 3.9 per cent during 1989-95. The sharp decline inGDP in 1963 was the result of political and industrial unrests. Growth in


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Growth, inequalityand poverty 60 5the mid I970S was due largely to the boom in sugar, rice, and bauxiteprices. The economic declinein the late 1970S and 198os is due largely topoor domestic policies, and the depressed state of commodity prices in theworld market in the 198os, and a deterioration in the commodity terms oftrade. The World Bank estimated that the 29 per cent decline in per capitaGDP between i980-90 resulted in an increase in the rate of poverty fromz6 per cent in 1980 to 43 per cent in 1990.4? In examining the evidencebetween economic growth and poverty reduction in the Caribbean, theWorld Bank concluded:Countries n the Caribbean hat havesustainedpositive growth ratesand investedheavily in human development such as Antigua and Barbuda,the Bahamas,Barbados,and St. Kitts and Nevis have relatively ow levels of poverty. Povertyhas increased in countries that have had low or negative growth rates forprotractedperiods such as Guyana, Haiti, Jamaica,Surinameand Trinidad andTobago."

The increased poverty and worsening living standards in Guyana arereflective in other indicators, for example, between 1978 and 1988 infantmortality rose by I7 per cent, and the number of gastroenteritis casesdoubled between 1984 and 1989. Most poverty in Guyana can beexplained by inadequate access to incomes, job opportunities, education,health care, and to declining real wages. The evidence on wages is, at best,fragmentary. The minimum wage which was US$2.89 in 1980 fell toUS$i.oo in 1989, and recent data suggest that it has increased fromUS$i.i5 in 1991 to US$2.28 in 1995 as a result of impressive rates ofeconomic growth.42 McFeeters noted that in 1990 an estimated 40 per cent40 World Bank, Report No. 1286,-GUA, p. 3.41 World Bank, CaribbeanCountries:Povertj Reduction ndHuman ResourceDevelopmentn theCaribbean.Report No. 11342-LAC, p. ix. (This will here-in-after be referred to as WorldBank, Report No. Iy342-LAC).42 For a discussion of this, see John Gafar, 'Guyana: From Cooperative Socialism toEconomic Liberalization and Growth: 1976-I994', p. 46. Public sector wages havebeen depressed (in some cases about one-third or one-half of that prevailing in theprivate sector). Most Afro-Guyanese are employed in the public sector, and depressedpublic sector wages have placed more Afro-Guyanese in poverty, and led to rentseeking activities by public employees, and the pervasiveness of corruption in the

public sector. The worsening of the economic condition of Afro-Guyanese has led topolitical instability in the country, and this partly explains why the main politicalopposition party, the Peoples National Congress (PNC), an Afro-Guyanese dominatedpolitical party, rejected the results of an apparently free and fair general election onDecember I 5, I997. The ruling party, the Peoples Progressive Party (PPP) isIndo-Guyanese dominated, and, with racial voting firmly entrenched, the PNC is likelyto come second in any election, however free. The security forces, which is more than70 per cent Afro-Guyanese may well determine the fate of economic reforms anddemocracy.


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Growth, inequalityand poverty 607per capita GNP are due to under-reported incomes, in particular,remittances from Guyanese living primarily in the U.S., breakdown instatistical reporting and administrative capacity, illegal activities such assmuggling gold and the sale of illegal drugs, and activities in the informalsector and subsistence farming. The benchmark used by the World Bankto define the absolute poverty line is households with a per capitaexpenditure of G$47,soo (US$38o), which corresponds closely to theUS$370 poverty line used in their I990 World Development Report.Households that had a per capita expenditure of G$35,'50 (US$28i) orbelow were considered to be in extreme poverty. Three estimates ofpoverty were obtained, namely, the headcount index, the poverty gap, andthe Foster-Greer-Thorbecke P2(FGTP2). The headcount index is theproportion of people that is living below the poverty line (in this case onUS$ I a day per person or below). However, the headcount index does notcapture the severity of poverty i.e. it ignores the extent to which the poorfalls below the poverty line. In short, the headcount index is insensitiveto the magnitude of the deprivation. In discussing the headcount ratio,Dreze and Sen wrote as follows:It is based on the notion that poverty as insufficient ncome or expenditure,andthis can be quite inadequatesince deprivationscan take many different orms -various inadequaciesof basic capabilitiesthat relate to many differentcausalfactors (such as publichealthservices and social insurance ystems) n addition toprivate incomes.46The poverty gap is a measure of the depth of poverty, it measures thetransfer that would bring the income of every person up to the povertyline. Put differently, the poverty gap defines the amount of resourcesrequired to bring those below the poverty line to a normative livingstandard.The FGTP2 is a measure of the 'severity of poverty in a population byweighing each poor individual according to his degree of deprivationwith the highest weight on the poorest of the poor'.47The principal empirical finding by the World Bank is that 43.2 per centof the population (i.e. 315 6oo people) of Guyana were living below thepoverty line (of approximately US$i per day per person) in 1993, and that27.7 per cent of the population can be classified as extremely poor. TheWorld Bank data indicate that 78.7 and 93.6 per cent of urban and rural46 Jean Dreze and Amartya Sen, India EconomicDevelopmentand Social Opportunitj (Delhi,

I995), p. 69.47 See World Bank, Report No. 1286i-GUA, p. i i and K. Sundaram and S. D. Tendulkar,'Poverty in Asia and the Pacific: Conceptual Issues and National Approaches toMeasurement', in Economic and Social Commission for Asia and the Pacific, EconomicBulletin for Asia and the Pacific, (New York, vol. XLIV, no. 2, December I993),pp. 42-5 8.


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6o8 John GafarTable 4. Estimates of poverty indicesby geographic egion n Guyana

Mean annualPoverty indices per capitaconsumptionPer cent of Head Poverty in G$Region population count gap FGTP2 (US$i =

G$iz5)Poverty indices based onG$47,0oo poverty line

Urban Georgetown 2I.0 28.9 8.7 3.6 I36,687UrbanOther I I.2 23.I 6.3 2.5 Io6,965Rural Coastal 56.o 45-I I4.7 6.3 75,923Rural Interior i i.8 78.6 46. I 3I.0 39,33 IAll Guyana Ioo.o 43.2 i6.2 8.2 9i,602

Extreme poverty indices based onG$35,I50 poverty line

Urban Georgetown 2I.0 I5.7 3.8 I 4Other urban I I.2 I2.2 2.5 0.9Rural coastal 56.o 27.9 6.9 2.5Rural interior ii.8 70.8 36.5 22.0All Guyana I00.0 27.7 8.9 8.9

Sources:(a) Extracted from World Bank, Guyana:Strategiesfor ReducingPovertyReport No. 12,f6I-GUA (cited as World Bank, Report No. 12861-GUA), p. I5, Table I.3.(b) Extracted from World Bank, Report No. 12861-GUA, Statistical Appendix Table i,p. I I2.

populations in Guyana were living on US$2 (or less) per person per day.Table 4 presents the poverty estimates.The principal conclusion to be drawn from examining Table 4 is thatpoverty in Guyana is predominantly rural. Over 70 per cent of thepopulation in the rural interior is extremely poor. The geographicdistribution of the poor is as follows: - rural coastal 58.5 %; rural interior2 I. 5%; Georgetown 14.0% 0; and other urban6.o%. Most of ruralcoastalpoor are involved in agriculture, in particular rice production working onsmall plots of land roughly 2.5 acres. According to the World Bank nearly38 per cent of the total population in the Caribbean (i.e. approximately 7million) can be classified as poor.48 If Haiti excluded, then around 25 percent of the Caribbeanpopulation are poor. Leaving Haiti aside, the WorldBank statistics indicate that Guyana has the highest incidence of povertyin the Caribbean. The statistics further indicate that most of the poor inthe Caribbean live in the rural areas. Most of the rural poor in the48 World Bank, Report No. Iy}42-LAC, p. 3.


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Growth,inequalityand poverty 609Table 5. Characteristics f households y quintiles n Guyana

QuintilesAll IHouseholds Guyana (Poorest) II III IV V

Area:UrbanGeorgetown 25.I i i.6 22.2 22.4 23.6 38.3Other i i.8 4.3 7.2 i2.8 I 5.8 I5.2RuralCoastal 54.4 52.4 64.6 59.3 56.7 42.9

Interior 8.8 3i.8 6.o 5-5 3.9 3.6Sex of head of householdMale 7I.8 69.9 7I.8 73.4 75.2 68.9Female z8.z 28.2 z6.z 24.8 3 I . I z8.zAge of head of household 44-2 45.7 48.3 45.4 44.I 42.8Household size 4.4 5.6 5-I 4.3 4.I 3.4Number of children i.8 z.6 2. I i.8 I .7 I .4(less than age I7)Number of earners I15 I.9 i.6 I.4 I.4 I.3

Source: Taken from World Bank, Report No. 12861-GUA; Table i.2, p. i2.

Caribbean are engaged in agriculture working as wage labour or selfemployed.(ii) Characteristics f thepoor in GuyanaTable 5 presents the findings on where the poor live, the head of thehousehold, the age of the head of the household, the size of the householdand the number of the children. According to the World Bank estimates23 per cent of population are below i0 years old, 24 per cent betweeni0-i9 years, 33 per cent between 20-39 years, 14 per cent between 40-59years, and 6 per cent above 6o years. In the poorest quintile, the datareveal 24.3 per cent of the poor are below i0 years, 26.i per cent of thepoor are between I 0-I 9 years i.e. half of the poor are below 20 years. Thestatistics summarised in Table 5 indicate the following:(i) Approximately 84 per cent of the poorest live in the rural areas.

(ii) Nearly 72 per cent of all households for all income groups areheaded by males. The proportion of households headed by females for thepoorest is about the same for the non-poor, suggesting that female-headship (of households) is not a proxy for poverty.(iii) The household size of the poor is approximately 5o per cent largerthan the non-poor; and the number of children in the poorest householdis more than 50 per cent larger than that of the non-poor.


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6 i o John Gafar

Table 6. Employmentby sector and type, wholepopulation age sy and over inGuyana(Percentage)

QuintilesAll IEmployment Guyana (Poorest) II III IV V

(A) By SectorAgriculture 3 3.8 58.6 3 6.3 3I.I 24.2 I9.4Public Service I5.I 9.7 I4.9 i6.9 I 5.7 i8.4Commerce I4.7 8.z I2.0I I4.8 i6.3 2I.9Manufacturing I2.2 7.4 I2.2 I 3.8 I 5.6 12.IServices 8.2 7.6 9.2 9. I 7. I 8.oTransport 5.6 2.4 6.2 5.5 5.9 7.7Mining 4.9 2.6 3.2 5-3 5.9 7.2Construction 4.2 3.2 5.6 3.0 7.3 2.4Finance I.3 0.4 o.6 o.6 2.0 3.0

(B) By TypeSelf employed 4I.9 56.9 33-5 34.7 39.5 4I.9Regular salaried/wage 5I.2 32.4 58.4 59.0 54-3 5I.2Casual labour 6.9 I0.7 8.o 6.3 6.i 6.9Source: Taken from World Bank, Report No. 12861-GUA, Statistical Appendix Tables

8 and 9, p. I I 5.

(iv) The number of wage earners in the poorest household is greaterthan that of the non-poor, but, the poor have a larger family to support.The decision of the poorest to have, on average, large families may notbe that irrational, since there is no comprehensive welfare programme orsocial insurance to take care of the old, ill, and destitute. For the poorest,surviving children help to support and provide for their parents in theirold age, if not sooner.

The labour force participation rate in Guyana is about 20 per cent lowerthan in Jamaica and Trinidad and Tobago.49 Some 50.8 per cent of thepopulation age I 5 and over are working, I I per cent are unemployed, andthe 38 per cent are engaged in domestic duties, in school or retired. In thecase of males and females 72. I and 30.5 per cent respectively are working;and 8.7 and 13.5 per cent of the males and females are unemployed,respectively. Of the poorest 52.9 per cent are working, 12.7 per centunemployed, and 34.4 per cent inactive. Table 6 presents the percentagedistribution of employment by sector and type for the various quintiles.The statistics in Table 6 indicate that agriculture accounts for a third oftotal employment; 58.6 per cent of the poorest are employed in" World Bank, Report No. 12861-GUA, p. 19.


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Growth, inequalityand poverty 6I Iagriculture; and most of the poor are self-employed in agriculture. A thirdof the public (civil) sector employees fall below the poverty line, becauseof low salaries at the bottom of public service pay scale. In fact, manypublic sector employees are known to supplement their incomes byengaging in rent seeking activities and petty commodity trades. Thestatistics in Table 6 show that approximately 42 per cent are employed inthe informal (self employed) sector; 5I per cent are employed as regularsalaried or wage labour; and 7 per cent are casual workers. Nearly 57 percent of the poorest are employed in the informal sector; a third work asregular salaried or wage labour; and I I per cent as casual labour. In theCaribbean, most of the poor in the rural areas are engaged in agriculturalactivities, while the poor in the urban area seek employment in theinformal sector, mainly as casual wage labour. The size of the informalsector in the Caribbean ranges from a low of 8 per cent in Antigua to 36per cent in Jamaica; and the size of the informal sector in Guyana isaround 23 per cent of the labour force.50(iii) Ethnicii) and povertyin GuyanaTable 7 presents the percentage distribution of the population living inhouseholds headed by different ethnic groups, and the poverty estimatesby ethnicity.Among the poor, poverty is the highest among the Amerindians(indigenous peoples) who live primarily in the rural-interior. TheAmerindians are not fully integrated in the society. The I990 WorldDevelopmentReportpoints out that in many countries, poverty is correlatedwith ethnicity, and the indigenous peoples in Australia (i.e. aborigines),Bolivia, Ecuador, Mexico and Peru are very poor.5'

The statistics summarised in Table 7 indicate that 87.5 per cent of theAmerindian population are below the poverty line; in the case of theIndo-Guyanese the incidence of poverty is 3 3.7 per cent; and for the Afro-Guyanese 43 per cent are below the poverty line. The Amerindians live inthe rural-interior where the quality of education is extremely poor, andaccess to basic health facilities and education is very difficult. Malnutritionis prevalent in the interior, and paid employment opportunities for theAmerindians are limited.

For the purposes of comparison with other Caribbean countries, theethnic composition of Trinidad and Tobago is very similar to that ofGuyana. The Afro-Trinidadian and Indo-Trinidadian population eachaccounts for approximately 40 per cent of the total population, whilethose of mixed descent account for i8 per cent. The Indo-Trinidadians50 See World Bank, Report No. Iy}42-LAC, p. 2i and p. I72.5' This is discussed in World Bank, World DevelopmentReport iggo, p. 37.


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6I z John GafarTable 7. Distributionof the Populationand PovertyMeasuresby Ethnic Groups

in Guyana(Per cent)Poverty measures

Quintiles Head PovertyEthnicity Total I II III IV V count gap FGTP2Indo-Guyanese 45-9 30.0 45.2 52-7 54.5 47.3 33.7 IO.3 4 3Afro-Guyanese 36.7 28.3 40.2 35.4 35.4 40.3 43 0 I 3.9 6.oAmerindian 10.3 37.4 6.6 3.5 2.I i.9 87.5 53 9 3.6Mixed 6.z 4.1 7.4 8.o 3.2 8.3 44.7 1 2.9 5 -3Other 0.9 0.2 o.6 0.9 o.8 2.2 N.A. N.A. N.A.

Notes: N.A. = not available.Source: Extracted from World Bank, Report No. 12861-GUA, Table 1.5 p. i8 andStatisticalAppendix,Table 5, p. 144.

live mainly in the rural areas and are largely employed in agriculture andbusiness; while the Afro-Trinidadians live mainly in the urban areas andare primarily dependent on public sector employment. This situation issimilar to that prevailing in Guyana. The World Bank reported that theheadcount index of poverty for Afro-Trinidadian is 24.8 per cent,Indo-Trinidadians 17.3 per cent, and for households headed by personsof mixed race 27.4 per cent. As a share of the total population who arepoor, households headed by Afro-Trinidadians account for 46.7 per cent,Indo-Trinidadians 35.7, and mixed race i7.7 per cent.52 This pattern ofethnic poverty in Trinidad and Tobago is very similar to that prevailingin Guyana, as the data in Table 7 suggest.(iv) Educationand poverty in GuyanaTable 8 presents the level of educational attainment by different incomegroups; and by geographic areas.

The data in Table 8 show that i6.2 per cent of the head of householdsdid not complete a basic primary school education; 58.3 per cent of thehouseholds had a primary school education; 22.2 per cent completedsecondary school education; and only 3.2 per cent of the households hada post secondary education. The poor (Quintiles I and II) have a lowereducational level than the non-poor. The statistics indicate that betweenIo to I 5 per cent of the poor have completed a secondary education, andless than I per cent of the poor have completed a post-secondaryeducation. The policy under cooperative socialism to provide freeuniversity education was a subsidy to the non-poor. As an anti-povertyprogramme, emphasis should be placed on both 'below primary' and52 World Bank, Trinidad and Tobago: Poverty and Unemploymentn an Oil Based Economy.ReportNo. i4_82-TR, (Washington,D.C., October 27, I995), p. I27.


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Growth,inequalityandpoverty 613

v r- -oo 0. 0

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qQ 4 4

0~~~~~cd- 44~, -o~ F F 4

b N

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?4500

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k ~~~~~0 4 6 60 0o ?o

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25/28

614 John Gafar'primary' levels of education. The statistics clearly demonstrate that thereis no educational gender gap. In fact, female headed households have ahigher educational level than male-headed households.

There is considerable evidence in the literature to indicate that there isa positive correlation between the level of education and life-timeearnings. In Guyana, especially in the public sector, the going wage rateand pay scales are linked to the level of education. The diploma becomesthe requirement for employment. The quality of primary education isimportant for economic growth. But while this is so, educationalresources are directed toward higher education. In 1993 actual ex-penditures were only US$2.6 per primary school student, US$54 persecondary student, US$i46 for non-university tertiary student, andUS$858 per university level student; and allocations to primary schoolhave 'continued to fall' while funds allocated to vocational, technicalschools and institutions of higher learning have increased.53 For instancebetween I ggo-2, the World Bank documented that resources allocated forinvestment in tertiary education facilities and centres of secondaryexcellence (e.g. President's College) were approximately four times asmuch as allocated for primary education.54 The government allocatedG$62.z5 million to construct President's College which benefited 300students, while it allocated G$5 5. million to repair and build nursery,primary and secondary schools that serve more than 175,000 students.International donors (the IADB and the World Bank) tend to fundtertiaryand secondary education more generously than primary education.This needs to be changed and emphasis should be on primary education.The data indicate that it is the non-poor who benefit the most from post-secondary education.

The statistics indicate that over 20 per cent of rural households have notcompleted a primary education, and less than I5 per cent have completeda secondary and post-secondary education. Poverty is pervasive in therural areas. Most of the secondary, vocational and technical schools arelocated in Georgetown, the capital, and in other urban areas. It is the lackof opportunities for educational advancement in the rural areas, and lackof formal sector type of employment opportunities in the rural areas, thatmay partly explain the low educational attainment (and poverty) ofhouseholds in the rural areas.5 Graduates from technical schools and universities (not primary school) are the first topack their briefcases and migrate. Allocations of resources to higher learning is asubsidy to the brain drain. According to World Bank Report No. Iy}42-LAC, p. 24most of the people who migrated from the Caribbean were skilled people. The statisticsindicate that about half of the skilled people who graduated from the DominicanRepublic, Guyana, and Jamaica emigrated between i980-i986.5 World Bank, Report No. 12?6I-GUA, P. 73.


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Growth, inequalityand poverty 61 5(v) Health andpovertyin GuyanaThe main causes of deaths among infants and young children arenutritional deficiencies and intestinal infections. Intestinal diseases reflectpoor water and sanitation conditions. The number of reported typhoidfever cases (due to poor environmental health) increased from 5 in i983to I54 in i988; gastroenteritis ases from 2,I42 in i983 to 4,396; malariacases exploded from 3,600 in i984 to 42.204 in i99 i. The AIDS situationin Guyana is getting worse as the number of reported AIDS casesincreased rom io in I987 to 390 in i992, and I3 per cent of applicants orUS visas were tested as HIV positive. Nutritional deficiencies have beenresponsible for deaths and anemia. In i990, over 76 per cent of pregnantwomen attending health clinics (in the rural areas health clinics are scarce)suffered from anemia, and about 6i per cent of all school children in 1986suffered from anemia. In i988 over 30 per cent of the children attendingclinics suffered from anemia; and the number of malnutrition cases at theGeorgetown Hospital pediatricclinic increased rom 93I in i989 to 3,506in i990. The Living Standard Measurement Study conducted by theWorld Bank for 199i and i992 found that 3 per cent of childrenunder5 years were severely malnourished, and 23.6 per cent moderatelymalnourished. The incidence of low birth weights increased from I7 percent in i987 to 18.3 per cent in i99i, and this rateis comparable o thatin Haiti and twice the rate found in Jamaica (8 per cent). The World Bankfound that 20 per cent of the children under 5 years whose mothers hadan educational level 'below primary' school experienced malnutrition,while for mothers with 'post-secondary' education the malnutrition ratefor children under 5 years was less than 8 per cent.5" This clearly suggeststhe link between education, health and poverty.Table 9 summarises the information relating to access to some form ofhealth by the different income groups. The data in Table 9 show that theaverage number of days someone was inactive due to illness was 5.2 days,for the poor it was 6 days (Quintiles I and II) and for the non-poor 4.Idays. Forty-three per cent of the population have some form of preventivecare; in the case of the poorest only 34 per cent have access to some formof preventive care. The World Bank data indicate that approximately 40per cent of the Amerindian births were attended by an unqualifiedassistant, while in the case of Afro-Guyanese and Indo-Guyanese (thetwo major ethnic groups with lower poverty rates) less than 5 per cent ofthe births were supervised by an unqualified assistant. The data also" See World Bank, Guyana: From Economic Recovery o SustainedGrowth, pp. 76-79 andWorld Bank, Report No. 12g61-GUA, pp. 52-64.56 World Bank, Report No. 12g6z-GUA, p. 6i.


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6I 6 John GafarTable 9. Access to health servicesby income roup in Guyana

QuintilesAll ICharacteristic Guyana (Poorest) II III IV V

i. Percent reporting illness 22 I9 i8 25 25 24or injury

2. Mean number of days 5.2 6.5 5.5 5.3 4.4 4.Iinactive due to illness3. Of those ill, per cent 55 63 45 58 54 53seeking care4. Per cent of totalpopulation seeking

prevention careTotal 43 34 40 48 49 45(a) Immunisation Io 8 9 8 10 12(b) Medical check-up I7 17 I4 i6 i8 i9(c) Pre/post natal care 3 3 3 3 3 3(d) Other I4 7 I3 I9 I7 12(e) None 57 66 66 52 5 I 5 55. Per cent not seeking care II 24 I9 10 7 3for illness/injuries due toexpense or distance

factors6. Contraceptive use 29 12 27 34 33 34Source: Taken from World Bank, Report No. I2S6I-GUA, Table 4.2, p. 55.

indicate that i i per cent of households do not seek care for illness/injuriesdue to expense or distance factors, in the case of the very poor 24 per centdo not seek care for illness compared to only 3 per cent for the non-poor.Contraceptive use is approximately 29 per cent for the total population,only i2 per cent for the poorest - compared to 34 per cent for the non-poor.

ConclusionsThe main conclusions of this paper are as follows. There has been anincrease in poverty rates in LAC during the i 98os, however, there has alsobeen an increase in life expectancy and school enrollment, and a reductionin mortality rates. The empirical evidence suggests that economic growthand increases in per capita GDP are necessary to reduce inequality andpoverty. But growth per se will not do the trick, it is the 'character' ofgrowth i.e. labour intensive growth is what matters.In the context of Guyana, the evidence is that as per capita GDPdeclinedby 29 per cent during i980-90, poverty increasedfrom 26 percent in i980 to 43 in i990. Most of the poor in Guyanaare concentratedin the rural areas, and they are engaged in agriculture. Reducing poverty


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Growth,inequalityandpoverty 617in Guyana requires a macroeconomic framework that emphasisessustainable and broadly based growth; as well as policies to improve theinfrastructure, education and health. The promotion of rural andagricultural development has an important role to play. The provision ofadequate incentives for farmers (i.e. the liberalization of agriculturalprices), improvements in the drainage and irrigation infrastructure; therehabilitation of rural roads; the maintenance of a competitive exchangerate (which is an export promoting and labour using policy), andimproving farmer's access to credit are some of the policies that can helpto promote growth and lead to a reduction in poverty. The poor needmore education, training and improvements in health to enhance the valueof their labour and increase their opportunities for remunerativeemployment. Public funds in education should be allocated in favour ofpromoting quality primary and secondary education in Guyana, as thepoor stand from benefiting more from primary and secondary education,since the social returns of education from primary and secondary levels arehigher than that of university and tertiary levels. Growth and povertyreduction will have to come from accelerated growth and employment inthe private sector. But to achieve this, the Government of Guyana willhave to encourage private, domestic and foreign investments; keepbudget deficits manageable; streamline the bureaucracy, eliminatecorruption and continue the privatization programme; keep inflation lowand the real exchange rate competitive; improving the infrastructure; relyon market 'friendly" policies (i.e. 'getting prices right') and an outwardlooking strategy; and make a commitment to improving the quality ofeducation and the provision of health services for the poor.Finally, while emphasis should be on promoting economic growth andeconomic efficiency, and on providing quality education and maintenanceof good health, it is imperative for the Government of Guyana to designand provide safety nets for the sick, the old, the unfortunate, the disabled,and the poorest regions, and involving the poor (through employment) inthe process of economic development.

Documents

Growth of Inequality in Guyana