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Monday, July 7, 2025

Diversification, why so hard to do?

by

20160219

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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