History of the Economy

History of the Economy

Guyana was first colonized by Dutch settlers in the 1600s. Spanish explorers had ignored the area because it lacked obvious mineral wealth. Key features of Guyana's current economic structure, especially the patterns of land use, can be traced to the period of Dutch stewardship. The Dutch West India Company, which administered most of the colony from 1621 to 1792, granted early Dutch and then British settlers ownership over 100-hectare tracts of land. Settlers augmented these narrow coastal tracts by clearing swampland and expanding their holdings inland, for several kilometers in some cases. Many of the large sugar plantations that formed the basis of the colonial economy were established in this manner. Dutch settlers also left their mark on the land. They built a system of dikes and drainage canals on Guyana's low-lying coastal plain, using techniques developed in the Netherlands. Parts of this original sea-defense system continued to operate in the 1990s.

Sugar soon emerged as the most important plantation crop. Sugar was first grown in colonial Guyana in 1658 but was not produced on a large scale until the late 1700s, about 100 years later than in the rest of the Caribbean region. Because Guyana's plantation owners entered the sugar industry late, they were able to import relatively advanced equipment for milling sugarcane. This investment in advanced equipment gave the local sugar industry a firm foundation and made it the leading sector of the local economy. By 1800 there were an estimated 380 sugar estates along the coast. In the 1990s, almost two centuries later, the population was still concentrated on the same coastal strip of land, and sugar was still one of the nation's two most valuable products.

Guyana's distinct ethnic makeup can be traced to conditions that prevailed during the colonial period. To supply the labor required for sugar cultivation, plantation owners at first imported slaves from West Africa. (The indigenous Amerindian population of Guyana was small and lived mostly in the impenetrable interior.) Thousands of slaves were imported each year as plantations expanded; more than 100,000 slaves worked in the colony by 1830.

The British formally took over the colony in 1814. But British Guiana's plantation economy fell into turmoil after 1833, when Britain passed the Act for the Abolition of Slavery Throughout the British Colonies. The law provided a five-year transitional period during which plantation owners were to begin paying soon-to-be- freed slaves for their services. In practice, however, owners alienated the slaves by wringing as much work as possible from them during the last years in bondage. Upon emancipation in 1838, almost all of the former slaves abandoned the plantations. Agricultural production plummeted. Some groups of former slaves were able to buy failed plantations, but they lacked the capital to reconstruct the complex operations after years of neglect. Most former slaves reverted to subsistence farming. By 1848 only 20,000 Africans worked on sugar estates. Even so, few Africans left the country; more than 40 percent of Guyana's postindependence population was descended from African slaves.

Faced with the prospect of a complete extinction of the sugar industry, plantation owners looked abroad for laborers. Free immigrants had little enthusiasm for the harsh working conditions on sugar estates, but indentured servants were less discriminating. Indentured servants typically contracted to work for five years in exchange for a one-way passage to British Guiana as well as food and housing. (In some cases, a return voyage was offered in exchange for extra years of service.) After taking on indentured servants from Portugal, China, and the West Indies, plantation owners turned to what would become the most important source of immigrants: India. About 240,000 indentured East Indians were brought to British Guiana between 1838 and 1917, the date when indentured labor was abolished. The British government supported this intraempire transfer of labor. In the short term, the influx of labor saved British Guiana's sugar industry. In the long term, the immigration deeply affected British Guiana's ethnic makeup. Most of the East Indians remained in the colony after completing their terms of indenture; many became independent rice farmers. Their descendants, along with later immigrants from India, accounted for about half of Guyana's postindependence population.

The racial and ethnic divisions that arose out of the two great waves of immigration into Guyana in the colonial period had a profound effect on the country. The divisions between Afro-Guyanese and Indo-Guyanese persisted into the modern period, in both economic and political terms. In the early 1990s, most IndoGuyanese were still employed in agriculture, growing sugar and rice, while the majority of Afro-Guyanese lived in Guyana's few urban areas..

The most important change in Guyana's economy after the turn of the century was the development of the bauxite (aluminum ore) industry by North American companies. Mining of bauxite began in 1914, and the ore would alternate with sugar as Guyana's most valuable product. Guyana possessed vast reserves of bauxite in the northeast, and by the 1960s, the country had become the world's fourth largest producer (after the Soviet Union, Jamaica, and Suriname). Until the 1980s, Guyana was also the leading producer of calcined bauxite, a high grade of the mineral required for specialized applications.

Parallel Economy


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