The present Government is being criticised for the economic situation in which we find ourselves today; according to Dr Bhoe Tewarie, “The persistent deficit, high overdraft at the Central Bank, the absence of economic growth, robust non-energy exports and demonstrable ability to repay debts are, taken together, strong reasons for concern about the economy. The Keith Rowley Government has not been managing well.”
Still, the Leader of the Opposition tells us that when the People’s Partnership was in office they created some 50,000 jobs and promised that the same will be done if the United National Congress is put into office. Tewarie asks, “What has the Rowley government done for the energy sector?”
If we were to step back a bit it is clear that the thinking here is that it is the responsibility of the government to drive the economy, to provide jobs, to make the energy sector work such that it provides the rents that fund our necessary imports. Maybe this is the legacy of the plantation, wherein foreign direct investment funds and runs the export sector, provides the rents that finance the import-distribute on-shore sector, while government’s income provides the local spending that encourages on-shore jobs and commercial activity.
Our export sector is collapsing; the production of oil has fallen from 240,000bbls/dy to below 60,000bls/dy and we have been unable to maintain the 4 billion cu.ft/dy of natural gas production to meet the demand of the LNG and petrochemical sectors. The hope is to import gas from Venezuela and Grenada, while the local gas fields in the deep water, if they produce anything, will be expensive, which is a threat to the viability of the local industry since the US entry into the global market with low cost shale gas. Even the existing upstream gas producers are demanding higher prices which exacerbates the situation—NGC is no longer the local cash cow of the sector. Thus we see government agents flying about the world trying to negotiate with the energy majors better deals, a larger take from the dying petroleum industry.
In some circles, all of this is seen as a failure of the present government. Indeed it is a failure of every one of our governments! But they are not the only ones to blame. Our private sector is low-risk and has failed to invest in and produce export companies that can complement and eventually replace the energy sector. To date they have been content to live well, off the rents generated by the energy sector.
However, some may say that past governments have tried via, for example, the negative listing to encourage import substitution that could eventually lead to competitive export industries, the building of Point Lisas with the hope that the local private sector would have gone downstream into other exports, the building of industrial parks to attract foreign direct investors. None of these bore fruit and the plantation remains intact.
What all of this tells us is that the solution is not the creation of 50,000 jobs by the now opposition were they to get into office, if these jobs are to be the result of government spending in the construction of houses, roads and the like, or expanding CEPEP, URP or employment in State enterprises. In fact much of this would put further pressure on the reduced rents from the energy sector. Hence the objective of economic development in T&T is not the creation of just any kind of job, but the creation of sustainable and competitive export companies that provide jobs even in this day when the technologies themselves are destroying some jobs.
The real problem before us is how do we go about building a sustainable export economy? If one were to peruse the economic literature it would come as a surprise that we have locally the three components that with proper vision, leadership and determination to succeed, we can build a system that can generate this kind of economic development. Etzkowitz, an eminent economist, tells us that this system is an integration of the private sector, the R&D institutions and government into what he calls a Triple Helix. Though we have had government over the years attempting to give some incentives to the private sector and even funding tertiary education via GATE, there has been no integrated and directed effort to weld the three parties into our version of the Triple Helix in which innovation becomes the market competitive advantage.
However, according to the April-May 2019 MIT Technology Review, innovation, as necessary as it is, today has become more expensive, less productive and needs larger and multi-discipline teams. Given the limit placed on our available people resource, because of our small population size, we have to a priori pick a few areas for innovation, for creating export companies, i.e., we have to put in place a foresighting system within our Triple Helix, our innovation system. Leaving innovation to a man and his dog is obsolete.
The recently disbanded Economic Development Advisory Board appeared to have been a move towards creating this innovation system. But, alas, that too came to nothing.
• Mary King is an economist