Economic growth — practice question

Background: In what ways might oil transform Guyana? Guyana fact file (2020) In 2020, Guyana recorded the quickest economic growth worldwide. For a long period, sugar, gold and timber have made up a fairly large share of the nation’s output and exports. During 2020, the sugar industry was affected by adverse weather and weakening worldwide demand, whereas gold and timber output rose. The chief reason for the sharp rise in Guyana’s real GDP was higher oil production. A foreign multinational company (MNC) discovered offshore oil in 2015, and production began in 2019. It is forecast that by 2025 Guyana will be the world’s biggest oil producer per head. The Guyanese government plans to direct some of the tax revenue it expects from oil into education and upgrades to the country’s infrastructure. Planned schemes include fresh railway lines and stations. A larger and less expensive rail network may allow more people to work further from home and could affect the market for substitutes, such as car transport. The Guyanese government also intends to use some of the tax revenue to improve the country’s internet access. Table 1.1 presents GDP per head and internet access in seven countries in 2020. Guyana’s population size has risen 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 production expands, emigration may fall and the country may begin to record net immigration. A larger population could affect Guyana in several ways, including altering the size of its labour force and influencing the environment.