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T&T can’t afford to lose sight of diversification goal

Published: 
Thursday, April 12, 2018

The first sign of trouble came in January when Dr Terrence Farrell, a respected economist and former Governor of the Central Bank, stepped down as chairman of the Cabinet appointed Economic Development Advisory Board (EDAB).

Just four months later, with the resignation of David Abdulah, the EDAB looks like it is on shaky ground.

It’s not only the matter of repercussions from two high profile resignations in quick succession but growing disquiet over the apparent inactivity by this crucial advisory group for the year so far.

Word on the ground is that the group has not had a single meeting since the departure of Dr Farrell and that its recommendations for adjustment, diversification and transformation of the T&T economy might now be gathering dust in some corner at the Office of the Prime Minister. Unfortunate, if that is indeed the case.

For now, we hold on to the hope that the Keith Rowley administration is not dropping the ball on an initiative that seemed like this nation’s best chance of meeting the challenge of structure adjustment and avoiding its worst consequences en route to economic recovery.

It looked like a step in the right direction when, in November 2015, the EDAB was appointed. At the time the country was in the throes of an economic contraction which started in 2014 with plummeting energy prices. Since then, the free fall in global prices has been halted and there has been some recovery. At one point this week a barrel of oil was trading above US$70.

However, T&T is still struggling to emerge from a very difficult period of adjustment and deep cuts in expenditure, as painful as they have been, are still barely enough to stave off higher unemployment, prices and debt. The revenue situation remains grim, mainly because this country is still so heavily dependent on the oil and gas,

Still, we have the hope that with a fully functional EDAB playing an “advisory and implementation role in the strategic management of the economy” some progress would have been made by now toward the economic diversification needed for long term economic revival.

Even before Dr Farrell’s departure, there were worrying indicators of a disconnect between the EDAB and the Government. Hints were dropped here and there that advise was being ignored, which defeated the purpose for which that committee was created.

A fairly detailed document produced by the EDAB in May 2016 has not been adopted, even in part, sources say. By the time Dr Farrell stepped down, he was clearly frustrated that there had been little or no response to the many recommendations and advisory notes that had submitted to government over the course of several months. He said as much following his departure.

This week, Mr Abdulah—whose track record of public service cannot be challenged—has issued a statement that echoes to some extent the concerns expressed by the former EDAB chairman.

Meanwhile, the government’s silence on the future of the committee—if indeed it has a future—only adds to the uncertainty.

Like the National Tripartite Advisory Council, which has lost the support of the trade unions, the EDAB is looking more and more like it will be left to fade into oblivion.

I cannot speak for either Dr Farrell or Mr Abdulah but it is my firm belief that no professional would want to put his reputation and integrity at stake merely to create a perception that this—or any—political administration is seriously pursuing policies, programmes and projects for T&T’s long term development and transformation when that is not actually the case.

Without real work that yields measurable results, this country could be heading toward a painful adjustment experience that will make the economic downturn of the 1980s look like a walk in the park. Although it sometimes feels that way, we have so far been spared full blown social consequences.

In theory but apparently not in practice, the EDAB’s remit is to advise the Prime Minister on strategies to boost the country’s economic potential and performance with sound economic analysis, proper public sector management principles, and good governance.

In fact, a blueprint had already been developed, a diversification strategy, yet to be adopted by the Rowley administration, that identified seven industries—food and beverage manufacturing; maritime aviation and related services; the creative industries, energy services, tourism and nearshore financial services —with the ambitious objective of achieving 40 per cent non energy exports by 2030.

At present, only 15 per cent of T&T’s exports are from non-energy industries, so meeting that target requires an average growth rate of about 10 per cent a year.

Some of the approaches recommended by the Farrell-led EDAB required new and difficult things for T&T, like innovation, institutional reform, foreign direct investment, and collaboration between government, industry and tertiary level institutions.

Successful economic diversification would have to be private sector led and supported by the public sector, focused on the global marketplace and responsive to global issues and developments.

There is some amount of risk taking involved since, in reality, T&T will take decades to be weaned from its reliance on oil and gas.

The trouble is, the country remains stuck in a mode of plenty talk and little action, reluctant to leverage capacity and capabilities that are already available to get to that better place of economic strength through diversity a decade and a half from now. That requires making a strong start on research and development, market intelligence, analysis, economic and commercial diplomacy, so that over the medium to long-term, T&T would not be as susceptible to the external shocks that have contributed to the current economic decline.

Successive administrations in T&T are guilty of the insanity of doing the same things over and over and expecting different results. Economic booms and busts have come along because the nation rises and falls on the fortunes of oil and gas and no real effort is made to shift out of that mode.

It is easier, I suppose, to stick to the route of political expediency, with short sighted vote-getting strategies that have little life beyond the five-year electoral cycle.

Why push for higher productivity, increased efficiency and discipline, which are among the objectives that must be achieved on the road to the positive transformation envisioned in that policy document developed by the EDAB almost two years ago?

Isn’t it easier and more comfortable to pay lip service and create perceptions than do the difficult work necessary for change?

Still, optimist that I am, I hold on to the hope that the EDAB can be put back on an even keel.

The two vacancies created with the recent departures of Dr Farrell and Mr Abdulah can be filled by qualified, high calibre individuals who will join Dr Marlene Attzs, Professor Karl Theodore, Dr Selvon Hazel, Dr Ronald Ramkissoon and Alison Lewis in developing a solid plan to transform the economy and society.

Of course, there will also have to be a clear demonstration by Government that it is willing to accept and implement the EDAB’s proposals which will result in more positive policy direction across ministries, agencies and sectors.

The good news is that while valuable time and opportunity had already been lost, it still isn’t too late. The goal of economic diversification by 2030 is still within reach but the serious work to get there needs to start now.

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