Home' Trinidad and Tobago Guardian : October 26th 2017 Contents BG10 finance
Thursday, October 26, 2017
Since the collapse of
oil and gas prices---
which was preceded
by a collapse in
rounding economic diversi ication
has taken centre stage. Recently
there was an admission that all of
our past governments did not pay
suf icient attention to the issue
because we could rely on oil and
gas revenues and so there was no
pressing need to do anything out
of our comfort zone.
Now that it is topical, even if
this is born out of an element of
desperation, the irst question we
should really be asking is: what
does diversi ication really mean?
The Manning administration
viewed the issue as one where
ener y resources would be con-
sumed locally instead of for ex-
port in the process providing the
impetus for a local industrial base.
Thus natural gas would be used to
power electric plants that would
support an aluminium smelter
complex. The aluminium would
then form the input into local
manufacturing initiatives which
would then be exported.
The People's Partnership ad-
ministration had a diversi ication
thrust more aligned to the service
sector with industries such as
fashion and ilm making, tourism
and information technolo y pro-
viding the diversi ication impetus.
Currently, we don't seem to
have a clear preference for one
option or the other. It is more a
case of anything and everything
that has the potential to generate
foreign exchange. Some emphasis
has been placed on the manufac-
turing sector with a push towards
export-led growth and, by exten-
sion, this should act as a means of
economic diversi ication.
The bottom line is: after more
than 15 years of talk we have no
clear de inition and each change
in government changes the em-
phasis, often leading us right back
where we started with no end
product in sight.
The next question is: what
should we be diversifying to?
The differences detailed above
need to be reconciled into a bi-
partisan national plan so it tran-
scends the politics. I respectfully
submit that the recently produced
Vision 2030 document does not
meet this objective.
In addition, at least from my
perspective, a lot of the diver-
si ication discussions relate to
a world that has past us and we
have not adjusted our thinking
to cope with the world that is nor
what is ahead of us.
I have long argued that the era of
export-led economic growth out-
side of the ener y sector is over.
The so-called Point Lisas model
was perfect for the 1970s into the
1990s. This was an era when the
"baby boom" generation of the
developed world started entering
Higher earning power, along
with an increased propensity to
borrow, saw their ability to spend
and consume grow exponentially.
Since this generation was, at
that time, tied to a job, manufac-
turing product for export to these
markets was the way to go.
China, more than anyone else,
capitalised on this consumption
pattern to become the low-cost
manufacturer of the world.
T&T carved a niche in the en-
er y sector and some of our local
manufacturers have since man-
aged to position their product into
the more developed markets.
Today the paradigm is vastly
different. The "baby boom" gen-
eration is now beginning to retire.
Their consumption levels and
pattern have changed. Next gen-
erations have grown up under-
standing the value in the sharing
of resources and the embrace of
service and solutions to augment
a manufactured product. It is no
longer just about manufacturing
products but about delivering
solutions. This requires a value
add beyond just pure widgets and
screws or packaged food in a box.
has not changed
and many of our
are in packaged
foods that, in many instances, can
be deemed as unhealthy foods by
On the margin consumption
of our traditional exports is now
taking place in the emerging mar-
kets. If our diversi ication thrust
is going to be based on manufac-
turing for export then what are
the competitive advantages that
exist over similar resource-rich
countries such as Brazil, Chile,
Colombia, Peru and countries
with cheaper labour pools as can
be found in Central America?
Manufacturing is returning to
the US due to abundant, low-cost,
ener y supplies. Mexico has both
cheap ener y and one of the low-
est cost labour pools in the world.
The effect of this is yet to be fully
grasped by us here in T&T.
Finally, we have an aging popu-
lation. This leads to two questions:
from where do we get the mass of
innovators and entrepreneurs nec-
essary to move the diversi ication
needle away from oil and gas?
Then from where do we get the
domestic market size required to
develop the necessary sophistica-
tion for our products and services
before seeking out new markets?
I have long advocated for an im-
migration policy that is tied to our
development objectives. There is a
deafening silence associated with
In today's world there are four
factors that contribute to tech-
nological innovation and entre-
preneurship. These are: cost,
convenience, calibre and creative
While creative destruction
speaks to the innovation itself the
irst three on the list comes from
the level of facilitation provided
by the State. Low cost to doing
business, infrastructure that lends
itself to convenience and acces-
sibility and the ability to attract
the right caliber of talent are fun-
damental to our diversi ication
thrust. How we measure up on
these matters will be the differ-
ence between success and "ole
Ian Narine can be contacted via his
website blog iannarine.com
After more than
15 years of talk
we have no clear
Links Archive October 25th 2017 October 27th 2017 Navigation Previous Page Next Page