Many are now beginning to understand the value of cloud Computing, Artificial Intelligence, 3D Printing and Robotics on a slowly accelerating scale of acceptance and application, but will exponentially explode over the next 2 – 3 years. But only just over a year ago, the Digital Age was finally recognized as an industrial revolution, as articulated by the World Economic Forum, Davos 2016. Whilst this was being conveyed through this medium since late 2015, there now appears to be an explosion in this realization through mostly the adoption , availability and rapid growth of the enabling technologies as writers and commentators started on boarding with the possibilities of digital technologies, not only as a business game-changer, but as a societal phenomenon.
Generally, Economic diversification means adding capability and capacity to other areas of the economy so that in times of slow growth in one sector(s), other sectors can maintain or increase their effectiveness. Usually this means making investments in increased capacity through more advanced means, whether in production methods or human capital development.
A typical example would be in Trinidad & Tobago for example. The core of T&T’s economy can be said to be oil and gas. Indeed, T&T is said to be an energy- based economy as oil and gas accounts for a large percentage of GDP. Diversifying this economy then would mean increasing production capacity and capability in other core areas or sectors such as agriculture, tourism, manufacturing, other goods and services, ITeS being one such sector.
ITeS is one of the fastest growing industries, globally. India’s flourishing ITeS sector produces almost 10% of its GDP, as it provides goods and services locally and internationally. More advanced nations such as the United States and Canada, and EU countries also derive significant value from ITeS, and this sector is growing at great pace globally. Information Technology enabled Services, and the global information technology industry according to the Computing Technology Industry Association or CompTIA, was expected to reach approximately 3.8 trillion in 2016.
T&T must engage this industry, as it offers a real and sustainable path to growth and Development. The Government of The Republic of Trinidad and Tobago (GORTT) in 2011 initiated a process, which has culminated in the award of an IADB loan for a project entitled Global Services Promotion Programme. The Ministry of Planning and Development has since published an Expressions of Interest notice on its website as a point of departure and this augers well especially in today’s global economic circumstances of low oil prices.
Since 2014, there has been a precipitous fall in oil prices from a high of almost USD 110 to a low of $44.67 today, June 16, 2017. It can be noted now, that the price of oil in the 2016-17 budget was USD 45.00.
The need for diversification is lucid and urgent. The need for innovation in agriculture, manufacturing, tourism, sport, culture, and education as revenue earners requires decisive action, in pure and simple words. Urgent action against inefficiencies, economic depressants such as crime and corruption is of utmost importance in a non-partisan approach to the future of Trinidad and Tobago.
But for diversification to achieve value generating capacity and capability is not simple and easy. Sinc 2011, the Ministry of Planning has been engaging ITeS as a strategy for economic growth. In six years, the initiative had only just reached the point of departure where financing has been arranged through the Inter-American Development Bank. An Expression of Interest has been formulated, responses are to be submitted, which will then be evaluated. The process will then move to the selection and award of contracts and then implementation. The length of time this process will take is open for discussion.
The implementation of strategies may very well take another few years, given the bureaucracy. Can Trinidad and Tobago wait that long?
Facing austerity measures, facing uncertainty in oil prices, and economic hardship the population may very well seek a change in administration. Further delays are expected and hence time is given to other players in the global market to achieve market gains in ITeS. This will make diversification even harder.
Given these circumstances, Trinidad and Tobago needs a “shot in the arm” to leapfrog into the sphere of sustainable economic development.
All is not lost, since there exists a mechanism for achieving economic prosperity without the reliance of the oil and gas sector. However it requires a transformative process as opposed to diversification.
In diversification of the economy new industries producing new products and to changing demographics, change occurs as new sectors emerge to compete in global markets, providing sustainability in local development.
Transformation creates the environment for all different contributing dimensions of the economy to flourish, whilst creating new ones. Pre-1945, Japanese society embraced a militarism culture, gaining notoriety as a fiercesome nation. It’s Military strength was the basis for national development and stability. Imperial Japan was the only non-Western world power and a major force in East Asia . Without delving into historical antecedents and the effect these may have had on Japanese society, it adopted the doctrine of “Enrich the Country, Strengthen the Armed Forces”. Japan’s participation in World War 11 was strong, fearsome, often violent but honorable to its culture. It was a military power. All of that changed with the bombing of Hiroshima and Nagasaki. From then till now Japan has been transformed from a world military power to a world economic power. The environment was created for Japan’s economic transformation into a world of economic power with its surrender.
The transformation was spectacular. It was epic. But it took the will and good sense in the face of the realization that their country could have been occupied and ruled over by another country for Japan to surrender and abandon their old ways.
India has also been transformed into an economic power house in the last twenty-five years. From a weak economic and geopolitical role, it has blossomed into an economic powerhouse, with a human development strategy, coupled with a strategic approach to engaging the global economy. ITeS contributes to 10% of GDP.
The transformation was achieved mainly in part through a political maturity that allowed an understanding of the treats to its existencial sustenance and survival as rivals built capacity and capability around their borders.
In Trinidad and Tobago, transformation is needed, in order to diversify. Economic transformation will be achieved when a rapid, fast-tracked approach to economic development is adopted, an all out embrace of the digital economy. The Digital Economy transforms the old and tired models of economic development and breathes new life into the traditional pillars of the economy in agriculture, manufacturing, tourism, sport, education, culture etc as new and exciting opportunities will emerge as are presently being achieved by smaller, less resourced countries.
This Transformation, the creation of an environment for prosperity in a sustainable economy, is needed in Trinidad and Tobago.