«Medium-Term Policy Framework 2011-2014 Ministry of Planning and the Economy October 2011 Table of Contents PREFACE BY THE MINISTER OF PLANNING AND ...»
In recent times, Trinidad and Tobago has weathered the global economic crisis well, relative to other Caribbean and small developing countries and macroeconomic conditions are now stable with real GDP growth projected at two (2) per cent in 2011/2012. Yet, there are some persistent problems that remain which must be addressed in the context of a new economic strategy.
We clearly lag behind in terms of the robustness of the economy, competitiveness, productivity and innovation. The agriculture sector has been in continuous decline while the tourism sector has not developed the niche products on which it can build and sustain a competitive advantage.
Although the Services Sector has seen some growth, there has been little diversification into high value services. The country also faces deficiencies in terms of the quality and relevance of the education system and tertiary education participation, while rising, is still below the requirements for creating a knowledge economy and the challenge of producing entrepreneurs and diversifying the economy fast enough to absorb increased throughput from the tertiary sector remains. In addition, there has been little or no attempt in the past to develop a comprehensive workforce development strategy. This has resulted in a capacity problem where 20 per cent of the workforce is classified as unskilled. Furthermore, based on the World Economic Forum’s Global Competitiveness Report (GCR), Trinidad and Tobago’s ranking has shown no notable improvements, moving from a rank of 84 out of 139 countries in the 2010/2011 Report to 81 out of 142 countries in the 2011/2012 Report. In addition, given the size of our country, our GDP, and the level of spending on human development, our ranking of 59 on the Human Development Index (HDI) indicates that compared to similar countries, our spending is not as well targeted as it needs to be and that, if it were, our ranking could be higher.
These global developments coupled with the structural rigidities, and competitive and innovation deficiencies in the domestic economy and declining hydrocarbon resources have created a sense of urgency to change the construct and engine of the Trinidad and Tobago economy.
The goal of the Government is to build an economy that is capable of generating endogenous growth based on innovation, the generation and use of knowledge, higher productivity levels and export expansion in order to create wider opportunities for high paying jobs at all levels.
Additionally, labour market effeciency and the quality of jobs people enjoy contribute to competitiveness. Greater attention is to be given to protecting and promoting the rights of Innovation for Lasting Prosperity 58 Medium-Term Policy Framework 2011 - 2014 workers while enhancing productivity, transforming the work ethic and creating a culture of entrepreneurship.
GROWTH, COMPETITIVENESS AND INNOVATION STRATEGYThe Growth, Competitiveness and Innovation Strategy for the medium-term will centre on Government’s efforts to drive innovation and entrepreneurship, support new strategic sectors with the potential for becoming internationally competitive and generate high paying jobs in accordance with the Decent Work Agenda, promote cluster development locally and regionally, re-structure the energy sector, and improve the business environment.
Strategy: Maintain Macroeconomic Stability Macroeconomic stability is a necessary condition for sustaining high levels of growth and competitiveness. It is also an essential pre-requisite for the growth and expansion of competitive firms that have the capacity to create high income jobs. In the face of depressed international economic conditions and global forecasts for a continuing slow recovery, the economy of Trinidad and Tobago remains in a relatively stable and strong position. There are warning signs now (October 2011) about stagnation and possible deeper recession than previously anticipated. This will ultimately have an effect on our economy if it comes to pass.
However we will press on with a positive disposition.
Recent increases in the overall deficit were necessitated by volatile and uncertain international and regional conditions. This along with the increase in the Government’s debt ceiling is geared toward stimulating economic activity and expanding the infrastructure necessary for growth.
Government’s macroeconomic policies will remain focused on maintaining a manageable debt burden while ensuring that any further deficit increases contribute to productivity gains and growth through sustainable strategies that use the knowledge of our people as the main input.
With a low debt service ratio and high levels of official reserves, the fiscal position remains strong, allowing for increased deficit financing to be directed to strategic investments aimed at building sustainable productive capacity. This notwithstanding, in this period of fiscal constraint, the Government must act prudently, investing in strategies that offer a solid return.
Accordingly, the policy shifts being introduced give priority to initiatives that promote knowledge-intensive, innovation-driven growth that creates higher income jobs. Monetary policy will continue to contribute to macroeconomic stability by stimulating growth and signalling to private sector financial institutions the need to increase lending for investment and growth.
1. The Energy Sector and the Manufacturing Sector have been growing relative to all others;
2. The Energy Sector and Mining in general are extremely vulnerable to exogenous shocks;
3. Manufacturing has a very low import productivity signature which means that it utilises more foreign exchange and foreign inputs to production than it is able to generate. This means that the domestic production system is weak;
4. The susceptibility to negative external shocks and the need for endogenous responses through the domestic production system makes the current structure of our economy a very high risk one in a volatile global environment;
5. These risks must be addressed by a carefully thought through strategy with regard to investment for development; and
6. There is need in any investment strategy which targets a restructuring of the Trinidad and Tobago economy to take into account counter cyclical industrial diversification with a concentration on domestic capital building. Domestic capital is a component of capital that is produced by the domestic economy, what one might describe as the endogenously produced component of GDP. As a consequence, our diversification strategy will be informed by the following strategic thrust and focused on the areas identified below.
Strategy: Promote New Strategic Sectors with the Potential for Contributing to Growth, Job Creation and Innovation Creative Industry Trinidad and Tobago has a diverse mix of art and cultural forms, some of which have expanded in size and structure to become the main elements of a growing creative industry. The industry which fosters innovation and creativity and builds upon the cultural attributes, indigenous skills and talents of our citizens, can provide a viable platform for diversification of the economic base and export earnings of the country.12 Production in the industry spawns a wide variety 12 Studies conducted by the World Intellectual Property Organisation (WIPO) estimate that the creative industries can contribute on average 5.7 per cent of GDP and 6 per cent of total employment.
Innovation for Lasting Prosperity 60 Medium-Term Policy Framework 2011 - 2014 of products and services from architecture to festivals and software production. If innovation is a major source of competitive advantage, then creativity must become the corner stone of business development and stimulation of the human imagination in all of our key institution becomes a matter of fundamental importance.
The High Level Expert Panel on Arts and Culture has outlined a series of initiatives for the longterm sustainability of the cultural sector. In particular, an organisational structure, strategies
and projects have been identified and approved for execution, including:
• The creation of an overarching Central Arts Council. The strategic orientation and strengthening of TTENT, TTFC, Trinidad and Tobago Heritage Company (TTHeritage) to function as networked agencies with clear deliverables. The establishment through Private Sector and Government Support a Venture Capital Fund and a Grant Fund
In the upcoming year, activities surrounding the celebration of the 50th Anniversary of Independence will serve as a catalyst to boost the Tourism and Cultural Sector and stimulate the development of creative and knowledge products and viable Creative Industries. These will include a number of the creative industries identified in Box 7 above, such as the Music Industry, Film and Television, Advertising, Book and Magazine Production, Fashion, Glamour and others.
Several complementary initiatives are also being undertaken by the Ministry of Arts and Multiculturalism in pursuance of the development of the Cultural Sector. These initiatives
• Conduct of Baseline Survey of Local Cultural Industry which will establish the baseline information required to monitor the growth of the industry and provide data to assist in planning for the development of the industry
• Conduct of a gap analysis and needs assessment of the current state of the cultural industries and the desired future state of the sector
• Develop the National Registry of Artists and Cultural Workers which will contribute data to CARICOM’s Regional Registry of Artists and Cultural Workers that will facilitate free movement within the CARICOM Singel Market and Economy (CSME) and with Europe via the Economic Partnership Agreement The development of human capital is a major component of the policy initiatives for the Cultural Sector. A number of projects are being developed to enhance the link between panyards and
communities. These are:
• The Music School in the Pan Yard which will enhance the professional potential of musicians through training in music literacy Innovation for Lasting Prosperity 62 Medium-Term Policy Framework 2011 - 2014
• Vacation Pan Camps which will facilitate the revitalisation of the panyards and deepen the interaction between the steelbands and their communities
• The Art of Success which will comprise a series of mentorship workshops to facilitate knowledge transfer from successful artistes In the interest of stimulating innovation in the sector, the New Vision Competitive Award will be implemented. This award is a financial incentive programme for thought leaders in key areas such as Dance, Drama, Music, Visual Arts, Design, Literature & Media. This initiative will provide early developmental support for the type of avant garde work capable of driving the economy once it is properly nurtured and structured for business success.
The Evolution of the Steel Pan and Pan in Art Exhibition is an important project of the Remember When Institute. It will amplify the international, regional and local interest in the National Music Instrument of Trinidad and Tobago and use the story of the Pan’s development to brand Trinidad and Tobago as a creative and innovative country. The project to have Port-ofSpain recreated as a Heritage City will turn building facades in the capital city into informative displays of our heritage.
Culture, art, industry, heritage, creativity and entrepreneurship will come together in East Port of Spain in a multi-dimensional strategic intervention in that particular location.
Environmental Services, Renewable Energy, Ecotourism The environmental services industry in Trinidad and Tobago is in its fledgling stages. The areas for possible development include the solid waste industry, renewable energy and ecotourism.
Diverting waste into other productive uses involves the establishment of downstream industries with the potential to serve the Region. An area that offers vast potential is the conversion of gases released from waste products into energy generation.
In terms of renewable energy, a number of fiscal incentives has been introduced to encourage the expansion of renewable technologies such as solar, wind and waste to energy. Solar and wind energy companies now have the enabling environment in which to operate by exploring the potential for establishing links along the value chain. Reforms in the legislative environment governing the exploitation of renewable energy resources are underway.
Information and Communication Technology Services in Tobago and Trinidad The creation of digital economy products is a high value, fast growing industry. In Trinidad and Tobago, local firms are increasing their capability to provide a complete suite of ICT services including: web content development, wireless services, end-user equipment, software, professional services, computer systems, and communication equipment. There is also the capability for the provision of ICT products in hard services such as networking, communication equipment, real time operational systems and back office services and other services such as software design and re-engineering, web development and e-commerce.
Evolving TecKnologies and Enterprise Development Company Limited (e Teck) was set up to develop and support new industries, thereby creating an environment to stimulate diversification and contribute to the achievement of self-sustaining growth. Among e TecK’s principal mandates, the construction of the Tamana InTech Park is focused on promoting investment in the ICT sector.
The Park will be Trinidad and Tobago’s first Science and Technology Park which will provide the necessary synergy between industries and academia in the areas of industry sponsored research and the management of innovations and intellectual property. The Park has been segmented into four (4) areas to foster a cluster environment - Information Communication and Technology (ICT) & Knowledge-Based; High Value Manufacturing; Agro Industrial; and Mixed Use. The Government will continue the work of e TecK and seek to capitalise on new opportunities. Over the 2011-2014 period, a sharper focus will be demanded of e TecK and identified objectives and targets will be met.