2021

MNG 3202 International Business

Assignment

Jenneil Carmichael

1028150

5/23/2021
Abstract

All Through the course of contemporary history, theories have changed in relation to trade.
International trade, particularly, has been the topic of much controversy related to the possible
pros and cons that may result from certain practices. The paper reviews the evolution of trade
theory since its origins in the mid- 1500s and mercantilism, advances throughout the 20th
century trade theories and 21st century trade theory.

Trade is very important for a fast developing country like Guyana. With imports and exports
accounting for 170% of GDP, it cannot be overemphasized the importance of trade and trade
policy. Guyana is deemed the fastest growing economy in the world with a projected GDP of
growth 26.2% in 2020. This paper will highlight five (5) of Guyana’s exported commodities
providing reasons for trade based on international trade theories and further evaluate the impacts
of three (3) foreign direct investments on Guyana’s economy during the period 2016 to present.
These commodities include oil, rice, sugar, gold and timber.

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Contents Page
Abstract 1
Introduction 3
Literature review 4
Methodology 5
Analysis:
Task 1
Mercantilism 6
Absolute Advantage 6-7
Comparative Advantage 8
Heckscher- Ohlin Theory 9
Product Life Cycle 9-10
New Trade theory 10
National Advantage 10-11
Task 2
Rice 11
Petroleum 12
Gold 12
Timber 13
Sugar 13
Task 3
Exxon Mobil 14- 15
Guyana Marriot Hotel 15
Aurora Gold Mine 16
Conclusion and recommendation 17
Bibliography and references 18-19

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Introduction

When we speak about international trade, we speak of methods used in exchanging goods and
services across international border. International trade permits countries to dilate their markets
and acquire goods and services that may not be available domestically. International trade has
created competition in the international market, this result in more competitive pricing and offers
a lower cost product home to the consumer (Catalano, T. , 2021).
According to Catalano, T. (2021), International trade allows developed countries to use their
resources like, labor, technology, or capital more efficiently. Every country is endowed with
divergent assets and natural resources, this allows some countries to produce the same good
more efficiently, meaning faster and more cost effectively, this allows them to sell the product
more affordably than other countries. Trading then occurs when a country is unable to efficiently
produce a product; they are able to trade with another country that is able to produce the product
more efficiently. In international trade this is known as specialization.
In the 16th and 17th centuries, mercantilism perturbed nations should encourage more exports and
discourage imports. Despite mercantilism being associated with trending previous theories it
reverberate in politics and trade theories of many countries. The social scientist Smith developed
the idea of absolute advantage, which was primary to elucidate why unrestricted trade is useful to
rustic. Smith contended that the invisible hand of the market mechanism, instead of Government
policy, should confirm what a rustic imports and what it exports.
The Heckscher- Ohlin theory is mostly known on theoretical grounds, however in the real world
of international trade pattern it is clothed to not be simply transferred, or observed because the
Leontief contradiction in terms. Another trade theory attempting to explain the letdown of the
Hecksher- Ohlin theory was the product life cycle which was developed by Raymond Vernon.

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Literature review

Reviewing the development of what is now known as the Standard Theory of international trade;
the years 1776-1826 marks the Publications of Adam Smith’s “The Wealth of Nations” and the
“Principles of Economics” (1951) by David Ricardo. Both books build on the belief of free trade
based on the unmatched success of England in the respective fields of industry and trade. For
Smith, the division of labor, in the nascent large-scale industries of his own country, England,
served as a basis for reducing labor cost, which ensured good global competition across nations.
Possible problems related to the need for funds adjustments for countries having a continuation
of trade in surplus could be shelved aside by relying on automatic adjustments, in terms of the
price-specie flow mechanism, the theory presented by Smith's contemporary, David Hume
period (1971 [1776]), about the same time.

Ricardo was responsible for solving the basic premises of a theory of free trade, which Smith had
started. Ricardo's industrial capitalism in England was at a relatively advanced stage compared to
what it was in Smith's day, both with rapid growth of large industries and captive markets in the
overseas colonies. The import of consumer goods (maize) played a particular role by lower
prices of wage goods and, consequently, the cost of labor for industry in Ricardo's England. Free
trade, like unlike mercantilist protection policies, was defended by both Smith and Ricardo as a
means of achieving overall production efficiency at international level. However, Ricardo's cost
calculations despite his concerns for the introduction of machinery on large scale, were based on
working hours, and treated as a single homogeneous input for production (in a two-product
world) subject to constant costs. It was seen as comparative advantage, not an absolute
advantage, which were necessary and sufficient to ensure mutually beneficial exchanges between
nations, ensuring full specialization in specific products with a comparative advantage in terms
of hours of work used per unit of output.

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Methodology
This research was done to (a) review the evolution of trade theories, (b) identify 5 of Guyana’s
major exported commodities and provide reason for trade, (c) Evaluate the impact of three major
foreign direct investments on Guyana’s economy during the period 2016 to present.

Type of Data:
This study most appropriately employed secondary data collection; which involves the use of
data are collected.
 
1. Online Journals
2. Text Books
3. Government websites
4. Online News reports
5. Business Websites
6. Blogs

This study employed the qualitative method of Secondary research. This method was used in
order to obtain a clearer picture of the research topics and to provide better understanding and
explanation of same.

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Analysis

Task 1. Review the evolution of International Trade theories.

Mercantilism
Beginning in the 16th century and remaining a popular theory until the late 18th century, the
mercantilism theory’s main objective was to stimulate exports and limit imports. The goal of
mercantilists was to create a “rich and powerful state” (Czinkota, et al. 2009; Hill 2012). The
logic behind this theory, while imperfect, states that a win-win solution does not exist and trade
was a "zero-sum game" that reflected the profits of a country and the loss of another country
(Hill). This theory has made governments, especially in Western Europe; create policies that aim
to increase the capital and strength of companies.

The period also saw the change from the foreign exchange system to physical currency, as like
gold or silver. Physical currency became ordinary; countries were able to quantify the prices of
raw materials in a common trading mechanism. This concept has also acted in the idea that
trading is a zero-sum game. Precious metals like gold and silver were believed to be the main
purpose in trading, so that the profits never go back to both parties because it would just be a
winner and a loser situation.

Corruption is closely linked to the era of mercantilism. Governments adopted policies that
directly benefit categories of merchants. As a trade- off merchants classes assisted the
governments remunerate their expenses (Czinkota et al. 2009; Hill 2012). Regrettably this
system allowed a great amount of division among the classes and hardly stimulated middle,
upper and lower class. Policies included monopoly provisions that forced local and colonized
markets to buy in certain places. Importation of goods by persons was laden with taxes and fees.
Taxes were foisted to ascertain there was little to no competition. At that time, Western
European nations associated with mercantilism saw large-scale increase. But, due to corruption,
the role of mercantilism in that increase of trade is unknown.

Absolute Advantage

"The Wealth of Nations" was published in 1776 by Adam Smith, from which time saw the slow
demise of mercantilism into insignificance for developed nations. The new theory absolute
advantage was proposed in his work. His book covered a variety of topics, beginning with the
division of labor and pursuing the ideal role of the government. He described many ideas that

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were purposed to help change cultural and economic standards, and give rise to a new way of
doing local and international business.

The absolute Advantage theory focused on how the division of labor divides a production
process into smaller functional tasks that would allow goods to be produced more efficiently.
(Morgan et al., 1997; Smith 1776). Production would be divided into individuals or groups each
of whom had a specific duty or function performed in the production of a good. Specialization
was purposed as a possible mean to effectively abolish the need for highly skilled workers
throughout production, which were previously required for certain tasks. This would see skilled
workers being replaced by non-skilled, low-cost and more fecund workers who would be
specializing in much simpler tasks. There was high probability to create a more innovative and
efficient way to perform specific tasks. Therefore, production would be more organized and
contribute to surplus growth. Smith predicted that this approach would see the fall in cost of
production, price of final good and all additional parts thereby resulting in a win-win for
consumers and producers.

In his published work, “The Wealth of Nations”. Smith criticizes mercantilism for numerous
reasons. Smith opined that trade is not a “zero sum game”, but a practice that can be beneficial to
both countries involved in a trade. He stated that the wealth of one country shouldn’t be
determined by the amount of gold and silver they can earn over time, but the expansion of trade
and production is most important. Smith further stated that a country’s aim should be to expand
trade and specialize in goods it has absolute advantage in producing compared to other countries.
Smith also criticizes the practice of taxes and tariffs on international trade. He believed in the
idea of free trade and that an economic system adjusts itself, which is known today as the
“invisible hand theory” (Morgan, el al., 1997; Smith 1776).

Possibly the most important aspect to economic theory by Smith was the unique and
revolutionary economic thought, that countries must produce all the goods they can produce
more efficiently than any other. This concept is based on the idea that different countries have
strengths and weaknesses in the production of goods (Morgan et al., 1997; Smith 1776).

An example, Guyana and Barbados can produce rice and sugar and both countries only have 100
resource units they can use for production. It would take four units of resources from Guyana to
produce rice and two units of resources to produce sugar, while Barbados needs one unit of
resources to produce rice and four units of resources to produce sugar. This means Guyana has
an absolute advantage in rice production, while Barbados has an absolute advantage in sugar
production. If these two countries follow the theory of absolute advantage, Guyana would
specialize in the production of rice (producing 50 bags) and Barbados would specialize in the
production of sugar (producing 100 bags). The trade of the two goods will allow both countries

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to make a profit, and to sell goods that produce more efficiently. Therefore, Smith discovered
that negotiation can be a "positive value game."

Comparative Advantage
The comparative advantage theory was developed by David Ricardo. He published his results in
his 1817 book, “The Principles of Political Economy and Taxation.” He answered the question of
what happens when a country or business has an absolute advantage in the production of all
goods. His model comparative advantage states that nations must produce goods they can
manufacture efficiently and purchase goods they produce least efficiently. (Czinkota et al.
Alabama. 2009; Hill 2012; Morgan et al., 1997; Ricardo 1817). Despite the fact a country can
produce both goods more efficiently domestically; comparative advantage states that a country
should produce only the goods they produce most efficiently. This creates an opportunity for the
rise in total output and both countries benefit.

For example, both Guyana and Barbados have 200 labor hours to produce the same goods. For
plantains, Guyana could produce 1 unit in 90 labor hours and Barbados could produce 1 unit in
100 hours. Guyana has an absolute advantage compared to Barbados. For coconuts, Guyana
could produce 1 unit in 80 labor hours and Barbados could produce 1 unit in 120 hours. Guyana
has an absolute advantage compared to Barbados. If there was no trading between Guyana and
Barbados, Guyana would need 170 hours (90+80) to make a unit of each plantain and coconut,
while Barbados would need 220 hours (100 + 120) for the same amounts of plantain and coconut
respectively. Though Guyana would have an absolute advantage in the production of both goods,
if the ratios were examined for the production of both goods, Barbados would have a
comparative advantage in producing coconuts and Guyana would have a comparative advantage
in producing plantains.

The absolute advantage and the comparative advantage have limitations. Both assume the only
goal of a nation is to maximize production and consumption. The cost of transportation is not
considered in none of the models. Additionally, the two theories consider only two countries and
two goods. Finally, globalization makes it onerous to ascertain where a product is designed,
partly produced, finally produced, finished and consumed in its entirety.

Though the comparative advantage theory has its flaws as indicated in the prior paragraph, the
findings have fostered change in the economic landscape and offers advancement of other
theories.

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Heckscher- Ohlin Theory
Complexity was added to Ricardo's theory by Eli Heckscher and his student, Bertil Ohlin. They
offered justification as to why the comparative advantage transpires. In their findings, Heckscher
and Ohlin established that advantages resulted from "factor endowments," like land, labor, and
capital. (Czinkota et al. 2009; Hill 2012; Morgan et al., 1997). The more abundant a resource, the
lower its costs. Heckscher and Ohlin prognosticated that a country or entity would export goods
that use abundant materials locally (Hill) and, conversely, that import goods not abundant
locally. Nonetheless, Leontief's paradox must be quoted as a contradiction of Heckscher and
Ohlin theory. The Leontief paradox shows that a country with the largest working capital in the
world, for example United States, has a low proportion of working capital in exports than
imports. Meaning, the United States has exported labor-intensive goods and imported capital-
intensive goods, which is a Heckscher-Ohlin contradiction, which would have predicted
otherwise.

Additionally, Heckscher-Ohlin theory, as well as many other theories and beliefs about
International trade, has been amended in recent years, mainly with the understanding of
globalization and world economy. . “For the most part, it has been necessary to formulate new
concepts in order to explore issues such as the strengths and limitations of import substitution in
the development process, the implications of common market arrangements for trade and
investment, the underlying reasons for the Leontief paradox, and other critical issues of the day”
(Vernon 1966, p. 190).

Product Life Cycle

Professor Ray Vernon introduced the Product Life- Cycle Theory in 1966. The Product life cycle
theory is way more pertinent to modern times, because the theory requires the production of
goods to be transported to and from different countries. For international economics the Product
life cycle is divided into three phases. The first phase is a new product that is produced and sold
only in, for example, Guyana. The second phase of the life cycle is the maturation phase of the
product. The life cycle of a new product involves: introduction, growth, maturity, decline and
death. The second phase is where the products perfection and improvement is carried out. Doing
this continuously builds expertise and then "Economies of scale" takes over, and this efficiency
allows for the product to be produced effectively, with quality and speed, at a minimum cost,
thus allowing the export of the product International sales and earnings (Czinkota et al. 2009;
Hill 2012; Morgan et al., 1997; Vernon 1966).

Once successful and greater demand arises for the product, the company that makes the product
can consider manufacturing the product overseas. The company examines all costs involved in
the local production of the product, in addition to distribution costs, and evaluates whether the

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cost is lower (or higher) than producing the product offshore, then ascertainment can be made. If
the company deduces it is cheaper to manufacture the product in another country, they can
decide to do so. However, this analysis is often performed after including an analysis of other
external factors, like tax levels in different countries, security factors in external production of a
product and possibly a greater capacity of competing companies to copy trade secrets if the
product is manufactured in certain “at risk” countries. Additionally, companies can authorize
other companies that manufacture the product in certain countries or might consider setting up a
joint venture or selling the rights to manufacture the product in one or more countries when it
increases profitability or reduces the need for the company to provide additional capital to
finance this production

In the final phase of the product life is for product standardization. This phase starts when
product has matured and is fully anchored society and production is close 100%. This allows the
company to consider offshoring to developing countries due to relatively low labor costs
(Czinkota et al. 2009; Hill 2012; Morgan et al., 1997).

New Trade Theory

The new theory (Krugman 1983) emerged in the 1980s with a completely new form of
understanding the world economy. The new trade theory establishes that the country or the
company's capacity to achieving economies of scale can be extremely important in international
trade. The theory proposes that international trade can lower the average cost of goods due to the
variety of goods available. International trade is favorable for all parties involved because it aids
consumers in achieving economies of scale; offers greater variety, and achieve lower and more
competitive prices (Czinkota, et al. 2009; Hill 2012). The new trade theory involves the concept
of "first mover advantage". This advantage is often achieved by the first companies to enter an
international sector that obviously faces many profound risks. This advantage mostly creates
barriers to entry for future entrants and sometimes allows for many other benefits from
monopoly in the international arena for a particular industry involved.

National Advantage (Porter’s Diamond)

The Porter’s Diamond theory seeks to identity how competitive a particular country is on the
international market by utilizing four points (Dunning 1993, Porter 1986, 1990). These points
alter for ingredients that go in the national competitive advantage. These include: 1. Availability
of resources, 2. Information used in deciding which opportunities to pursue for the company, 3.
Goal of individuals in companies, 4. Innovation and investment pressure on companies.
Point one refers to conditions in which the situation of a country is in related to production
factors such as, skilled labor, infrastructure, etc., and how they are relevant to competition in
specific sectors. Point two concerns the conditions of domestic demand, and describes the state

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of domestic demand for products and services produced in a country. Point number three
concerns to related and supporting industries for which the existence or nonexistence of
internationally competitive supplying industries and supporting industries are considered. The
fourth point refers to the strategy of the company, structure and rivalry, and establishes the
conditions in a country that determine how companies are established; how they are organized;
how they are managed and how they determine the characteristics of internal competition (Porter
1986, 1990). The "Porter diamond" is a theory that can help a company learn about the types of
advantages it can have over other companies in their country therefore, it allows them to gain an
international advantage.

Task 2: Select 5 of Guyana’s major commodities exported and identify the reason(s) for
trade. Provide theories to support your answer.

1. Rice

The history of rice cultivation in Guyana dates back to the eighteen century (GRDB, n.d). Rice
was first introduced by the Dutch Governor of Essequibo who saw this as a mean to supplement
the diet of salves on the sugar estates during this period (GRDB, n.d.). Further, after the period
of indenture had concluded, most of the East Indian laborers chose to remain and acquired plots
of lands and to begin rice cultivation (GRDB, n.d.). By 1876 the rice production had exceeded
local consumption, this paved way for Guyana’s first export of rice to Trinidad and Tobago
(GRDB, n.d.).

Preferential access has made exports to the CARICOM and the EU markets very profitable for
Guyana. In the EU market, Guyana shares an ACP quota of 125,000 tons of rice .Guyana is a
major rice exporter to countries like Trinidad and Tobago and Jamaica. Rice is Guyana's second
most exported commodity. “The Guyana Rice Development Board’s 2019 export report has
revealed that US$222.7 million was earned through the export of rice to more than 35 countries
in that year alone. The export value for 2019 represents an increase of 20% when compared to
the revenue earned from the export in 2018 (US $186 million)” (Ministry of Agriculture,
2020:para. 1).

Guyana trades rice because it holds a comparative advantage in rice cultivation. Guyana’s rice
cultivation has lower domestic opportunity costs than its trading partners eg. Trinidad and
Tobago. Rice is traded in exchange for those goods that have higher domestic opportunity costs
compared to other nations such as, Irons/steel from Trinidad and Tobago. Additional, the
Heckscher Ohlin Theory refers to the use of the factors of production in international trade. In
this regard, Guyana has more land and skilled labor force in rice cultivation industry.

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2. Petroleum

In the year 2015, US oil giant ExxonMobil discovered more than 9 billion barrels of oil
equivalent resources offshore Guyana and has made 18 other discoveries since then at the
Stabroek block (OilNow, 2020). Three other discoveries were made by companies in the
Orinduik and Kanuku Blocks (OilNow). Additionally, “Apache and Total have made four
discoveries at Block 58 while Petronas and ExxonMobil have made one at Block 52” (Oil Now,
2020, para. 8).

According to OilNow (2021).Guyana has sold its 5 th oil cargo to Hess in February of this year
which had seen the country being paid the highest sum to date for its petroleum exports. Guyana
received over US$61 per barrel for the shipment – for a total of US$61,090,968.03 –
representing 997,420 barrels of oil sold.

Today, Inclusive of Royalties the total in Guyana’s Natural Resources Fund Account now stands
at US$267,668, 709.12 (Oil Now, 2021).

Guyana trades Petroleum because it creates excellent opportunities to profit in nearly all markets.
This is a unique opportunity for Guyana’s economic development because petroleum has a
possibility to present very lucrative investment opportunities. Exporting Oil means Guyana as an
opportunity to make a few thousands per trade while at the same time requiring much less
investment than the stock market in comparison. Liquidity is also another reason for trade. Oil
futures are one of the most liquid assets due to the volume that is traded each day.

3. Gold

Exploration of Gold in Guyana began in the 1980s and by 1986 Guyana exported around
140,000 ounces of Gold Roopnarine, L. (2006). Gold plays an integral role in Guyana’s economy;
it represents around 64% of foreign exchange and 15% of its total economic output.

Guyana Trades Gold because it a limited resource. Once there is an increase in gold prices,
Guyana will see an increase in the strength of its currency, since this increases the value of total
exports. Which means an increase in the price of gold can create a trade surplus or help offset
a deficit. Also, Gold is a value- preserving commodity that is not restricted to local markets. It
serves as a hedge against inflation.

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4. Timber

According to ITTO (2019), Guyana produced on average approximately 549,000 m3 of primary
timber products between 2014 and 2018, which almost entirely originated from national forests.
Guyana’s timber exports are primarily based on the export of logs and to a lesser extent on the
export of sawn wood. The total export value of primary timber products was around 65.2 million
US dollars for the period 2014-2018 according to ITTO (2019).

One of Guyana’s major timber importers is China. According to Trading Economies (n.d.),
Guyana’s export of wood to China was US$7.29 thousand in 2018. Guyana trades timber with
China because it has a larger opportunity cost in the production of timber compared to China.
Therefore, Guyana has a comparative advantage in compared to China in the production of
Timber. Further, the comparative advantage theory suggests that countries should specialize in
certain goods and trade its surplus. Hence, Guyana trades its surplus with China and imports
goods such has, motor vehicle parts which it does not specialize in producing.

5. Sugar

Sugar production in Guyana started 1700s, 100 later than other Caribbean countries. However,
the late start offered a foundation in sugar production for Guyana because the country was able
to import advanced milling sugarcane equipment to aid in the production of sugar and soon after
emerged as the leading sector of Guyana’s economy (U.S. Library of congress, n.d.).

The main export market for sugar is the United Kingdom where Guyana has an agreement to sell
195,000 annually. Guyana also exports sugar to the United States and the Caribbean. Guyana
holds a comparative advantage in sugar production compared to other CARICOM sugar
producing countries. Guyana has more lands and skilled labor forced to aid in the production of
sugar. Therefore, Guyana trades it surplus sugar and import goods it is less skilled in producing
like cement from Barbados or exporting sugar to the United Kingdom and imports machinery for
sugarcane milling.

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Task 3: Evaluate the impact of three major foreign direct investments on Guyana’s economy
during the period 2016 to Present.

1. Exxon Mobil Liza Phase 1 development project.

International oil giant Exxon Mobil has invested largely in Guyana’s petroleum and other
economic sectors over the period of 2016 to present. “In March 2015, ExxonMobil began
exploratory drilling off Guyana’s coast, investing nearly USD 2 billion into the project.  ExxonMobil
has since reported significant findings of offshore petroleum that, as of April 2019, are estimated at
over 5.5 billion barrels of oil-equivalent, with exploration continuing for the foreseeable future.  This
venture would generate billions in revenue for the country and could potentially transform its social,
political, and economic landscape” (StateGov, 2019: para 3.). Exxon Mobil to date has made 18
discoveries at the Stabroek block (Guyana Chronicles, 2020). Inclusive of Royalties the total in
Guyana’s Natural Resources Fund Account now stands at US$267,668, 709.12 (Oil Now, 2021).

Over the past five (5) years Exxon Mobil has invested approximately $2.7 billion in social
programs in all ten (10) administrative regions across Guyana (Guyana Chronicles, 2020).

According to the Guyana Chronicles (2020), the year 2020 alone has seen investment in social
programs from Exxon Mobil in the sum of $285 million. $140 million of the 285 million went
towards assisting students, vulnerable groups and the Guyana Government cope with the Novel
Corona Virus pandemic (Guyana Chronicles, 2020).

Further, Exxon Mobil has contributed to the further development and enhancement of STEM
Guyana programs, Sustained Youth Development and Research, the Rotary Club of Stabroek and
WeLead Caribbean and the Blue Flame Women’s Group from Region One (Barima-Waini)
(Guyana Chronicles, 2020). Exxon Mobil has purchased from approximately 700 local
businesses in the sum of $300 million during this 5 year period (Guyana Chronicles, 2020).

Additionally, Exxon Mobil Guyana has provided employment for over 500 local talents, which
represents 52 percent of the company’s workforce (OilNow, 2018). “The company is also
providing training to Guyanese to fulfill key responsibilities including to serve as primary subsea
engineers on the maintenance team, coordinate equipment strategy and operational issues and be
part of its emergency response unit” (OilNow, 2018, para. 5). Exxon Mobil is also building
supplier capacity through its Centre for local business development and has since trained 1730
Guyanese inclusive of businesses in courses of energy.

Exxon Mobil Guyana has also contributed 10 million to The University of Guyana and a new
collaboration with Conservation International to train Guyanese for sustainable job opportunities
and to expand community-supported conservation (Exxon Mobil Newsroom, 2018). The
investment was also purposed to support the Guyana Green State Development Plan which seeks

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to, “diversify Guyana’s economy and balance economic growth with the sustainable
management and conservation of the country’s ecosystems” (Exon Mobil Newsroom, 2018).

2. Guyana Marriot Hotel Georgetown

The Guyana Marriot Hotel Georgetown was established with expectations to have significant
positive impact on Guyana’s socio economic environment, mainly through the creation of job
opportunities for a wide variety of skilled and unskilled Guyanese workers and boost in
Guyana’s Tourism sector (Stabroek News, 2011).

According to Stabroek News (2011), Guyana’s Economy was expected to benefit from,
“increased demand for goods and services during both the construction and operational phases of
the project” (Stabroek News, 2011: para. 2). The Marriot Guyana project was set to have, “a net
positive impact on the larger economy of Guyana” (Stabroek News, 2011: para 3), by providing
entertainment and hospitality product to Georgetown, while creating significant economic and
job opportunities (Stabroek News).

The project was also deemed environmentally tolerable, “provided all mitigation measures are
implemented in advance of other additional project related activities” (Stabroek News, 2011:
para.3).

It was noted that Guyana Marriot investment of US $42 Million, “represents a flagship
investment in Guyana’s travel and tourism sector” (Stabroek News, 2011:para. 4). The
establishment of this internationally recognized brand sought to provide a secure facility with a
range of accommodation, entertainment, restaurant and concession offerings developed
according to international standards.

According to Stabroek New (2011), the ESIA stated that other than direct employment of
Guyanese, the project was expected to create economic and social benefits to Georgetown, its
immediate and costal surroundings and national economy. Downstream economic
development was also expected to be created through purchase of good and services from loyal
businesses.

“It said that the project is expected to attract visitors from abroad, especially the Caribbean,
North America and Brazil. The project is expected to have an average annual turnover in the first
10 years of approximately US$20.5M and is envisaged to service a minimum of 3,740,000
people over the first 10 years” (Stabroek News, 2011: para. 9).

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In September 2020, the hotel terminated the services of 37 employees due to lock down of the
country’s international airports and curtailments on dinning indoors which were as a result of the
corona virus pandemic (Stabroek News, 2020). This fostered a negative impact on the economy.

3. Aurora Gold Mine Project

Developed by the Guyana Goldfields, the Aurora Gold Project was expected to make significant
impacts on Guyana’s economy, particularly the mining sector. According to Mining Technology
(n.d.), the total gold production is estimated to be 3.3 million ounces during its seventeen (17)
years life span.

According to DPI (2019), Aurora Gold mine started its open-pit exploration in Guyana back in
1992, but has started producing in 2016. The Company has to date invested $63 Billion in this
operation.

A GINA (2016) report states, Aurora mines of Guyana Goldfields produced an estimated 75000
ounces of gold in the first half of 2016 and “Guyana Goldfields is anticipated to produce
between 160,000oz and 180,000oz of gold in 2017” (Mining Technology, n.d.:para.4).

The Prime Minister, Finance and Tourism Minister at the time lauded the project as one that will
serve to keep the economy out of a regression due to the low performance of products like sugar
at the time. The Prime Minister stated, “This is an example of a good investment, the rewards are
showing now and they are encouraging for new investors…there are plans in terms of expanding
of production areas, in terms of producing alternative energy, accommodating the workforce in
an environment that is more permanent, in terms of health considerations, security, and the
supply of food,” (GINA, 2016: para. 8). While the Minister of Finance at the time noted that gold
has allowed the economy to continue to grow rather than regress.

The project has created employment opportunities for over 500 skilled Guyanese, “who have
performed 1,000,000 man hours of work without any break in service” (GINA, 2016: para. 7).

In May- June 2020, the company began workforce reduction to some 85%. This was done in two
phases. The company cited the corona virus pandemic and financial conditions, travel restrictions
and pending environmental approvals as factors. These factors were noted as hindrances to its
mining operations and thus manpower adjustments were instituted. This fostered a negative
impact on Guyana’s economy.

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Conclusion & Recommendations

All the international trade theories listed have played a role in the knowledge of international
trade. None of the trade theories can be deemed all right or all wrong given the fact that they
were all birthed at different periods when trade was developing and undertaking different
attributes. The theories were developed at the right time suit their specific era. However, when
reviewed in today’s era it can be concluded that most can either be tweaked or replaced by the
new theories of trade.
Guyana’s International trade and investment agreements are of most importance to export
performance and economic growth. The traditional economic industries alone cannot provide a
sufficient number of jobs and rapidly increase per capita income. An increase effort is required
by both exporters and the Government to explore new markets and enable the environment for
increased production and export of non-traditional exports and improve trade infrastructure. The
Government of Guyana must also work towards improving its political and business environment
so as to attract more foreign investors. These include: reducing high electricity rates, create more
training opportunities for its workforce, and reduce high level of crimes.

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