The Minister of Trade (and now Diversification?) continued the diversification rhetoric, even going as far as referring to Lloyd Best's Muscovado Bias, (though he did not use the term) in that we export our indigenous products in containers and re-import them as manufactured products.He concluded that since we cannot compete with China or India in manufacturing, we have to, yes, a cliché, find niche markets. Further, a preliminary report from some Cambridge University post-graduate students looking over the past few weeks at our economy suggested that our subsidies may be masking inefficiencies of our manufacturers (what we are all already well aware of).Minister Cadiz defends these subsidies, saying others do it, and these subsidies, according to him, make our manufacturers efficient by, for example, Caricom standards.In fact, one report emanating from a United States Embassy suggested that the reason why T&T backed away from supplying Jamaica with natural gas at "regional" prices was that this would have eroded the comparative advantage of our manufacturers.
As the Cambridge University project, students would have argued that these manufacturing subsidies, Minister Cadiz's efficiencies simply allow our manufacturers to avoid increasing their productivity via better technologies, higher quality staff or looking at innovation. Further, such subsidies redirect an un-earned share of energy sector rents into the pockets of our manufacturers.The then Minister of Energy, Carolyn Seepersad-Bachan, recognised that such subsidies were counter- productive, especially if we wanted to encourage our people to shift to greener technologies, which, at current prices, could not compete with, for example, our subsidised electricity rates.
Subsidies may be bad economics, but they have been good politics, especially for a regime that focuses on being re-elected. However, if Cadiz's comment that subsidies equate to manufacturing efficiency is our export strategy, then we had better hope that we continue to find more petroleum and, if this is natural gas, that we are able to compete with the glut of gas on the global market-a situation that could last for decades.Cadiz claims that there is almost no research and development (R&D) taking place in this country and this affects the growth of our manufacturing sector.
The truth is there is little R&D focused on local economic development, since the competitive advantage of our manufacturers is not knowledge, nor do they intend to pay for such research locally-any technology required is simply imported.The Government has to spend to diversify the economy, but this spending has to create new investment in higher risk companies that are willing to be innovative, use technologies to drastically improve their productivity and recognise that in today's global market the acquisition, use and creation of knowledge are key to competitive advantage.
Developing countries that have succeeded in diversifying their economies had to implement a very strict economic regime, authoritatively managed across government ministries and which co-ordinated the private sector and public at large.Our laissez-faire approach to economic development, in which Food Production Minister Vasant Bharath is doing his own thing in corn and wishing that our old cocoa plantations could resume the glory of the Muscovado days, in which the Prime Minister repeats the PNM call for expansion of the printing and packaging industry, marine, etc, in no way resembles the highly non-linear and systematic approach that has come to be known as a national innovation system.
Victor Darceuil
Via e-mail