Economic growth — practice question

Study the source carefully before you start Question 1. Source material: How will oil change Guyana? Guyana had the world’s fastest-growing economy in 2020. For a considerable period, sugar, gold and timber have made up a fairly large share of the nation’s output and exports. In 2020, the sugar industry suffered from adverse weather and a drop in worldwide demand. By comparison, the output of gold and timber rose. The chief explanation for the sharp rise in Guyana’s real GDP was the expansion of oil production. Oil was found offshore by a foreign multinational company (MNC) in 2015 and the MNC began producing in 2019. It is forecast that Guyana will be the world’s biggest oil producer per head by 2025. The Guyanese government plans to direct some of the tax income it will gain from oil towards education and upgrades to the country’s infrastructure. Proposed schemes include additional railway lines and stations. A larger and less expensive rail network may allow more people to take jobs farther from home and could affect the market for substitutes, such as car transport. The Guyanese government also intends to use some of the tax income to improve the country’s internet access. Table 1.1 shows GDP per head and internet access in seven countries in 2020. Guyana’s population size has grown only slowly in recent years. In 2020, its birth rate was 16.5, its death rate was 6.8 and its net migration rate was -7.7. As oil output rises, emigration may fall and the country may begin to record net immigration. A larger population could influence Guyana in several ways, including altering the size of its labour force and having an impact on the environment.