The Cen­tral Bank Gov­er­nor says we need to start mov­ing quick­ly to di­ver­si­fy the econ­o­my.How­ev­er, he sees di­ver­si­fi­ca­tion as a pri­vate sec­tor ac­tiv­i­ty; they have to de­ter­mine what they see as busi­ness op­por­tu­ni­ties, es­pe­cial­ly those that earn for­eign ex­change. Yet, he says, the pri­vate sec­tor is wait­ing on Gov­ern­ment to tell them what di­ver­si­fi­ca­tion looks like and the Gov­ern­ment is wait­ing on the pri­vate sec­tor to do cer­tain things. In the mean­time, he is wit­ness­ing the mu­sic play­ing while the two sides are not ready to dance.

Oth­er com­men­ta­tors on our di­ver­si­fi­ca­tion have dug a bit deep­er in­to the prob­lem. For ex­am­ple, Prof Ri­car­do Haus­mann sees that our pri­vate sec­tor is op­er­at­ing in the sparse pro­duc­tion area of glob­al trade. As a re­sult our pri­vate sec­tor does not have the skills to jump in­to pro­duc­tion of high­er added val­ue prod­ucts to di­ver­si­fy the econ­o­my.

Haus­mann sees the need for an in­ter­ven­tion by the Gov­ern­ment to pro­duce these skills as a pre­cur­sor to eco­nom­ic di­ver­si­fi­ca­tion. Still, this is in­suf­fi­cient and does not ful­ly de­fine the prob­lem. Both Sir Arthur and Lloyd Best talked about the cul­ture of our pri­vate sec­tor. Sir Arthur said our pri­vate sec­tor is loath to take the risks to in­dus­tri­alise the coun­try while Best won­dered if a cul­ture can change it­self.

The NAR gov­ern­ment opened a busi­ness in­cu­ba­tor to en­cour­age in­no­va­tion/en­tre­pre­neur­ship. This Gov­ern­ment is at­tempt­ing to do the same un­der the Min­istry of Labour. We have had im­port re­stric­tions, cou­pled with en­cour­age­ment of pi­o­neer in­dus­tries, in­cen­tives to the pri­vate sec­tor to do re­search and de­vel­op­ment, we have had the Ven­ture Cap­i­tal In­cen­tive Pro­gramme, Pt Lisas to en­cour­age down­stream in­vest­ment, Tamana; you name it, we have tried it, even in­no­va­tion com­pe­ti­tions. Some failed and the oth­ers are go­ing the same way. There­fore, there must be a more fun­da­men­tal prob­lem that is in­hibit­ing our at­tempts at eco­nom­ic di­ver­si­fi­ca­tion. I have writ­ten ex­ten­sive­ly on this; here I will sketch an out­line of the prob­lem.

Economies are what the lit­er­a­ture calls com­plex self-adap­tive sys­tems. They are com­plex be­cause they are made up of in­ter­con­nec­tions and link­ages among many, lo­cal and in­ter­na­tion­al, se­mi-au­tonomous sys­tems whose be­hav­iour de­pends on their in­di­vid­ual his­to­ries. These sys­tems can adapt to un­cer­tain­ties/dis­con­ti­nu­ities and based on these ex­pe­ri­ences ap­pear to be able to even in­flu­ence their fu­tures.This abil­i­ty to adapt is con­strained by the his­to­ry of the econ­o­my; for ex­am­ple, our pri­vate sec­tor has been very suc­cess­ful and has en­riched them­selves by op­er­at­ing on­shore in eco­nom­ic cer­tain­ty, be­hind the break­wa­ter of a for­eign in­vest­ment dri­ven plan­ta­tion, trop­i­cal agri­cul­ture, then pe­tro­le­um.

Be­sides the boom-bust cy­cle our on-shore pri­vate sec­tor has lived a peace­ful life sup­ply­ing gen­er­al­ly the needs of the pop­u­la­tion with no ma­jor eco­nom­ic dis­con­ti­nu­ity. Hence, they do not re­al­ly see the need to di­ver­si­fy the econ­o­my (they pay lip-ser­vice to it) and they can­not adapt, even if such a dis­con­ti­nu­ity threat­ens the sta­tus quo.In gen­er­al, the abil­i­ty to adapt by an or­gan­ism de­pends on its his­to­ry of hav­ing to sur­vive over gen­er­a­tions to life threat­en­ing en­vi­ron­men­tal un­cer­tain­ties and dis­con­ti­nu­ities. Our pri­vate sec­tor has had no such ex­pe­ri­ences, so has not de­vel­oped this ca­pac­i­ty to adapt.

Di­ver­si­fi­ca­tion of our econ­o­my in the face of the threats of the de­clin­ing en­er­gy sec­tor and the cur­rent glob­al un­cer­tain­ties re­quires the es­tab­lish­ment of an ex­per­i­men­tal­ly or­gan­ised econ­o­my; an em­bry­on­ic adap­tive eco­nom­ic spi­ral that can feed off the cur­rent econ­o­my (in­vest­ments) and, in time, gath­er, im­ple­ment and cre­ate knowl­edge that will en­cour­age in­no­va­tion, the com­pet­i­tive ad­van­tage of to­day.

Mary K King

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