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A Government misstep

Monday, January 15, 2018

The announcement of Dr Farrell’s resignation was followed almost immediately by the appointment of a government appointed committee headed by Mr Christian Moutett to seek out from the private sector any large projects that they wish to undertake; I presume so that government may assist them in the diversification of the economy.

The alacrity with which this was done, coupled with the repeated talk about setting up an aluminium products facility, seem to suggest that the approach to economic diversification that was being taken by the EADB did not fit in with that which our government preferred, given also Farrell’s claim of government’s tardiness in the adoption of his Board’s recommendations.

It is very significant that the new committee is looking at the private sector as opposed to seeking to develop a system that could diversify and maintain the sustainability of the economy.

But this is in line with what we have come to recognise as economic development in T&T—foreign projects in the energy sector; projects in Pt Lisas and LNG, to build plant to exploit the waste product, natural gas; industrial parks to attract foreign investment; hotels to attract tourists.

Many of these depend on a depleting resource and as a result did not provide us with a sustainable economy, though as the resource lasts and global prices are maintained we enjoy a good living.

Some years ago Etzkowitz showed us that sustained economic development depended on the vigorous activity of the Triple Helix in a country—the integrated effort of the private sector, the government and the R&D institutions. These together can produce what we know as an innovation system, which according to Schumpeter continually produces the technological innovations that improve productivity and generate companies that replace older ones that fall by the wayside as the technology develops.

The fundamental role of government should be to fund the generation of the basic knowledge and innovations that drive the progress of the economy.

A small country that does not have the same scale of human resources available to it as large economies has to impose its own version of the Triple Helix in choosing the areas of technology and/or industries on which to focus its attention.

This normally calls for a foresighting exercise, one in which the various scenarios that the country envisions for itself can be examined.

The result then is, say, where we wish to be in 2030, and a backcasting exercise developed—ie what we have to do from now and continuing in order to get there. The current Vision 2030 is a far cry from this exercise.

This is the approach adopted by the EDAB under its Chairman Dr Farrell. The University of Cambridge Group was engaged with the help of the IDB to recommend an economic roadmap, via a foresighting exercise, to allow us to choose the economic areas in which our Triple Helix/innovation system was to occupy itself.

The report of the Cambridge Group was recently presented to the public. To my mind it was incomplete and the EDAB had some more work to do to identify the emerging technologies that would give our chosen economic efforts sustainability.

The EDAB had requested that the initial funding of the diversification be sourced from the interest earned from the Heritage Fund (an apt use of the proceeds of such a fund), particularly so since this would be in foreign exchange required to fund the capital resources required by the innovation system.

This was refused by the Cabinet and instead a sum of TT$50 million was proposed as the country’s innovation fund.

The EDAB also recommended that NIHERST be redirected to manage the development of this innovation system.

Alas, like the PP Government, the fundamental importance of the creation of a national innovation system to the diversification of our economy was not appreciated or understood by this government.

The last time we got instead the “i2i” serendipity programme, and today the search for private sector large projects. The history of our private sector tells us that it is not about the higher risk investment into R&D and the requisite global export competition.

This government has shown no interest also, outside the traditional energy sector projects and the like.

This leaves our R&D institutions, in particular UWI, out on a limb, perhaps to continue to concern itself with reparation!



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