Guyana has become the fastest-growing economy in the world.
For a small country of just 800,000 people, this is nothing short of remarkable.
The question is, will this growth lead to a prosperous and powerful nation or be another victim of the resource curse?
The Boom Everyone Sees
Guyana’s economy grew by over 40% last year, outpacing every other nation in the world.
The engine of this surge is oil. Massive offshore discoveries have transformed Guyana from a quiet, largely agricultural state into a rising energy power almost overnight. In 2024 alone, the oil sector expanded by nearly 58%, while other parts of the economy, construction, services, and agriculture, grew by a healthy 13%.
Foreign investors are pouring in. New roads, ports, and high-rises are reshaping the skyline of Georgetown, the capital. For many, it feels like a country on the verge of a new era.
But history tells us sudden wealth often comes with hidden dangers. Economists call it the resource curse: when resource wealth fuels corruption, inequality, and political instability instead of sustainable development. Think Venezuela’s oil collapse or Nigeria’s struggles with corruption and conflict.
Guyana is determined to avoid that fate, but determination alone won’t be enough.
A Democracy Under Pressure
Politically, Guyana is a parliamentary democracy, and for now, it’s holding strong. Earlier this month, President Irfaan Ali and the People’s Progressive Party (PPP) were re-elected in a vote widely regarded as free and fair by international observers.
This is no small achievement. Guyana has a history of electoral tensions, often shaped by deep ethnic divisions between its two largest groups: Indo-Guyanese and Afro-Guyanese communities. These divisions historically determined party loyalty, making politics less about ideas and more about identity.
While these tensions haven’t disappeared, the most recent election showed signs of progress. Opposition parties competed vigorously, and emerging groups like We Invest in Nationhood (WIN) have begun to challenge the old binary system.
But the test is just beginning. As oil revenues surge, so will the stakes of political power. History shows that when billions of dollars are suddenly at play, even healthy democracies can fail.
Guardrails for the Future
To protect itself from the pitfalls of oil wealth, Guyana has established two key mechanisms: the Natural Resource Fund and the Local Content Act.
The Natural Resource Fund (NRF)
The NRF is Guyana’s version of a sovereign wealth fund, modeled after successful examples like Norway’s oil fund. Its purpose is simple but vital:
Save a portion of oil revenues for future generations.
Stabilize the economy by preventing wild spending swings.
Provide transparent oversight of how funds are used.
Money from the NRF can only be withdrawn under strict rules, ideally for long-term investments like infrastructure, education, and public health. Without this kind of fund, sudden wealth can overheat the economy, drive up prices, and collapse when oil prices inevitably fall.
The challenge? Oversight is still fragile. Critics warn of politicization and short-term spending pressures, especially as elections bring demands for quick results.
The Local Content Act
The Local Content Act, passed in 2021, tackles a different issue: who benefits directly from the oil boom.
It requires foreign oil companies to hire Guyanese workers and use local businesses for services like logistics, shipping, and engineering.
Forty “priority sectors” are defined, ensuring Guyanese participation in key parts of the supply chain.
This is an attempt to prevent all the profits from going to foreign corporations like ExxonMobil and its partners.
But enforcement is tricky. Some sectors lack enough trained workers to meet the quotas, and monitoring compliance remains a challenge. If implementation falters, the law risks becoming symbolic rather than transformative.
Inclusive vs. Extractive: A Cultural Lens
From a cultural perspective, Guyana’s future hinges on whether its institutions remain inclusive or slide toward extraction.
Inclusive institutions are collective and emphasize cooperation, quality of life, and relationships. They invest in education, create opportunities across social groups, and ensure that rules apply equally to all.
Extractive institutions are individualistic and motivated toward achievement and success; they concentrate wealth and decision-making in the hands of a few elites using resource wealth to entrench their power.
Right now, Guyana is in between. Its democracy and legal frameworks show inclusive aspirations: free elections, transparent laws, and civic participation. But the risks are clear: ethnic divisions could fracture national unity. Oil revenues could be captured by a small elite or foreign corporations. And the speed of growth itself could overwhelm Guyana’s young institutions before they fully mature.
Why It Matters: Guyana’s Crossroads
Guyana’s story isn’t just about one small country’s oil boom; it’s a test case for the entire world.
Can a rapidly growing nation harness sudden wealth without losing its democratic soul? Can it build a model for inclusive, sustainable development, avoiding the mistakes of Venezuela, Nigeria, and countless others before it?
Guyana now stands at a historic crossroads. One path leads to shared prosperity, strong institutions, and a democratic model for the developing world. The other leads to corruption, instability, and another tragic chapter in the long history of the resource curse.
The choice isn’t just in the hands of politicians. It will depend on transparency, civic engagement, and the ability of ordinary Guyanese citizens to hold leaders accountable.
The world is watching. And Guyana’s next steps will determine whether this era of rapid growth becomes a global success story—or another failure.
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Super interesting. How does this compare to Dubai? have no clue, except it seems like a similar situation on the surface - except for the form of government, which is obviously a big deal. Also Dubai seems to support its citizens, but exploit workers brought in for the menial jobs, though that may just be a blurry lens on my part.