I want to talk sensibly about timely perspectives the upcoming budget might feature, but the Government has not provided me with its reviews of its economic performance to enable me to do so. It has not engaged the public on the macro measures—or any other kind of measures for that matter—that the country needs to grow its real GDP and push it towards the achievement of the vision of developed country status by 2030. So I, along with every other commentator, am left to speculate about what is appropriate.
It’s been like that from as far back as I can remember. It is quite clearly a cultural style of budget preparation and presentation that must be adjusted if we want to improve our GDP and advance our development status. There’s no law that says we must mechanically or robotically depend on oil and gas for our development.
Luckily, I can fall back on extranational bodies like the World Bank and the Inter-American Development Bank for relevant data. The World Bank has published development indicators, for example:
Between independence (1962) and 2022, GDP per capita grew by two per cent annually.
In the last 20 years, real GDP per capita grew at a lower average rate of 1.8 per cent per year.
In the last decade, real GDP per capita declined at 1.2 per cent annually.
In the five years before COVID, real GDP per capita declined by 3.5 per cent per year.
Now, P(urchasing) P(ower) P(arity) is a macroeconomic analysis metric used to compare economic productivity and standards of living between countries. And G(ross) D(omestic) P(roduct) is a monetary measure of the market value of all the final goods and services produced in a specific time frame by a country. They are both tools for measuring the economic productivity of a country. The higher the PPP and the GDP, the better off the country.
T&T had an estimated PPP of $14,480 in 2022. If the country could sustain the two per cent trend (from 1962 to 2022), the economy would attain a GDP of about $16,632 by 2030, the targeted year of developed country status. But clearly, that trend of growth is woefully inadequate. In fact, if we took on board the IDB’s estimate that the GDP grew by 3.1 per cent in 2022, growing the GDP at that rate (with the population growth held stationary) would only deliver a measly GDP per capita of PPP$17,929 by 2030.
By comparison, in 2019, the average GDP per capita of developed countries was about $50,000. We would have to either abandon the dream of achieving developed country status by 2030 or push up the actual growth rate to about 20 per cent, which, by current economic practice, is unattainable.
To achieve that refocus, the Government would have to embrace the following key initiatives: a) upgrade the policymaking institutions to achieve consensus on competitive strategy; b) institution of a large-scale public education programme to enable citizen participation in shaping their future; c) pursuit of a basket of initiatives to achieve real diversification of the economy; and d) seek to systematically upgrade the country’s capacity to innovate.
The policymaking institutions I have in mind are the major ones of Parliament and of government in Tobago. They would have to be radically reformed to enable legislative and public control of the Cabinet and the Executive Council. The country badly needs to develop effective oversight arrangements that moderate the role of the Cabinet and the Council, even in respect of the budget.
Budget-making would also have to be adjusted—from past practice to provide for initiation of a large-scale public education programme to facilitate citizen participation in shaping their future. This kind of change would not come easily; our alpha politicians would have to be struck down and have their eyes opened like the Apostle Paul on the road to Damascus in his zealous campaign to arrest pioneering Christians.
In respect of diversification, which everybody talks about but about which no coherent policy has been developed to materially change the status quo, there is a great need to focus on the key role of growing exportable capital production per worker in targeted sectors such as education, healthcare, and the creative arts. Yes, Exportable. Capital. Production.
It is more than time to focus, not just on the domestic market but also on the export market—perhaps more on the latter, even if experimentally. This kind of transformation is not a mere dream. The initiatives can be sustained if funded by sustainable deficit spending, development credit, growing validating domestic savings through a rising profit rate, and foreign capital inflows to the capital-producing sectors attracted by consensus policy.
The other initiatives, especially the initiative to systematically upgrade the country’s capacity to innovate, would be achieved by facilitating investment designed to grow employment of workers with high levels of knowledge, problem-solving skills, and self-confidence. Many of these workers would have to be produced by a radically reformed education system with the aid of modern machine learning. Many would also have to be foreign, linked to the efforts to attract foreign entrepreneurs.
These kinds of perspectives might not show up in the forthcoming budget, but they are what the country must eventually adopt to achieve its fundamental development goals.
Winford James is a retired UWI lecturer who has been analysing issues in education, language, development, and politics in Trinidad and Tobago and the wider Caribbean on radio and TV since the 1970s. He has also written hundreds of columns for all the major newspapers in the country. He can be reached at jaywinster
@gmail.com
