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Diversification, why so hard to do?

Saturday, February 20, 2016

Since 1956 successive governments have faced the issue of diversification yet none has been able to lead us there, far less to keep us there. As John Lennon said, “It’s like trying to shovel smoke with a pitch fork, in the wind.” The physical conditions are bad, the tools in use are bad and the substance of the thing itself is contrary to what is trying to be done with it. 

The first thing we need to do is to control the wind. That means changing our market conditions—we need a competition-based business culture. The pitch fork won’t do, we need to uphold competition principles, that is, facilitating market entry for potential new investors from the private sector (ie eliminate entry barriers so more efficient players can enter the market quickly and bring more efficiency in cost and resource allocation).

Money is to be invested where it can generate the highest return, given a level playing field. Instead of going through the details here, simply consider this: the WTO reference paper on telecom liberalisation contains the basic tenets for competition-based liberalisation. 

Apply these same principles to our other select markets. Use them as a prescription for opening up those critical markets we have, that are not effectively competitive.

What we need first is effective competition as the backdrop against which we can foster our critical markets to grow. The diversification areas are already there—tourism, performing and visual arts, agriculture, construction, marine-based services, athletics, football and cricket even swimming, SME incubation for niche markets and technologies, consulting and advisory service within the region. 

T&T is a first mover in many fields of endeavour within the Caribbean, we can leverage this first-mover experience and knowledge and be a capacity builder and knowledge broker to the other countries that may not be able to afford first-world technology brokers.

This will bring “development” that can drive “growth” instead of growth without development. These competition market principles in turn will catalyse the emergence of pockets of investments that can deliver diversified growth. The diversification will virtually create itself and ascend from the mix, wherever it will. 

We’ve been fooled too long by thinking too much of the “what to diversify” when it is the “how” that escapes us. Put the proper market operating mechanics in place and support the dynamics of the changes these bring, enough so they can take hold. 

Our underlying domestic culture of doing business is very much at odds with competition market forces. Marshaling these changes will be the ultimate test of many a politician, who under the system of funding elections, owe their success a lot to business interests and owners. 

Nevertheless, if one is interested in living and is a student of wisdom, it is clear that corruption and monopolistic behaviour will not sustain any regime, country or government and failure is the ultimate destiny of those who choose this path. 

First World countries have learned this lesson after many occasional failures. That is why no matter what the terms, they will always steadfastly pursue and uproot corruption. They understand this as a first principle of their sustainability and formula for longevity. 

So must we. We must learn this too, that you cannot sacrifice the sustainability of the country to any desires for the ways of corruption and unfairness. Every successful country is living testament of having faced and essentially overcome this predicament.

John Thompson,

Fort George Road


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