Home' Trinidad and Tobago Guardian : October 22nd 2015 Contents BG10 FEEDBACK
BUSINESS GUARDIAN www.guardian.co.tt OCTOBER 22 • 2015
Recently, I quoted Dr DeLisle
Worrell s (Governor of Bar-
bados Central Bank) declara-
tion that our small and open
economies are indeed engines
that run on foreign exchange
earned and, in particular, the rigidity of the
private sector, the on-shore economy in T&T,
in its inability to respond to both producing
new exports products/services and/or replacing
with local products any of those currently
imported. Further, if the foreign exchange were
to cease the engine, the economy, stops.
This characterisation is in sync with my
discussion of our plantation economy and
hence the need to create an embryonic private
sector if we are to diversify our economy, say,
via a national innovation system.
Though lately there has been much talk on
our need to diversify the economy, amplified
by the current recessionary state, the general
belief is that the existing private sector will
step up to the wicket and deliver, will produce
these required globally competitive goods/ser-
vices for export or replace imports.
We boast of improvements in our business
conditions; a reduction in the number of days
it takes to set up a business, the number of
various trade agreements we have established
with various countries, even as far afield as
However, with regard to the latter, such
trade agreements have made absolutely no
impact on increasing the ability/reality of our
private sector to export.
Hence, it was with a sense of satisfaction
that I read in the Business Guardian, October
25, the article by Ved Seereeram entitled,
"Major fallacies driving economic decisions"
in which he tells us that: The economic per-
formance in the non-oil (on-shore) sector
appears to be good despite the visual concerns
with the energy sector.
Further, the Central Bank reported that the
energy sector declined by three per cent and
the non-energy sector by two per cent, which
give the impression that the non-energy or
private sector behaves independently from the
energy sector, that is, it can diversify the econ-
omy. This is a view reinforced by the politician s
call on the non-energy sector to step up their
investments to make up for the shortfall in
the energy sector.
Seereeram refers to this as a fallacy, that
the private sector can pick up this slack left
by the decline in the energy sector. He bases
his argument on the fact that we have a high
propensity to import (we import some 70 per
cent of what we consume) and hence (as Wor-
rell states) the economy is significantly depend-
ent on the availability of foreign exchange.
Also, the private sector does not on its own
generate foreign exchange.
Exporters are most likely net users of foreign
exchange and manufacturers depend on sub-
sidies from the energy sector. He concludes
with: "imagine the country without the energy
sector where will the foreign exchange come
Still, Seereeram did not venture into the
realm of whether our current private sector
can adapt to providing globally competitive
exports or replacing imports. I have mentioned
that the current business culture inhibits this
kind of innovative production activity; an
observation made long ago by Sir Arthur Lewis
and discussed by Lloyd Best in his thesis on
the plantation economy.
Also, the difficulty in changing such a culture
is analysed at length in Lawrence Harrison s
book, "The Central Liberal Truth", though
some countries have been able to modify this
However, Harrison thinks that two things
need to come together to initiate this cultural
change; government leaders with a progressive
vision and a time of crisis or unique oppor-
tunity as seen, for example in Botswana and
Taiwan. The current energy sector s situation
could be considered one of crisis, but according
to Mr Seereeram, he is concerned that a strat-
egy for structural adjustment has not been
put on the table for discussion.
He wrote: "If government pursues a borrow
and spend strategy, the can will be kicked
down the road delaying the urgent changes
required"---a leadership vacuum?
Mary K King, St Augustine
A leadership vacuum?
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