Decentralisation, Ethnic Fractionalisation, and the Resource Curse: The Case of Guyana

ABSTRACT

During the period May 2015 to December 2019, sixteen discoveries (eight billion barrels of oil) of commercially recoverable oil deposits were made in Guyana. Guyana's GDP grew by 44% during 2020-the first full year of oil production and the novel coronavirus pandemic. However, the big question is, how can Guyana mitigate the resource curse? Surely, mitigating the harmful effects of the resource curse will require efforts on multiple fronts. This article proposes greater decentralisation as one solution for mitigating the likely adverse economic effects that will arise once oil revenues begin to flow. Greater decentralisation, especially fiscal decentralisation, is recommended because it could help to mitigate the perennial issue of ethnic fractionaisation. Oil revenues will surely add more fuel to the fire of ethnic fractionalisation, and so any effective measure for dealing with ethnic fractionaisation provides a potent channel for mitigating the so-called resource curse.