Leveraging the talent that exists in the services sector is one sure way for this country to realise sustained growth in the non-energy sector says Dr Terrence Farrell.
Professions such as accounting, energy services and legal were just some of the varied disciplines which this country could compete in, he said. Nationals possessing their skill sets were already plying their trades regionally and internationally, he added.
Speaking at the Employers Consultative Association Champion Employer Awards and Gala Dinner held at the Hyatt Regency Hotel, Dock Road, Port-of-Spain, on Thursday, he made it clear this was T&T’s best bet, since the twin-island Republic could not rival China in manufacturing.
He pointed to the growth of online shopping as another dimension to the challenge that could confront this country in that sector.
Farrell, however, did not rule out T&T’s exploration niche manufacturing opportunities that would allow this country to compete on a basis of unique raw material or unique designs, where intellectual property could be effectively protected.
But, even this model, he said, had to be innovative and constantly so, to succeed.
The economist said he never supported efforts by numerous administrations which chose to draft industrial policies in which it selected industries believed to be able to generate new engines of wealth creation.
“Services, I think, are our best bet. Our citizens have to be employed in decent jobs which pay good salaries. Neither niche manufacturing nor an integrated chemicals sector will absorb sufficient of our underemployed workers.
“The industries in which we can compete on location and history are: tourism and the national environment specifically our unique plant and animal life. Because our history has been so traumatic, there is a tendency to be amnesiac as Derek Walcott termed it. It only lives in the forts and derelict sugar mills. But confronting the trauma is one way of overcoming it, and we can then discover that our history has been really interesting and can be interesting to foreigners,” he said.
“The Brechin Castle Sugar Museum is an example in that regard. Our plant and animal life also support tourism, but importantly, should also support an indigenous pharmaceutical industry. The medicinal and therapeutic properties of a host of local herbs and oils such as coconut oil and aloe are yet to be properly explored and commercialised.”
But that was not where Farrell ended his predictions on sectors that could help this country maintain a healthy and sustainable economy outside of energy.
He said T&T should invest in industries such as agriculture and minerals in Guyana, Suriname and Haiti, and tourism in Cuba.
“I am doubtful about industrial policy because I am doubtful that government officials have the capacity and knowledge, superior to the market, to determine what businesses and industries should be pursued.
“Governments, in my view, should provide extensive and efficient infrastructure and efficient public services and leave much else to the private sector. There are exceptions of course, but these should be genuine exceptions based on strict criteria and the criteria reviewed for relevance over time,” he said.
Farrell added, “The alternative engines must be tradable goods and services because we need to earn foreign exchange and that requires that we address global markets.
“By global markets, I mean any market of any size outside the home market, where hard currency can be earned. Some economists argue that the industries producing the tradeable goods and services must exhibit increasing returns to scale. I think where increasing returns are possible, the opportunities should of course, be grasped.
“But I think that niche markets can be effectively and profitably exploited where firms are nimble enough to shift from niche to niche. I also think that external economies are as important as scale economies, if not more so.”
amnesiac as Derek Walcott termed it. It only lives in the forts and derelict sugar mills. But confronting the trauma is one way of overcoming it, and we can then discover that our history has been really interesting and can be interesting to foreigners,” he said.
“The Brechin Castle Sugar Museum is an example in that regard. Our plant and animal life also support tourism, but importantly, should also support an indigenous pharmaceutical industry. The medicinal and therapeutic properties of a host of local herbs and oils such as coconut oil and aloe are yet to be properly explored and commercialised.”
But that was not where Farrell ended his predictions on sectors that could help this country maintain a healthy and sustainable economy outside of energy.
He said T&T should invest in industries such as agriculture and minerals in Guyana, Suriname and Haiti, and tourism in Cuba.
“I am doubtful about industrial policy because I am doubtful that government officials have the capacity and knowledge, superior to the market, to determine what businesses and industries should be pursued.
“Governments, in my view, should provide extensive and efficient infrastructure and efficient public services and leave much else to the private sector. There are exceptions of course, but these should be genuine exceptions based on strict criteria and the criteria reviewed for relevance over time,” he said.
Farrell added, “The alternative engines must be tradable goods and services because we need to earn foreign exchange and that requires that we address global markets.
“By global markets, I mean any market of any size outside the home market, where hard currency can be earned. Some economists argue that the industries producing the tradeable goods and services must exhibit increasing returns to scale. I think where increasing returns are possible, the opportunities should of course, be grasped.
“But I think that niche markets can be effectively and profitably exploited where firms are nimble enough to shift from niche to niche.
“I also think that external economies are as important as scale economies, if not more so,” he said.