This is the final in a four-part guest series by economist Mary King, chairman of Mary King and Associates, on major environmental issues facing T&T. An embryonic, adaptive and innovative spiral is one in which economic activities set off by the spiral’s new actions expand and build their own momentum towards more adaptability in the larger economy. For 50 years now both government and the private sector have been talking about diversifying the economy. There have been initiatives by government—tax breaks for R&D, import substitution and negative listing to encourage local manufacturing, the building of Pt Lisas, Vision 2020—yet we remain stuck in a petroleum-based plantation—the successor to an agriculture-based one. This is a frightening statement which suggests that the current private sector is incapable on its own of diversifying the economy.
According to Prof Ricardo Hausmann, we are operating in the sparse area of the global product space and that our skills are so limited that we cannot jump to a more dense part of the space, to higher-added-value products, without the deliberate intervention by the Government. Lloyd Best tells us that in many societies their economies are creatures of the societies; in ours, the plantation economy created the society. Sir Arthur Lewis, in his attempt to recommend on the industrialisation of the British West Indies so as to improve productivity of the agricultural sector, tells us that the private sector preferred to buy and sell and would not take the risk to industrialise the region. Little has changed since; the private sector is a creature of its conditioning, a victim of its history.
The adaptive economic spiral establishes and interconnects institutions, the local and global networks, builds the redundancy, the symbiotic partnerships (the clusters) that can respond to the uncertainty in the global economy. Such a spiral defines the processes of technological diffusion, adaptation and is indeed a national innovation system—the innovation diamond. The literature documents this, particularly Bo Carlsson’s Experimentally Organised Economy, but in our context we have to provide our peculiar institutions, the infrastructure, the activities, the linkages and the local and international networks that meet with our policies, objectives, and economic strategies. Knowledge acquisition, implementation (doing new/innovative things with it) and its creation (intellectual property) are fundamental to this embryonic spiral. Formal institutions have to be established to provide these activities, integrated and interconnected to the finance, marketing and market development, and business creation and development systems.
Of particular importance is the financing system given that the current financial system in the country is highly risk-averse and caters for the low-risk activity of supplying onshore goods and services mainly via imports. This model, the Innovation Diamond, is the result of a policy-foresighting exercise in which the design was tested via a series of public meetings, panchayats, at which those who attended were asked to appraise the proposal presented and suggest modifications and at the end give their approval—a legitimation exercise. One important elaboration that came out of the panchayats is that the centres of excellence should also provide a technological service to the current economic practitioners and those involved in business and concept innovation, to improve their productivity or start new companies. This was readily accepted, given the embedded concept to cast even short-term problem solutions into longer-term innovative approaches that can create new sector competitiveness.
The next step in the process of establishing the diamond is to now use foresighting as a policy, as an instrument to choose activities and implement the sub-processes for creating a knowledge-based economy, identify the deficiencies in resources, funding, business culture and move to influence the budget allocations, structural and cultural changes to meet the objectives that define economic diversification. This requires astute management: setting of objectives, choice of strategies, performance monitoring and control feedback to enhance performance.
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