Home' Trinidad and Tobago Guardian : January 4th 2018 Contents BG10 verbatim
Thursday, January 4, 2018
...The virtuous circle
MARY K KING
iven the current economic
recession, the need to di-
versify the economy is on
the lips of all.
Many agree that the
major objective of diversifi-
cation is the creation of export companies
that are globally competitive. According to
Professor Anthony Clayton of UWI, Mona,
these companies have to be both innovative
and disruptive since, to him, incremental
innovation is a high-risk approach to re-
T&T is a small, open economy and cannot
build locally all the goods and services that
its population needs to live a modern and
Hence, it has to import the majority of
what it consumes and, to do so, it has to ex-
port to earn the required foreign exchange—
thus defining the diversification objective.
Particularly so, when it appears that the
petroleum resource is depleting and the
global prices of the resource and its deriva-
tives are expected to be low for some time
into the future.
Since economic growth is about continu-
ally increasing the level of economic activ-
ity, it is easy to appreciate that sustainable
economic growth in T&T will depend pri-
marily on investing the surplus of foreign
exchange earned over that spent on con-
sumable imports into productive capacity
that uses a high import content.
This presents difficult decisions in the en-
If, for example, this productive capacity
is in malls, non-export production and the
like, then to sustain their activities corre-
sponding increases in export capacity are
needed to fund their required importation
of goods and services.
If, primarily, the increase in economic ac-
tivity is about generating exports then again
the increase in foreign exchange earned
would drive increased local imports—
markup-sell activity and any balance on im-
provement of reserves and savings, which
themselves can earn more foreign exchange
on investment overseas—a virtuous circle of
exports and imports.
Unlike, say, what China is now consider-
ing, economic growth based not on exports
but on local production for local consump-
tion, the economic growth of our small
economies depends on increasing export
earnings which encourages and drives on-
shore economic activity that depends on
Though the competitiveness of our ex-
ports will depend on the local acquisition
of knowledge, its application and creation,
innovation, to maintain global competi-
tiveness, our import industry will have to
provide the artefacts of technology contin-
uously that we do not produce so as to both
maintain/improve our standard of living
and upkeep and upgrade the export capac-
ity, via these technologies.
For example, our export capacity and
capability, competitiveness, will depend
on the use of technological products that
we do not manufacture—computers, ma-
chinery, telecommunications equipment,
robots—but are necessary to support our
innovative export industries.
Hence, the diversification of our econ-
omy is twofold: ie building a sustainable
and innovative export capacity and an im-
port facility that keeps the population in a
state of increasing sophistication and also
supports the continuous upgrade of our ex-
The risk here is that we may import even
the little that we can produce locally. All of
this sits on our ability to produce a human
resource that is capable of maintaining a na-
tional innovation system among the triad of
the private sector, government and the R&D
The technologies, their innovations and
applications may indeed drive the birth,
implementation and death of many prod-
ucts and services to be marketed globally.
But of these none will be invented, built lo-
cally nor even marketed if we do not also
develop the human resource who under-
stands the technologies but are also suitably
equipped to structure the networks in the
This resource identifies the future global
demands and are also able to foresee what
these demands could be, can initiate dis-
ruptive innovations, the bedrock of Carib-
bean competitiveness. They must also be
able to bring these new products and ser-
vices to market.
But how do we get this started, even
though we have seen it happen in Taiwan,
Singapore, S Africa etc?
The availability of the petroleum re-
source in our latest version of the plan-
tation economy has created a culture, a
curse, of its own wherein the rents and for-
eign exchange left behind (the results of the
exports from the energy sector) drive the
on-shore import-based economy.
The current private sector is low risk and
able to make good profits in the import sec-
tor; the government normally receives di-
rectly via taxes etc. foreign exchange which
maintains adequate reserves and its spend-
ing, which also supports the on-shore econ-
omy; the tertiary level institutions continue
to produce graduates for export—79 per
cent of the graduate workforce emigrates.
The private sector and government are
loath to take the lead in this transformation
of the economy—both appearing now to
await the resurgence of the energy sector.
The lead role then falls to the R&D insti-
tutions, especially UWI. The problem is fi-
How does UWI fund the initiation of a na-
tional innovation system in the context of
the failure, the lethargy, of its two partners?
This is the conversation that is now taking
place across the campuses of UWI.
The lead role
then falls to the
especially UWI. The
problem is finance.
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