TT needs technology to survive

THE FUTURE prosperity of Trinidad and Tobago does not lie in the energy or manufacturing sector, but in establishment of a knowledge based society with emphasis on innovation and research toward the development of technology, Prof Emeritus of Economics at Princeton University, William J Baumol said yesterday. He noted that the world is faced with rapid globalisation, a phenomenon that is destined to last some time, and if countries intend to survive, they must adapt to the challenges it brings. “Globalisation is not a temporary phenomenon. It is the consequence of a mechanism that is in place and which drives economies in the direction of greater unity of the world, greater trade and greater proportion of GDP consisting of trade,” he said in the feature address at First Citizens Bank’s Corporate Clients Breakfast meeting at the Cascadia Hotel yesterday.

Prof Baumol said the TT economy is fortunate in its abundance of natural resources, but while this was a good thing, natural resources were exhaustible and the country could not rely on them forever. In addition, the process of innovation in developed countries had made other  practices, agriculture and manufacturing among them, obsolete. Prof Baumol explained that globally manufacturing had recorded a high rate of productivity growth, which meant that it now took fewer workers to produce more. At present in the United States only 17 percent of the population is engaged in manufacturing. China, which was expected to take over the manufacturing of the world, loses a share of its manufacturing labour force each year.
“Therefore, manufacturing is not the way of prosperity,” Prof Baumol asserted. “We need it, I am not suggesting that we abandon it, but that is not where we must look. The three obvious sources of prosperity in all of human history are clearly not the underpinning of future prosperity. “What all the prospects indicate is likely to continue is what has been deemed the knowledge economy — innovation, understanding, research and improved technology.” He noted that in the most prosperous economies the majority of the population was employed in the manufacturing sector. In the US, that sector now comprises approximately 70 percent of the work force.

He said future prosperity from technological innovation did not mean that countries like TT needed to “out-invent” advanced countries like the US and Japan. Instead, it was not what was invented, but how quickly the respective countries were able to transfer technology and adapt to it. “Every country must depend on the technology of the rest of the world to stay in the frontier of world competitiveness and prosperity,” he said. “There is a way, in the long run, for an economy to ensure participation in the globalisation process and to ensure that it can keep up in the race up that giant and rapidly growing hill of GDP per capita. “But it will only happen if you are prepared to embrace, with enthusiasm, the knowledge economy and all that is required for participation in it,” he said.