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Letter: Let the flowers bloom

Dear Sir:

A commentator on a radio talk show in Trinidad and Tobago agreed that it is necessary that we diversify our economy. However, he does not see a fundamental role for the government or the need for centres of excellence, which concentrate on the development of a few technologies/industries via innovation. Instead he sees many entrepreneurs developing small to medium enterprises (SMEs) that focus on forming a myriad set of products/services for export markets. His words were; let the flowers bloom.

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Indeed if we were to look today at Germany and even Silicon Valley of the USA there are widespread SMEs whereas in the former case the range of goods is large though addressing niche markets, while the products/services of Silicon Valley are driven by the digital technologies.

However, both models have been the subject of duplication attempts in various areas, all of which have been disappointing failures. If we see such widespread SME involvement in our export thrust as the objective of our economic diversification, the task ahead is to choose a strategy to achieve this objective given the historical constraints of the socio economy.

When the German model is examined at the SME level many of the companies are family owned and the innovations depend on very strong technical and vocational training of the workforce. The question then arises; should we plan our diversification strategy by training our people in the new and various technologies – graduates, technicians etc. – and leave them and the private sector entrepreneurs to select niche opportunities and build globally competitive companies, even with government facilitation?

What is the track record here in Trinidad and Tobago? It was always appreciated that we have to diversify the economy and the private sector could be the driving force – though it seems happy to simply import-markup-sell. The Trinidad and Tobago government instituted a negative list and encouraged the local private sector to produce the listed goods locally – the hope was that after a time the private sector would develop the skills/expertise to export, when the negative list was lifted. Nothing of the sort occurred. On lifting the negative list the screwdriver industries were closed and the private sector reverted to import-markup-sell.

Another Trinidad and Tobago government initiative was Pt Lisas where petrochemical plants were built, again with the hope that the private sector would go downstream into the many products that such commodities could spawn – never happened. We had a VCIP that failed when funding of the entrepreneurs was thought to be the problem.

Today we are teaching courses in entrepreneurship, innovation, providing small loans to prospective SMEs, ‘i2i’ competitions, business incubators, and still the export SMEs remain non-existent. Also, we are challenged by a long standing recession based on a shortage of oil and gas and their low prices in the world market.

Yet we have one of the local conglomerates complaining that it has adequate cash in hand, TT$S, but is unable to invest in its traditional activities (import-…) in other countries with better economies, since it cannot raise foreign exchange locally to so invest. The local soil is not fertile enough for this investor.

It has also been suggested that the many Trinidad and Tobago graduates who cannot find jobs should instead be creating jobs and exports as they build these SMEs. Yet 79% of our graduate workforce emigrates. Why are these flowers not blooming on our shores?

Some tell us that life is still comfortable in Trinidad and Tobago and a further deterioration in our economy is needed to force the population to respond and build exporting SMEs. If so why did Easter Island collapse, and Haiti is following in its footsteps? The population seems incapable of adapting to the new circumstances as the petroleum resources deplete.

What then explains this phenomenon? Prof John Foster of Queens University, Australia, may indeed have the answer. He defines an economy as a complex self-adaptive system, which has the capacity to adapt to changes in the economic environment to its continuing advantage. However, he warns that such a system can lose or not develop this capability depending on its history and its derived culture.

For example, our economy was not built by the society – the society was imported and fashioned by the economy, the plantation. The underlying characteristic of this economic model is that foreign investment with the imported labour produced the commodities for export and the rents that remained locally were used to purchase the necessities for local life, which were imported.

The local private sector grew into using the rents to provide the imports that sustain the economy and eventually produced the majority of jobs in the country. Such a complex system has never had to develop the ability to adapt to such a change as we now envisage.

Hence, there has to be a deliberate initiative that seeks to create a new economy. This initiative has to be focused on, for example, a few technologies and industries and become the vector via innovation that, hopefully, spreads someday far into the future into something that may even look like a Silicon Valley.

The associated literature talks about a Triple Helix in which governments have played the leading role in partnership with the private sector and the R&D institutions where the latter provide the centres of excellence that create the ideas/inventions that lead to innovative products and services.

Mary K King
St Augustine