Last week, I ex­plained eco­nom­ic di­ver­si­fi­ca­tion through in­vest­ment port­fo­lio con­struc­tion. The point was pro­duc­ing oil, nat­ur­al gas, LNG, am­mo­nia and methanol does give Trinidad and To­ba­go sev­er­al sources of in­come. How­ev­er, these ma­jor eco­nom­ic en­gines re­main tied to gas avail­abil­i­ty, com­mod­i­ty prices and the same glob­al in­dus­tri­al cy­cle, which means we are chang­ing the ac­tiv­i­ties in the port­fo­lio with­out chang­ing enough of what can cause it to fall. That is why we re­main locked in a boom-bust cy­cle.

This week I want to add an­oth­er con­cept, be­cause even when we iden­ti­fy a new in­dus­try, we must al­so ap­pre­ci­ate the im­por­tance of the fence line. Trinidad and To­ba­go can un­der­stand this con­cept through crick­et. We are cur­rent­ly host­ing two Test match­es. Tarou­ba just host­ed its first men’s Test, while the sec­ond be­gins at the Queen’s Park Oval on Au­gust 2. The Oval has host­ed more Tests than any oth­er Caribbean ground.

For peo­ple of a cer­tain age, a Test match at the Oval was nev­er on­ly a Test match. Peo­ple came from east, cen­tral and south Trinidad. Ven­dors, taxis, park­ing at­ten­dants, bars, restau­rants and shops ben­e­fit­ted. When play end­ed, the crowd did not nec­es­sar­i­ly dis­ap­pear in­to cars and head home. Tra­garete Road was out­side the gate and Ari­api­ta Av­enue was near­by. The crick­et end­ed at the bound­ary rope, but the spend­ing and so­cial­is­ing con­tin­ued be­yond the fence. The same al­so ap­plies to a T20 game at that lo­ca­tion.

When crick­et was played reg­u­lar­ly with the Oval as the an­chor, habits were formed that pro­duced de­mand that re­sult­ed in eco­nom­ic ac­tiv­i­ty. Af­ter the 2007 Crick­et World Cup, in­ter­na­tion­al crick­et al­lo­ca­tions to the Oval be­came spo­radic. Across the re­gion, Gov­ern­ments of­fered grounds free of charge. By 2025, all Trin­ba­go Knight Rid­ers home match­es in the CPL were as­signed to Tarou­ba.When a fa­mil­iar prod­uct be­comes un­re­li­able, con­sumers find oth­er us­es for their time. Once a tra­di­tion is bro­ken, at­ten­tion has to be pur­chased again, of­ten at a con­sid­er­ably high­er cost.

The Bri­an Lara Crick­et Acad­e­my is a state-owned venue that has suc­cess­ful­ly host­ed in­ter­na­tion­al crick­et, CPL fi­nals and World Cup match­es. Yet that fa­cil­i­ty has not de­vel­oped the same ex­ter­nal econ­o­my. In­stead, large crowds have been a lo­gis­ti­cal night­mare. Pa­trons fo­cus on get­ting in, see­ing the match and es­cap­ing af­ter­wards.

Port-of-Spain al­so has traf­fic. The dif­fer­ence is what you en­counter oth­er­wise. Around the Oval is a dense, walk­a­ble com­mer­cial area. Around Tarou­ba is a pur­pose built fa­cil­i­ty reached large­ly through high­ways, ac­cess roads, park­ing and shut­tles. The sta­di­um is not in­te­grat­ed in­to a dis­trict that con­verts a crowd in­to broad spend­ing be­fore and af­ter the game.

That dif­fer­ence is the fence line. This is not the chain-link fence but rather the eco­nom­ic sys­tem con­nect­ed to the an­chor, which in this case is crick­et.

Ecosys­tems

The first lay­er of the fence­line is the ac­tiv­i­ty in­side the gate: em­ploy­ment, goods sold and ser­vices pro­duced. The sec­ond is the sup­pli­er net­work: con­trac­tors, trans­port providers, main­te­nance com­pa­nies, ven­dors and pro­fes­sion­al firms. The third is spend­ing gen­er­at­ed in sur­round­ing com­mu­ni­ties. The fourth, and most valu­able, is what the an­chor en­ables oth­ers to build: busi­ness­es, skills, prod­ucts and ex­ports. The eco­nom­ic mul­ti­pli­er ei­ther lives or dies at the fence line. The fence line is why our Car­ni­val can­not be eas­i­ly repli­cat­ed else­where.

Some peo­ple saw the move­ment of crick­et from the pri­vate­ly owned Queen’s Park Oval to a state-owned fa­cil­i­ty in Tarou­ba as a sim­ple ques­tion: why should crick­et au­thor­i­ties use a pri­vate ground when the Gov­ern­ment can of­fer up one owned by tax­pay­ers?

On the nar­row ac­count­ing state­ment of the venue, that may ap­pear sen­si­ble. On the in­come state­ment of the coun­try, it is non­sen­si­cal in its present form. Rent paid to a pri­vate club is a cost. Spend­ing cap­tured by trans­port providers, ven­dors, restau­rants, ho­tels and sur­round­ing busi­ness­es is out­put. A state-owned venue can be cheap­er and still cre­ate less eco­nom­ic ac­tiv­i­ty out­side its gate.

This does not mean Tarou­ba should not host crick­et. It means the pub­lic in­vest­ment was in­com­plete when the sta­di­um was com­plet­ed. Its fence line should have in­clud­ed pub­lic trans­port, pedes­tri­an ac­cess, or­gan­ised vend­ing, restau­rants, en­ter­tain­ment, train­ing, ac­com­mo­da­tion and a cal­en­dar that keeps the precinct pro­duc­tive be­tween match­es. Ba­si­cal­ly, all the things that were promised but nev­er de­liv­ered.

The choice was nev­er sup­posed to be a sta­di­um or an ecosys­tem. Sound de­vel­op­ment pro­vides both.

The same poor de­ci­sion mak­ing ap­peared with Ca­roni and Petrotrin. There was a fo­cus on the an­chor, an un­der­es­ti­ma­tion of the net­work around it, and an as­sump­tion that if the an­chor was closed, some­thing else would nat­u­ral­ly take its place.

At clo­sure, Ca­roni (1975) con­trolled ap­prox­i­mate­ly 77,000 acres and em­ployed just over 9,000 peo­ple. It did not pro­duce on­ly sug­ar. Its ac­tiv­i­ties in­clud­ed rice, cit­rus, live­stock and aqua­cul­ture. Around it sat field work­ers, cane farm­ers, truck op­er­a­tors, me­chan­ics, fac­to­ry work­ers, sup­pli­ers, ware­hous­es and com­mu­ni­ties whose eco­nom­ic rhythm fol­lowed the crop.

Ca­roni was fi­nan­cial­ly trou­bled and had ac­cu­mu­lat­ed years of loss­es. There was a le­git­i­mate ar­gu­ment that it could not con­tin­ue in its ex­ist­ing form. The fail­ure wasn’t that an un­prof­itable en­ter­prise was closed. The fail­ure was that the pro­duc­tive sys­tem around it was not re­placed.

A sev­er­ance pay­ment can com­pen­sate a work­er for los­ing a job. It can­not cre­ate the next cus­tomer for the me­chan­ic, the next crop for the trans­porter or the next mar­ket for the farmer. Giv­ing peo­ple agri­cul­tur­al plots does not recre­ate ir­ri­ga­tion, ac­cess roads, fi­nance, ex­ten­sion ser­vices, pro­cess­ing, stor­age and dis­tri­b­u­tion. More than two decades lat­er, land and in­fra­struc­ture is­sues con­nect­ed to for­mer Ca­roni work­ers re­main un­re­solved. We dis­man­tled an in­te­grat­ed net­work and ex­pect­ed in­di­vid­u­als to re­pro­duce its co­or­di­na­tion on their own.

That was the clo­sure of the Ca­roni fence line and the im­pact on agri­cul­ture. Petrotrin pro­vides the in­dus­tri­al ver­sion to this sto­ry. Again, the com­mer­cial prob­lems at Petrotrin were re­al. Again it was shut down with­out a re­place­ment and so the fence­line com­mu­ni­ty, suf­fered as the salaries and pro­cure­ment gen­er­at­ed by the an­chor was not re­placed.

The com­mon les­son with Tarou­ba, Ca­roni and Petrotrin, is that an en­ter­prise in­come state­ment and a na­tion­al eco­nom­ic sys­tem are not the same thing.

A de­ci­sion can ad­dress the fi­nances of the state en­ti­ty and still leave a hole in the wider econ­o­my. If the re­place­ment strat­e­gy does not iden­ti­fy the sup­pli­ers, skills, com­mu­ni­ties and mar­kets at­tached to the an­chor, it is not a tran­si­tion plan. It is an ex­it plan.

The AI Op­por­tu­ni­ty

This brings us back to the AI da­ta-cen­tre pro­pos­als.

Last week, I ar­gued that com­put­ing ser­vices could pro­vide for­eign ex­change earn­ings less cor­re­lat­ed with oil, gas, am­mo­nia and methanol. That makes the op­por­tu­ni­ty im­por­tant. But a da­ta cen­tre will not di­ver­si­fy the econ­o­my mere­ly be­cause servers are in­stalled and elec­tric­i­ty is con­sumed.

The key is how we de­vel­op the fence line and it is quite amaz­ing that so many have opt­ed to dis­miss the op­por­tu­ni­ty with­out wait­ing for more de­tails on this. In­side the fa­cil­i­ty will be elec­tri­cal sys­tems, cool­ing, net­works, servers, se­cu­ri­ty and a spe­cialised work­force. Around it should be con­struc­tion, pow­er, wa­ter treat­ment, fi­bre, equip­ment main­te­nance, cy­ber­se­cu­ri­ty, lo­gis­tics, in­sur­ance, elec­tron­ic waste man­age­ment and train­ing.

Be­yond that sup­pli­er ring is po­ten­tial­ly the re­al prize: lo­cal and re­gion­al cloud ser­vices, ac­cess to com­put­ing ca­pac­i­ty, soft­ware de­vel­op­ment, da­ta en­gi­neer­ing and much more.

None of this hap­pens with­out the da­ta cen­tres be­cause the an­chor must ex­ist. But we must ex­plore the re­main­ing po­ten­tial. Lo­cal firms must qual­i­fy for con­tracts. Train­ing in­sti­tu­tions must know the oc­cu­pa­tions re­quired be­fore com­mis­sion­ing. A key stage in the analy­sis is to be able dis­tin­guish gross rev­enue from val­ue re­tained here. Ap­pre­ci­ate that some of it we will have to cre­ate our­selves.

The da­ta cen­tre can there­fore re­peat ei­ther Tarou­ba or the Oval.

It can be­come a tech­ni­cal­ly im­pres­sive fa­cil­i­ty in­to which peo­ple and re­sources flow and from which most val­ue leaves through a few chan­nels. Or it can be­come an an­chor em­bed­ded in a wider econ­o­my, with ac­tiv­i­ty be­fore it, af­ter it and be­yond it.

The les­son from crick­et is not that every match be­longs at the Oval. It is that a venue and its sur­round­ing econ­o­my form one prod­uct. The les­son from Ca­roni and Petrotrin is not that trou­bled en­ter­pris­es must re­main open. The les­son is that once a fence line is bro­ken, busi­ness­es close, skills mi­grate, habits dis­ap­pear and peo­ple find oth­er things to do. Restart­ing the an­chor does not au­to­mat­i­cal­ly restart the ecosys­tem.

The AI pro­pos­als are still ear­ly enough for T&T to avoid these mis­takes. The fence line should not be treat­ed as a ben­e­fit that may ap­pear af­ter the da­ta cen­tre is built.

We should be dis­cussing it now, along­side the in­vest­ment it­self. Yet in­stead of that many are too busy ob­ject­ing.

Ian Nar­ine is a fi­nan­cial con­sul­tant who isn’t sit­ting on the fence when there is a lot on the line. Please send your com­ment to ian@ian­nar­ine.com