Letter: Our economic conversations

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Dear Sir:

Recently I was engaged in a conversation on the import of electric vehicles into Trinidad and Tobago. They were lauded for their energy efficiency and the lack of carbon based emissions into the atmosphere, ignoring that of the prime mover, which produces the electricity.

Another current conversation is into the need to introduce renewable energy systems — the need to import solar cells, wind turbines, electricity generating equipment to utilise coastal currents and the like. Indeed there has been talk about us manufacturing solar cells for export.

However, it is unreasonable to attempt to compete globally in a highly competitive area if we do not have a technological advantage, something new/innovative to offer, which we do not have. Again, these conversations extend to our poor public transportation system and though we may not wish to put in place the high speed train system once recommended to us, such an upgrade will again be based on imports.

Even the sea-bridge to Tobago is fundamentally based in imports unless we innovate as our trade unionist Watson Duke did by swimming to Trinidad — create some personal type of swim-aid!

Indeed we are into the fourth industrial revolution and the disruptive telecommunications and digital technologies are impacting on what we are also beginning to see as the necessities of life. The mobile smart phone is now an essential personal device, the Internet brings into our homes, into the palms of our hands, streaming of movies, news, content from abroad, social gossip, information on request from Google etc. and the Internet of things is ahead.

All of these either have a direct or imply import content. For example, Netflix does business in Trinidad and Tobago, charging for its services in US dollars, foreign exchange, while it does not have a business place in Trinidad and Tobago, Facebook and LinkedIn are soliciting advertisements locally.

Many of the above products and services are indeed necessary for, say, the protection of the environment, for improving the local infrastructure and services and even for our convenience. But to benefit from all of these and the myriad others we need but cannot produce locally, as mentioned, they have to be imported, we need to have the foreign exchange to purchase them; hence we have to export.

If we were to pause a bit it is clear that we are a small and open economy and we cannot produce most of what we need to survive. Therefore, it is mandatory that we export, earn foreign exchange so that we can import. But to export we have to be globally competitive. We have survived so far simply because we possess petroleum and, live off the rents, the foreign exchange left in the country from the exploitation of the resource by foreign investment and its technology/innovation.

The sustainability of the major earner of foreign exchange is being threatened in the short term by the depletion of the resource and competition from shale gas/oil and in the longer term by the need to reduce the use of petroleum to combat climate change. Hence, the major conversation has to include what we can export and in particular how do we use the technologies of the fourth industrial revolution to produce globally competitive exports.

Today the import bill for Trinidad and Tobago stands at some TT$60 billion, funded mainly by the rents from the energy sector. Some commentators suggest that the diversification of the economy to fund these imports should eventually be left to serendipity, the activities of the general public.

For example some could export pepper sauce, pumpkins, others more cosmetics and even others beverages and yogurt (dahi). Our cocoa, as we have heard for decades, can also be the basis of an industry that can earn foreign exchange.

The problem here is twofold. First, these activities require financing and they are higher risk that our un-adaptive private sector is willing to take. Secondly, many of them are not new to the global market and in general there is no or little R&D locally in support, together with little or no market development, marketing and sales to make them globally competitive. But more so, as Prof Anthony Clayton of UWI recommends, we have to produce disruptive innovations.

The most important concept of sustainable economic development was articulated by Paul Romer, Nobel Prize winner in economics, and that is: It is the endogenous and innovative activities of a country that drive its sustainable economic development, which should be the backbone of our diversification conversation. In general these endogenous activities must be supported by knowledge, R&D and innovation, market development, marketing and global sales and all of these underpinned by a financing system.

The literature tells us that even in the large developed countries the system that supports such sustainability is the Triple Helix; a national innovation system that integrates the efforts of government, the R&D institutions and the private sector. The key effort here is knowledge/innovation. Further, R&D is not about a lone researcher and his student working in a lab nor the man in the street getting an “ah ha’ moment. It is the agglomeration of inventors, innovators, entrepreneurs and financiers which may even support any serendipity.

Being a small nation in which availability of trained manpower, R&D skill, is limited, this agglomeration can be achieved by selecting a few areas for attention by the Helix. These areas, technologies/industries, should be chosen a priori by a foresighting exercise. Thus, our major conversation should turn to how do we build our version of the Triple Helix, our national innovation system? Normally the government policies drive the Helix.

However, our government appears to be concerned in the short term with extending the life of the energy sector, while, at best, its onshore efforts are serendipity — a port, a factory to make aluminium car wheels and cable/wire/sheets, another industrial park and a hotel in Tobago.

Mary K King
St Augustine
Trinidad

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