T&T should take a page out of Dubai's experience as it moves way from oil and gas in its attempt to diversify the Middle Eastern economy, said Ricardo Hausmann, director of the Centre for International Development at Harvard University. "Dubai is a very interesting story. They thought that Dubai was running out of oil and, like all oil producers, they always fear the day that oil is going to run out. They thought that because they had a lot of oil wealth, they would consume more and increase their standard of living. They built airports, malls, banking systems, golf courses. "These are also the same things that tourists need.
So they did not add value to the mineral resources that they already had. Instead, they used the capabilities they had accumulated to service the domestic market and repackaged them to service the foreign markets in tourism and financial services and so on. So that was their move out of oil," said the Venezuela-born Hausmann. He was speaking on Monday night during a presentation entitled, Achieving Sustainable Prosperity in T&T, at the Learning Resource Centre at University of the West Indies (UWI), St Augustine.
Going downstream narrow-minded
He drew an analogy of monkeys in a forest and countries trying to diverse into other spheres of development. "So if you want to make a jump to the next product in T&T, I would start by jumping from that part of the forest that you're in. You have monkeys in other parts of the forest. You want to think about what other capabilities and what other things you have. Hausmann argued that trying to develop a downstream industry out of oil and gas is not a good strategic move. "In some cases, it may be good but, in general, downstream industries are not a good way to develop. It's a very narrow-minded way of thinking of development. It not a very creative way of thinking of development.
"If you invest in an aluminium industry and the oil runs out, the aluminium is going to run out," he said. "My approach is that the society has to develop its capacity to create the structures that would ask, Who would do what next? Who would create the next feasible products? It can be young people, entrepreneurs, foreign investors, but there needs to be structures. In the Dominican Republic, there are 54 privately-built industrial zones. They are trying to find people to sell services." Hausmann said T&T, like other countries in its position, must find other types of industries it can develop. "A lot of your productive capabilities have been based in one part of the forest and your challenge is to think how you are going to find new things to do."