Colonial Origins, Institutions, and Socioeconomic Progress in the Caribbean: Guyana and Barbados

The countries that were once British colonies in the Caribbean share a common language and history of slavery, dominance of a plantation-based sugar industry, and broadly similar government and administrative traditions. Following independence in the late-1960s economic strategies and performance across the region diverged, but by the end of the 1980s, economic policies converged with the orthodoxy supported by the international financial institutions. Despite this, socio-economic indicators in Guyana and Barbados continued to diverge in the subsequent decades. This chapter explores some of the origins of that divergence, and particularly, those institutional factors that derive from the countries’ history, geography, and political developments. In Guyana, while the focus by the government on growth and fiscal policy has been important, sustained social progress has been hampered by weak institutions, particularly related to political stability. The country’s emergence since 2020 as a major oil producer has evidenced other weaknesses. These include the poor governance of initial contract negotiations with the oil companies and limited capacity for monitoring the companies’ finances. These weaknesses have diminished significantly the benefits accruing to the country from oil. Unless Guyana addresses its fundamental institutional shortcomings oil production will reflect in unprecedented rates of growth of GDP and average incomes, but will not deliver political stability nor a sustained improvement in citizens’ well-being.