Limits of policy: Local content and resource curse dynamics - evidence from Guyana

Guyana's 2021 Local Content Act is among the Caribbean's most ambitious efforts to ensure that newly discovered oil wealth generates broad-based domestic economic participation. Using synthetic control methods to construct counterfactuals from structurally comparable economies, this study examines the macroeconomic trajectory of Guyana after the implementation of the local content Act during an active oil boom. The results reveal that while Guyana achieved substantial post-2021 income gains relative to its counterfactual, these gains were accompanied by pronounced structural pressures. Specifically, estimates indicate a contraction in the share of manufacturing value-added and an appreciation of the real effective exchange rate associated with the post-2021 period. These findings suggest that local content mandate is insufficient to offset structural pressures associated with the boom itself.