Ten percent growth needed for Vision 2020, says Farrell

Executive Director of Guardian Holdings Limited (GHL), Dr Terrence Farrell, has advised that if Trinidad and Tobago aims to attain developed nation status by the year 2020, it has to achieve a rate of growth of ten percent per annum (US$). He was speaking at the recently held pre-Budget Breakfast Seminar, organised by the TT Economics Association and held at the Hotel Normandie. Dr Farrell, who is a member of the 25-member multi-sectoral core group established by the Ministry of Planning and Development to develop the road map towards Vision 2020, revealed that TT presently had a per capita income of US $7,000 per capita.

When compared to other developed countries, he maintained, we were far behind those of the Organisation for Economic Co-operation and Development (OECD) which had a per capita income of between US$25,000 and US$33,000. Another group of countries, labelled the High Income Developed Countries, which includes Singapore, had a per capita income of between US$17,000 and US$22,000. “If we have to get to developed country status by 2020,” he said, “we need to establish some kind of benchmark outside which this can be done. “Maybe we will not get to US$20,000, but the question is what does TT need to be able to do to get within striking distance of those countries?” he asked. Dr Farrell expressed his belief that to achieve this, TT would have to grow at seven percent per annum, something which has not been done over the last few years. TT, he stated, is now growing at approximately 4.5 percent.

He said, “We need to understand that no country is going to jump from where we are now, growing at about 4.5 percent GDP to seven percent in 2004. This can’t happen, economies don’t behave this way.” TT, he continued, therefore needs to accelerate gradually from where we are now at 4.5 percent up to and in excess of seven percent. “At some point in time between now and 2020, TT will have to grow at rates of ten percent per annum, US dollars,” he asserted. “This has never happened in TT before.” However, Dr Farrell stressed, this rate of growth could be achieved once the country adopted certain macroeconomic conditions. It is important, he stated, to understand that growth will not happen in a stable society, since by its very nature it is a state of imbalance.

Therefore, if the country intended to accelerate growth, it was necessary to create imbalances, always being cautious of the fact that if certain conditions get too far out of balance, this will result in a crisis situation. Dr Farrell expressed his belief that the 2003/2004 Budget would revolve around two major areas, namely the quantity of expenditure or the size of the deficit and the quality of this expenditure. He said, “What you want is that from a growth point of view, a significant part of expenditure should be on capital formation. “If you spend too much Government and society expenditure on consumption and not enough on capital formation then there will be no growth.”