UCCI Caribbean Conference 50-50 – Surveying the Past,
Mapping the Future.
University College of the Cayman Islands
21-23 March 2012
Industrial Diversification in Trinidad and Tobago:
Strategies for Diversifying the Trinidad and Tobago Economy Beyond Oil
and Gas
Abstract
Sustained industrial growth has been widely acknowledged as an engine of economic
transformation in all countries; developed and developing. Less developed countries,
however, remained predominantly agrarian due to lack of dynamism in the industrial
economy and the low level of industrialization.
It has been postulated that diversification of the economy is necessary for survival, and it
is being suggested that the manufacturing sector of the economy has a significant role to
play in strengthening the economy, and raising the level of productivity, and by extension
making the economy more stable and sustainable.
Several key areas need to be examined, and these areas constitute the elements of a new
diversification paradigm that will enable Trinidad and Tobago to benefit from a better use
of its resources and from the ongoing trade liberalization efforts at bilateral, regional, and
international levels. The ultimate recommended diversification policies would necessarily
include the evaluation of the current macroeconomic, trade, sectoral, industrial, and
financial development policies; as well as the proposed strategies that will strengthen
institutions. We will evaluate the government’s roles, the role of the private and banking
sectors to determine the need and scope for diversification in the local economy.
1
Objectives & Overview
The government of Trinidad and Tobago has indicated its intentions of diversifying the
local economy. One reason for the need to diversify the economy is that Trinidad and
Tobago has failed to reap benefits optimally from preferential trade arrangements and
from globalization. There is, therefore, a need for a new paradigm on diversification, to
enable the economy to benefit from the existing (albeit diminishing) preferences and
trade liberalization. It is also evident that while other developing regions have increased
their share in global trade, Trinidad and Tobago’s non-energy sector has seen its share
progressively decline even as global trade liberalization has progressed.
The failure to maximize gains from preference utilization and trade liberalization
assumes special significance in the debate, given the likelihood that the future gains that
may accrue to Trinidad and Tobago from current trade liberalization efforts will be
marginal at best.
Essentially, as it currently stands, with the current economic structures, CARICOM
countries will not be able to maximize gains from trade liberalization, and these
economies risk perpetuating their historical failure to secure benefits from global trade
reforms, as are being undertaken at the World Trade Organization.
Notwithstanding the falling prices in the primary markets, the inefficiencies of the
economies, the low level of value-add incorporated into the exported goods; it is also
probable that CARICOM will be marginalized further and any marginal gains will be
unevenly distributed among its countries.
Several key areas need to be examined, and these areas constitute the elements of a new
diversification paradigm that will enable Trinidad and Tobago to benefit from a better use
of its resources and from the ongoing trade liberalization efforts at bilateral, regional, and
international levels. The ultimate recommended diversification policies would necessarily
include the evaluation of the current macroeconomic, trade, sectoral, industrial, and
2
financial development policies; as well as the proposed strategies that will strengthen
institutions.
One key concern has to do with the need for pragmatic macroeconomic policies if the
Trinidad and Tobago economy is to diversify successfully. While macroeconomic
stability is important for the diversification of an economy to take root, not all
components of the macroeconomic framework need to be excessively rigid. Stability
alone through conservative fiscal and monetary policies (which at times may be prudent)
is not enough to ensure the deepening of diversification within the local economy. While
contributing to stability, a conservative fiscal policy may end up limiting the necessary
fiscal space needed to boost investment in Trinidad and Tobago. Such constrained fiscal
space, as the empirical results may suggest, may undermine the diversification efforts in
the long run.
Therefore, given that diversification of the Trinidad and Tobago economy is necessary
for high and sustained growth, pragmatism in designing macroeconomic policies
becomes imperative.
Industrial Diversification in Trinidad and Tobago
Regarding the approach to ensure sustainable economic growth in Trinidad and Tobago,
consensus is split between whether to strengthen our dominant non-energy sectors or
pursue industrial diversification. It is well worth the effort to take a closer look at least at
the theoretical level, and practical levels.
Interestingly, the funds and reserves gained from the present incomes form the energy
sector can be used to develop the manufacturing, tourism and agriculture sectors; and this
will assist in national development long after the present oil-boom has abated. We seem
however, not to be able to learn from the past experiences of our economy as in the 1980s
depression, or the intentional economic upheavals and crises of the 1990s.
3
It may be prudent at this time to look at some partnership programs between the
government and the local manufacturing, tourism and agriculture industries, who have
against all odds, been developing, albeit slowly, over the last decade. This is the only way
to bridge the gap and deal wit the economic obstacles and realities that exist in the market
place. Examples can be easily found when looking and similar economies (to some
extent, such as the NICs). There is need not only for informed governmental industrial
policy; but as is being advocated here, there is also a need for an informed diversification
policy to be developed by the government.
The seven (7) industries identified by the former government, may in fact be useful to the
overall development of the national economy; but there is sufficient evidence for us to be
cautious in our selection of these sectors, and in our approach to the diversification
process. What is being advocated here at this juncture is for all parties (governmental,
private sector and civil society) to look at these sectors and make an evaluation as to their
inputs into the future development of the national economy and developmental
objectives. In other words, let us do an analysis and determine whether or not these
industries are better suited to our developmental needs, than others (presently existing or
to be developed).
The government clearly wants to move in the areas where they perceive Trinidad and
Tobago to have a comparative advantage, however, it is being posited in this paper; the
issue of competitive advantage has much more to offer the nation if the ultimate goal is
sustainable development and sustainable employment in the economy.
There are also other strategies that can be pursued, such as joint venturing with more
knowledgeable firms in the economy (who may in fact have international links and
access to knowledge and R&D); rather than seeking FDI as has been the rule of thumb
for so many decades.
Market access is also an area that needs serious attention, as the realities of globalization
and trade liberalization have changed the game in the international arena. Small states
4
tend to find themselves fighting for the scraps or playing catch-up to the larger more
developed nations.
We can be insulated from this to some extent by our close
geographical and increasingly close trade and political relations with our neighbors to the
south.
This expanded market is many times that if CARICOM and some preparatory work has
been done by way of bi-lateral trade agreements. This is the case of Costa Rica, and this
may be seen as a potential doorway to the Latin American market for Trinidad and
Tobago and the wider CARICOM territories. The same is true for the Cariforum
arrangement between CARICOM and the Dominican Republic. With this in mind, we
may want to concentrate on specific areas of high value-add such as ICTs, Intentional
financial Services, Tourism and Agriculture.
The Current Dependency Syndrome
There is no secret that Trinidad and Tobago economy has morphed into a heavily
dependent one (on, the energy sector - oil and natural gas). Note however, that this overdependence is what adversely affected the local economy in the past. It is the
understanding of this, and the appreciation of the fact that the manufacturing, tourism and
agriculture sectors are the three sectors that will hold the country firm in times of
economy turmoil and uncertainty that is presently important.
The Growth Potential
The proposal of industrial diversification seemingly stems from concerns about our heavy
concentration on the energy sector. In the case of Trinidad and Tobago it should mainly
refer to the revitalization of the manufacturing sector. Of course, the proper approach is
by expediting its development rather than deliberately slowing down the energy sector
development (which is not an option for the present government). But because of the free
market doctrine that Trinidad and Tobago is observing, industrial diversification implies
certain interventions in the free market to be made by the government.
5
Economic Policy Reforms and Realities of Trinidad’s Industrial Political Economy
The Organization for Economic Co-operation and Development (OECD) defines
competitiveness as, “the degree to which a nation can, under free trade and fair market
conditions, produce goods and services, which meet the test of international markets,
while simultaneously maintaining and expanding the real incomes of its people over the
long-term.” 1
After the demise of the centrally planned economy of USSR in 1991, the global
economic management of the bi-polar world economy has shifted to uni-polar. Since then
economic reforms, pushed by international donor agencies (Fund-Bank), aims at reducing
the role of state and increasing the role of market in economic decisions. Numerous
national governments of various countries of the globe now have an option only between
‘Big Bang’ and ‘Gradualism’ (Hoff and Stiglitz 2004).
The Indian government had chosen a path of economic reform since July 1991 to
gradually reduce the role of the state and to provide greater and dominant role to the
market in the process of economic decision making. The Indian government dismantled
controls and regulations related to the location of private economic activities to establish
production units in industrial sector of the economy (Srinivasan and Tendulkar 2003).
Industrial licensing policy, which had been enacted to regulate and control location of
industrial activities, has been the bone of contention for quite some time due to misuse of
this policy both by the Indian private capital as well as the bureaucratic-political lobbies.
So was the location of public sector enterprises which was purely under the state control.
Therefore, the allocation of the licenses and public sector enterprises has determined the
level and speed of economic development of the different states. It has been argued that
Punjab state has suffered due to policy-induced barriers and constrained private sector
initiatives through allocation of licenses and public sector investments in the industrial
1
OECD, Annual Competitiveness Report. The Organization for Economic Co-operation and Development, 2001
6
sector of her economy, and as such the Trinidad and Tobago policy must be cognizant of
this approach.
Since Punjab’s industrial economy is a grooming ground for small scale industries,
external and domestic liberalization was expected to put substantive constraint on this
sector. An important change in paradigm of policy making under which universal
applicability of market in economic decision making for alleviating all the ills of the
capitalist economic system during the 1980s and 1990s (popularly known as the
Washington Consensus) was questioned in the late 90s when financial crisis triggered in
South East Asia.
Around this time economists in academic arena realized the complementary role of the
state and the market as well as of the public sector. Harberger (1998) cautioned fellow
economists not to recommend dismantling of the public sector for privatization until the
efficiency gains of such acts are substantial.
During the 1980s and 1990s growth experience of world economy in general and
economies under reform program in particular recorded substantial instability. Therefore,
realization dawned on the experts to recognize the differences in the stage of economic
development and institutional arrangements across countries. In fact the profit-seeking
private agents, misguided by market imperfection, were mainly responsible for creating
instability in economic growth and creating unprecedented economic crisis in high
performing East Asian countries (Stiglitz 2002).
Thus, standard recipes and sole reliance on the market for efficient allocation of resources
and economic development can do more damage than good to the economy. Turnaround
in the thinking of economic policy making, where the state and market have been
regarded as complementary rather than competitive, was reflected not only in the
discussions in the academic circles but also from the documents and programmes enacted
by the international financial institutions. This paradigm shift in recognizing and
providing due respect to the role of state in policy making has been characterized as Post-
7
Washington Consensus (Hayami 2003). Contrary to this, the process of policy making in
most of the developing economies still reflect the Washington Consensus approach.
Punjab state is one such example. An attempt in the following section is made to examine
the impact of liberalized economic policy on the industrial economy of Punjab.
In the local Trinidad and Tobago economy, we must realize that the majority of firms are
characterized as either small or medium-sized. This classification applies beyond the
industrial sector, and is based on structural variables such as the production structure, the
enterprises’ size, the inter-firm relationships, the background of the entrepreneurs, the
features of the local labour market, the sources of innovation, the social structure, the
local institutions and economic policies.
The Employment Consideration
Interest in economic diversification has increased in most nation states due to the realities
of economic instability and generally declining employment opportunities in the
traditional resource based industries of agriculture, forestry, mining, and related
manufacturing industries. Many counties depend to a large degree on one of these
industries as their economic base. The sensitivity of rural unemployment and
employment to swings in the business cycle has been examined by many researchers. In
this paper we posit that communities must focus not only on providing jobs, but more
importantly on providing stable jobs. Communities, state and local economic planners
concur and have made diversification a focus of development efforts in many developed
countries, it is now left for the developing economic to adopt such practices and policies.
Industrial diversification is believed to be able to improve employment, which could
serve the great need of the Trinidad and Tobago’s economy. We are presently facing
unemployment problems in the lower educated and skilled labor force spectrum under the
shocks of technological progress. No matter how fast the economy seems to be growing,
the employment rate would be hard to bring down. Reintroducing labour intensive
industries may actually exacerbate the present problem, as we need to create the avenue
8
for high-end products, thus requiring high-end inputs from labour; thus requiring better
skilled and trained workers.
Trinidad has labour-intensive manufacturing industries, such as textile, food processing,
etc. However, due to a range of factors including developmental path, economic
depression, lack of funding and the like; we seem to have missed the opportunity to
develop high-tech and electronics industries, which happens to be a strong field for other
NICs like Singapore.
Thus, if Trinidad and Tobago aims to improve the employment of its higher educated and
skilled labour force by revitalizing the labour intensive manufacturing industries and
pursuing industrial diversification, it will lower the chances for success.
On the other hand, high value added manufacturing is capital and technology intensive in
nature, which is unable to provide large scale unemployment relief, that the economy will
need in the future as the construction boom abates.
Redeveloping the manufacturing sector by subsidizing heavily could only benefit present
employment figures; other than that, it fails in both competitiveness and economic
efficiency, thus presenting a less convincing argument.
This paper supports the view that unemployment in a more diverse economy is more
stable over business cycles than in a less diverse economy as is found in Trinidad and
Tobago. Thus, it can be concluded that, in general, economic diversification in small,
largely resource- based economies should lead to greater cyclical stability. At the same
time, diversification was is the sole explanation of unemployment instability.
In general, the agricultural and manufacturing sectors were the main stabilizing
components in the economies of developing countries. This lends support to efforts to
maintain the agricultural sector and to increase manufacturing activity. This will not be
true for all manufacturing, however.
9
Analysts have to do more investigation to determine what industries and sectors are
strongly related to unemployment instability, while realizing that others have the opposite
effect on employment locally; noting that food processing and other, non-resource-based
manufacturing were less so. These results have implications for development policies of
natural resource-based states.
Another key factor is that the base services sector (made up of service-producing
activities not necessarily based on local population and income) is strongly related to
unemployment instability. This is a somewhat anomalous conclusion, given the
knowledge that services are generally more stable over business cycles and that they are
the growth sectors of the economy. Again, however, the different effects of specific
industries must be considered.
We posit that neither simple unemployment stability nor indiscriminant diversification
should be the desired goal for the Trinidad and Tobago economy. This approach supports
previous research, primarily focusing on small developing states, which found that
diversification generally reduces cyclical instability. Nevertheless, such aggregate
measures provide little in the way of specific policy recommendations. As suggested by
other researchers, this requires more detailed information on specific industry and
community characteristics and how they also may affect economic stability.
Trinidad and Firm Linkages and Clustering
In this framework two polar models of innovative activities have been developed
following Schumpeter (1934, 1942). On the one hand, the first pattern of innovative
activities is characterized by conditions of medium-low opportunity, low appropriability
and low cumulativeness so to lead to technological ease of entry in an industry. To be
sure, a relatively large number of innovators, (a major role played by new firms in
innovative activities), continuously breaking through the current way of production,
organization and distribution.
10
On the other hand, the second patterns of innovative activities are related to conditions of
high opportunity, appropriability, and cumulativeness which are more likely to lead to a
low number of innovators and the dominance of few firms that are continuously
innovating through the accumulation over time of technological and innovative
capabilities. They employ their accumulated stock of knowledge, and thereby create
barriers to entry to new entrepreneurs and small firms.
Importantly, it has been shown that technological regimes are technology-specific
(Malerba, Orsenigo, 1996 b), i.e. that the pattern of innovations in one sector is very
similar throughout all countries. However, one can also observe systematic differences in
patterns of technological change across countries in all sectors (Guerrieri and Tylecote,
1997). Does the technological regime within which firms operate have consequences
upon enterprise clusters, and especially on their internal organisation, geographical
location, and innovative behaviour?
It is reasonable to expect that innovators will emerge from the location where
technological opportunity is available and accessible (Baptista and Swann, 1998). When
there are conditions of high opportunity, high appropriability and high cumulativeness as
innovators are usually geographically concentrated. This is also related to the firm’s
knowledge base, since the more technological knowledge is tacit, complex and systemic,
the more constant interaction will be needed, so to expect a greater concentration of
innovators, as this type of knowledge can only be learned through daily use, and requires
informal personal contacts and exchanges (Nelson and Winter, 1982, Lundvall, 1988).
This should imply greater industrial and geographical concentration. Conversely,
geographical concentration should be less important when the industry’s knowledge base
is simple and well codified and conditions of low opportunity, low appropriability and
low firm cumulativeness prevail.
The prevailing techno-economic model with the diffusion of the ICTs and the rapid
internationalization of all economic and technological activities would seem leading
toward an increasing role and relevance of the Schumpeterian dynamics, where
11
resources, capital and other inputs can be efficiently sourced in global markets.
Furthermore it is assumed that information and technologies become generic,
increasingly codifiable and are readily available via globalization. More specifically,
firms find it increasingly necessary to create knowledge through linkages with other firms
and organizations.
Change in technology and global competition have therefore diminished many of the
traditional role of geographical location. The analysis needs to move beyond the
boundaries of a region or nation state, and international knowledge linkages acquire
increasing importance (Ernst, 1998). But all that reveals only one side of the coin. In fact
location remains fundamental to competition, albeit in different ways in the new technoeconomic model dominated by ICTs (Cox, 1997 and Storper and Salais, 1997). The
relevant knowledge base involves tacit as well (Baptista and Swann, 1998).
It is arguable that if technology can be licensed or sourced from other locations, that
components and equipment can be out-sourced, more advanced dimension of competition
remain geographically bounded. The enduring technological and competitive advantages
in a global economy are often still significantly local (Cox, 1997 and Storper and Salais,
1997). In this perspective the spread of global production networks (GPN) may be
understood as an organizational innovation that may enable a firm to gain quick access to
higher quality and/or lower-cost foreign capabilities that are complementary to its own
competencies while maintaining an effective home base for innovation activities (Ernst,
1998:5).
To our present aims, it is important to emphasize that these recent patterns impose drastic
re-organizations on most all Trinidad and Tobago enterprises. Particularly, such changes
are sweeping and imply comprehensive industrial restructuring, new skills and
intermediate inputs.
12
The Role of Government
Strictly speaking, Trinidad and Tobago does possess some labour-intensive
manufacturing and processing. As for the chances of success in developing high value
added manufacturing, it should be decent providing that the Government gets actively
involved, like the case of Singapore. It should not aim primarily at employment relief,
though this will be a factor in the future. Under the high cost structure, the employment
issue has to be addressed fundamentally by population and education policies instead of
industrial policies.
The fact that high value added manufacturing has not taken hold in Trinidad and Tobago
even though public opinion is firmly supportive and private enterprise agrees in principle;
suggests that market forces alone might not be enough.
The Government has to get involved proactively and intervene in the market. This is
exactly how Singapore has succeeded. Its Government has taken measures, such as
formulating comprehensive economic plan, passing rules and regulations, enacting
preference and industrial policies, and investing directly or indirectly in the economy.
These endeavors not only bore fruits in its economic restructuring and the second
industrial revolution in the early 1980s, but also give birth to its electronics, IT, and
biotechnology industries, etc. Clearly in the case of Trinidad and Tobago, many obstacles
have to be overcome before we can successfully adopt such an approach.
To promote industrial diversification, the Trinidad and Tobago Government has to
actively be involved in the economy and change the current thinking. The Government
needs to reach consensus internally and gain the support from the business sector and
civil society in relation to which sectors and industries should be supported by this
diversification program; as this is paramount in order to avoid controversies, as industrial
policies often imply policy favors and preferences granted to certain industries.
The argument for diversification of the economy is that Trinidad and Tobago has no other
choice when the realities of globalization and liberalization put additional stress on the
already-failing sectors of the economy. The argument against it is not without rationale
13
either. These include the concerns about the potential conflicts of commercial interests,
operating efficiencies and deviation from fair competition due to excessive subsidizing
and governmental interference. The Government, we must realize, though intent of being
productive and assisting the development of the sectors; also lacks the capability and
experience of diversification. Therefore, eagerness for quick success and instant benefit
could prove to be counterproductive.
As a supporting mechanism, policy research is critical. But the Trinidad and Tobago
government does not possess strong resources in this area. Thus, the private sector,
academic and research communities in Trinidad and Tobago need to shoulder some of the
research burden and assist the Government. Related studies must shift from purely
theoretical to practical, producing more comprehensive assessment and analysis to
concrete proposals. Only by doing so, we can get results in the shortest time under
limited resources. Otherwise, pinning all hopes on the Government will compromise the
efficiencies and results.
Endogenous Innovation Systems and Government Initiatives
Niosi et al (1993) provides a working definition of a National Innovation System as: “the
system of interacting private and public firms (either large or small), universities and
government agencies, aiming at the production of science and technology within national
borders. Interaction among those units may be technical, commercial, legal, social and
financial, in as much as the goal of the interaction is the development, protection,
financing or regulation of new science and technology”. (Niosi et al, 1993, 212)2
To be sure, innovation systems are critical, and definitely necessitate a significant
commitment in resources from the public and private sectors, non-governmental
organizations and non-profit actors like academics, universities and think-tanks.
Developing countries need to be careful where they put their limited resources, and as a
consequence, it is crucial to differentiate between innovation systems and invention
systems. One must remember that enterprise is a factor in the equation, to do otherwise
2
J Niosi et al, “National Systems of Innovation: In Search of a Workable Concept.” Technology in Society 15, no. 2 (n.d.) : 207-227.
14
would be to ignore the Schumpeterian assumptions. One of the central claims in
Schumpeter’s “Theory of Economic Development”
3
confused with innovation. Innovation may be viewed as
is that invention is not to be
an economic act that may in
reality may depend not on new technology but on new perceptions of market opportunity.
With this understanding, it is assumed that the more successful firms would be the ones
that carry out innovative activities that would in the long run make them more profitable,
and increase their market share as a result. This incorporates not only the funding to
carryout such activities, but also the vision and leadership of the management of these
companies. To aid this kind of activity it is usually necessary in small developing
countries for the government as the central economic manager to provide the impetus for
such activity by creating and maintaining a fertile environment for such innovative
activities; as without this assistance it will not develop naturally. But it must similarly be
cautioned that it is ultimately the responsibility of the firms to avail themselves of these
opportunities, as is suggested by Antonelli, Kaiser and Prange (Antonelli, 20054, Kaiser
and Prange, 2004)5
What one usually finds in these types of economies, as is evident in Trinidad and Tobago
is that historically the private firms have existed in an environment of excessive
government protectionism as art of the modernization and developmental programs. As
such these firms have not been able to develop as their reliance and dependence on the
government has actually increased over time rather than decrease, as was initially
intended by the developmental programs. Thus the issues of reduced dependency, selfsufficiency seems to have been abandoned by most firms in the economy, save a few.
It has been argued that once these firms recognize the need to be self-sufficient and
expansionary, going beyond the simple local markets, they will by necessity need to re3
Schumpeter, Joseph A.. Theory of Economic Development. Oxford: Oxford University Press, 1949.
C. Antonelli, “The Governance of Localized Knowledge”, mimeo, Laboratorio di Economia dell’Innovazione, University of Turin.
2005.
5
R. Kaiser and H. Prange. “The Reconfiguration of National Innovation Systems - The Example of German Biotechnology” Research
Policy 33 (2004): 395-408.
4
15
adjust their marketing and productive activities to be more regionally-oriented in the first
instance, then when they gain some momentum to attempt to become globally-oriented.
Conclusions
To be sure, the strategies of development in the region had been less successful that had
been hoped for, and this is due to a myriad of reasons, not least being the ‘Dutch
Disease’, the over dependence on one or a few products which are produced for export, to
earn the much needed foreign exchange for the economic development of the region. This
desire to earn foreign exchange also created and maintained development strategies that
did little to help the economies grow, and at the most fundamental level, it is being
argued that a major shortcoming of these strategies was the lack of vision. This lack of
vision was accompanied by a lack of consultation with the major stakeholders in these
economies as the governments tried to ‘pick winners’ in industries where the prevailing
economic theories of the day informed them that they had a ‘comparative advantage and
should support these industries at all costs. Secondly, because historically the business
sector had developed an over-reliance on the government to provide excessive levels of
protectionism, which in term made them less efficient and a burden on the local coffers.
Some of the major issues that have restricted the development of the local economies and
hampered their incorporation into the international environment are the falling prices for
primary products (for which we had a ‘comparative advantage’), increased demand for
high technology goods, the imminent extinction of the preferential trading arrangements
between the region and the former colonial masters, the proliferation of trading blocs, the
rise of developing states internationally, all serving to make the developmental objectives
of the region more ‘out of reach’.
The region needs a consolidated program for the development of its ICT, Research and
Development and Innovation capacities, along with a coordinated education program to
ensure the highest level of productivity in all fields. For real development to occur
regionally, all stakeholders have to be involved, and while the local and regional
governmental bodies have a responsibility to create the structures and environment for
16
growth and development, it is being argued that the private sector also has a role to pay in
regional development.
For diversification to be successful in the Trinidad and Tobago economy there needs to
be a unified Best-Practices policy in a number of areas that will assist in the development
of the policies that are being advocated. The areas that need urgent attention are business
development, procurement, taxation, transparency, accountability, environmental
standards, and production.
The Trinidad and Tobago government also needs to create the environment for, and
finance the incubation of innovation firms. Institutional linking needs to take place on a
number of levels. There needs to be a strong and developing link between Research and
Development institutions and Training institutions regionally, without this, there will be a
continuing disconnect between what we perceive and what we produce in terms of future
workers. Additionally, there is a dire need for the coordination of policies as they relate
to planning, economic production and knowledge creation. It must be noted that these
activities are not necessarily (as presently perceived) mutually exclusive. In fact we are
suggesting that the greater the synergies between these activities; the greater the level of
innovation, efficiency and productivity.
17
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