Home' Trinidad and Tobago Guardian : June 13th 2013 Contents JUNE 2013 • WEEK TWO www.guardian.co.tt BUSINESS GUARDIAN
FEEDBACK | BG13
There are two true facts: our petroleum
resources are depleting and getting more
expensive to produce; and we need to diversify
How we do the latter is still being debated.
However, all of our governments, given the
lucrative energy sector s contribution to gov-
ernment coffers and its support of the onshore
sector, appear to be in favour of foreign invest-
The recent discussion with US vice president
Joe Biden reconfirms the need for such United
States investment. Hence we have delegations
at the highest level, even led by the Prime
Minister, to various parts of the world declaring
that T&T is open for business, for investment.
Further, the plethora of reports tells us that
we have low global ratings, for example, in
ease of doing business, productivity, compet-
itiveness, clearing things off our ports, etc.
Hence, we see the Minister of Trade applauding
Government s performance for improving the
speed of setting up a new business, for bringing
to fruition the Single Electronic Window project
and even winning a prize for the Biz-Link sys-
We have built Tamana Park and now a new
airport business park, hoping to attract foreign
businesses; one that provides data storage has
indicated its intention to locate in Tamana,
presumably to take advantage of cheap sub-
The objectives in attracting such companies
must be to provide jobs and foreign exchange;
the onshore employment requirements are
much larger and crucial than for the energy
sector if we are to see the last of the URP,
CEPEP and other populist projects.
Economists, Prof Michael Porter and our
own William Demas, have told us that foreign
investment may help in our thrust for eco-
nomic development onshore, but we have to
invest our own resources in creating a pro-
ductive and innovative nation.
The foreign investment approach is highly
recommended by the well known market econ-
omist, Alan Greenspan, the one-time chairman
of the Federal Reserve Board of the US.
Listen to him:
"The manufacturing-for-export model that
India urgently needs to embrace has an impres-
sive record of success elsewhere in Asia. It is
a model that employs in mass urban manu-
facturing centres low-wage rural workers with
some education. A critical ingredient has been
foreign direct investment embodying advanced
technologies and attracted by laws protecting
Shades of our own Sir Arthur Lewis.
Nicholas Lardy, of the Peterson Institute of
International Economics, said: "China s export
model consists of, in big measure, renting out
cheap labour and land to foreigners."
One impediment to ever increasing exports
from China and the Asian Tigers is these coun-
tries rising costs of production. Vietnam is
now being sought as the next low-cost pro-
duction platform for global trade; the new
player in Schumpeter s capitalist market of
creative destruction. Is this, then, the foreign
direct investment model we are considering?
One interesting divergence from this model
is India s IT industry (in Bangalore, Delhi and
Mumbai) which bypassed this labour intensive
low-wage manufacturing-for-export and
focused on the rapidly growing sector of high
tech global services.
Still, on the whole, the performance of India
lags behind China s, and some put this down
to India s penchant for a centrally-controlled
economy that inhibits the free market.
The question before us is: should we adopt
the cheap labour intensive manufacturing path
and the exploitation of locational advantages
by foreign direct investment, or, given our
size, take a leap into the future into indige-
nous-driven innovative, high-tech, game-
changing activities, especially since we are not
considered a low-wage country. The Dutch
disease saw to that.
Mary K King
Foreign investment in economic development
Should we adopt the cheap
labour intensive manufacturing
path and the exploitation of
locational advantages by foreign
direct investment, or, given our
size, take a leap into the future
Links Archive June 12th 2013 June 14th 2013 Navigation Previous Page Next Page