Contact Magazine - Transforming Trinidad & Tobago

transforming t&T
Why is it taking
so long?
So far, the sweet scent of petrodollars has
been much more attractive than real economic
diversification
WORDS By: kevin baldeosingh
In his book The Armchair Economist, University of Rochester economist Steven
E. Landsburg writes: “Most of economics can be summarised in four words:
‘People respond to incentives.’ The rest is commentary.”
This is the basic reason why Trinidad and Tobago has failed to diversify its
economy for the past 40 years: because politicians and business people responded
to the powerful incentive of oil and gas money.
As for the commentary, Dr Ronald Ramkissoon, a former senior economist at
Republic Bank and present member of the Economic Development Advisory Board,
noted in an interview with Contact that “while there was identification of the
need for diversification, there was never any sustainable effort towards investment
in research, innovation and the promotion of new high-value goods and services
for export.”
In the last budget debate, prime minister Dr Keith Rowley listed
the sectors that the government has identified as the foundations of
diversification (see next page). They have all been on the table of
different administrations for the past 15 years, but state funding
has seen no returns, particularly in the creative industries. As Table
1 shows, the state has never made any consistent attempt to
facilitate economic diversification, since this must necessarily
start with government getting out of commercial activity.
Economists’ view
UWI economist Dr Roger Hosein, in an email response to Contact,
argued: “The fundamental reason why the Trinidad and Tobago
economy failed to appropriately diversify in the period 1999-2016
was simply because the state did not show enough initiative, and
the incentives or the lack of incentives provided to the Trinidad and
Tobago economy were of such a nature that it was biased against
the non-oil export-oriented sector.”
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Trinidad
and Tobago Chamber
of Industry and Commerce
www.chamber.org.tt/contact-magazine