On the eve of Christmas 2016, I see a need to inform you of the fact that Trinidad and Tobago must embark on change in an aggressive mood, to ensure our sustainability, and this is not withstanding the dire straits of our closest neighbors or global slowdown in traditional economic conditions. I will first look at the global environment and then examine trends to project into our future.
2016 is about to end and it’s important to focus ahead, look at the horizon, and try to comprehend the world around us. This world is clearly so interwoven, now even more so through technology, the occurrence of any event has a ripple effect, some cascading into much larger waves.
The greatest challenge we shall face globally, in 2017 and beyond, will be technological disruption. Global systems will be disrupted causing socio-economic, socio-cultural and socio-political shifts only experienced at the inception of the first Industrial Age. As we head into 2017 also, prevailing conditions continue to amplify problems faced by small oil producing countries such as Trinidad and Tobago and these will not be alleviated in the near or short term. Continued low prices of oil, informal market supply as well as formal supply will ensure high reserves. As high stockpiles result in less buying of inventories from high volume users of energy to drive production, uncertainty of US Policy due to the change in administration results in an abeyance as business awaits clear direction, and this will affect investments. Here in Trinidad and Tobago, investment in oil and gas will also be affected and as reserves depletes, new investments in exploration and drilling will continue to be impacted negatively. Technology will disrupt and provide an avenue for growth and development, creating new business opportunities, generating wealth but negatively impact on traditional jobs.
The price of oil, despite a recent OPEC decision to reduce production, NASDAQ has reported little change in the production levels of the past weeks. There are many issues to consider. Firstly, the availability of oil on the world market is abundant. Iran’s re-entry into global markets meant the supply became high, and have not followed OPEC’s directives. Production in the United States was boosted as moratoriums were lifted and technological advances has made Shale production more efficient. Informal markets are also contributing to global supply and downward pressure on prices. The situation in the Middle East and Nigeria, especially, were large portions of oil producing field are under non- governmental control, will continue into 2017.
Oil and energy based economies will continue to experience low growth in GDP, further lowering demand reducing production. These economies will be unable to reap benefits of economic diversification in the short to medium term. Consumer markets such as these will continue under depressed conditions, furthering lower demand for oil.
United States Policy
United States Policy by the new government, will take some time to develop and enact. The time frame in doing so will result in a period of uncertainty further delaying growth rates in supplier markets as consumers prepare for adjustments. The US President Elect has clearly indicated a desire to reduce outsourcing as poilicy, and business will have to deal with the negative fallout, especially multi-nationals. Immigration also remains an issue to be seen as policy becomes clearer. Issues such as deportation and restrictions, as well as flight by fearful legal and illegal immigrants will become a clear deterrent to people who wished to migrate. Uncertainty will further esercabete slow economic growth.
Outside of those issues, the US economy thrives on low oil prices, and consumerism will continue to spur business, in turn having a positive effect on business overseas. Business in China will continue to enjoy preferred status in the US, as their manufacturers maintain manufacturing contracts with major US global brands. This could be affected if the President Elect develops policy for returning jobs to the US. The world waits, but with much anxiety, and this will be of concern in the financial markets.
It is not all doom and gloom!
During the past year, I have written extensively on this blog, about the Fourth Industrial Revolution, the Digital Age and the opportunities that can and are now engulfing the global enconomy. It is the vehicle for new wealth creation, a new and exciting global emergence of a world only previously imagined. Economies will be diversified and sustained in more ways than ever, as India has done. India now generates almost 10% of GDP from technology. Many other countries have followed suit, and right here in the Emglish speaking Caribbean, Barbados has forged ahead of Trinidad and Tobago.
The Digital Economy is the only growth area outside the traditional core economic activities of agriculture, energy and other key areas. It is the only true area of innovation and creativity pushing at boundaries, creating new industry and generating growth, development and wealth. It ability to combine technology and needs are enormous.
The age of super-efficiency, as I’d like to call it, is here. In the digital world wastage will be reduced to a minimal. In the age of cloud-computing, access to everything from anywhere will reduce time and space to the present, up-to-date and realtime. Decision making by management will be realtime as information is available realtime. Cloud computing in the digital world has in fact made redundant legacy IT, or bi-modal IT. Doing business digitally means great reduction in overheads.
What is most insightful though, is that the consumer now becomes the designer, the manufacturer, the end-consumer, reducing the value chain process to design and access. In this value chain, a design is made accessible to the consumer who then manufactures it by 3D. Downloadable, as it is with music for example. A customer can order a dress online, and will collect an hour after at a 3D print shop. If the customer can afford a 3d printer, the customer becomes the manufacturer. In Facebook, anyone can be a publisher, an advertiser or a seller.
Technologies such as 3D Printing will reduce waste to virtually nothing. It is here, and it will disrupt the global 13 trillion global manufacturing market. It will impact healthcare, delivery, design to name a few. 3D Printing is in fact an additive manufacturing process. Traditional manufacturing is based on subtractive manufacturing. In subtractive manufacturing the processes involve extracting raw materials, then extracting the product, then finishing it. Oil is extracted from the ground, then through processing fuel and other downstream products are extracted and the waste is burn away. A wooden door is extracted for a tree, that has been extracted from the environment. Extraction or subtraction, whichever way it’s referred to, means a lot of waste. When the door is fashioned, there is a lot of wasted material, such as saw dust and shellings etc.
3D Printing, or additive manufacturing, means a product is made by adding layers of a material on the other to create a product, using a compound additive. So for example, the door can be 3d printed using a resin compound, without any waste being generated. The design of the door would have been made on a graphics software, to specifications, then sent to the printer where it will be made. The resin compound on the printer will be layered and the door made, as a simple example.
3D Printing makes everyone a manufacturer, without large capital investments, just Facebook makes everyone a publisher, or Uber makes everyone a cab driver, or Airbnb makes everyone a hotelier. The Digital Age makes platforms for delivery of services and products.
Drone and Artificial Intelligence technology are here, revolutionizing transport, and other key activities such as security, maintenance other labor intensive jobs.
The Internet of Things (IoT) is here. This will create new opportunities such as healthcare, community, home and personal security.
Alternative sources of energy is becoming mainstream as solar, wind and water provide sustainable sources of energy. An example of this importance is demonstrated by this huge oil company investing in wind energy.
Digital currency will become of greater significance as traditional money systems impose more and more regulations and become most cumbersome. Financial Technology (FinTech) such as Bitcoin and its infrastructure, Blockchain, are gain in popularity as we speak.
What is needed
A well thought out strategy is needed to engage the Digital Economy, made to the fit of Trinidad and Tobago. T&T must emphasize it uniqueness, and build its comparative and indeed its competitive advantage in the Digital Economy. The competence must be built for this and undoubtedly, the human capital development strategy needs a focus in this direction.The Entrepreneurial spirit must be re-directed into this new digital economy for creating the change needed.The timing is right, as the Fourth Industrial Age takes off, and our dependence on oil and gas is is demonstrated in our present economic and political climates.
The Augmented Team and I want to wish you and yours a great Christmas 2016, and God’s Blessings for an equally great 2017!🙏🏽🙏🏽🙏🏽