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“[…] The Ministry of Finance website provides budget statements from 2002 onwards. Diversification is mentioned in each budget statement. All 23 years. Undoubtedly, diversification will feature in Budget 2026 when it is read in the coming weeks.
“[…] This is not to say that there have been no changes since the late 1950s. Some aspects of manufacturing have done well, and our financial sector has blossomed. However, these changes have not diminished our reliance on the energy sector. This begs the question, why? […]”
The following Letter to the Editor on why Trinidad and Tobago has struggled with diversifying our economy was submitted to Wired868 by economist Dr Jamelia Harris:
Attempts at diversification are not new to Trinidad and Tobago policy. In fact, it has been a permanent feature of our post-independence policies and budgets, and even before.
Writing in Inward Hunger, Dr Eric Williams described the 1911 colonial economy as “cocoa the reigning queen, sugar the ex-king, and oil the future emperor”.
Arguably, the oil emperor (and its energy offspring) still reigns in 2025, though somewhat reluctantly. Colonial economies were set up to be primarily extractive, centred on the highest earning raw material, not to be diversified and broad-based.
In our later years as a colony and early years of independence, Trinidad and Tobago had several development plans. Dr Lester Henry, in his chapter contribution to the 2021 Handbook of Caribbean Economies, documents some of these early strategies.
(via Riomate)
The first was the 1958–1962 development plan. This drew on the seminal works of Caribbean scholar and economist, Sir Arthur Lewis, and sought to address our “primary reliance on oil and sugar”.
The second development plan (1964–1968) was more intentional in its diversification efforts and included import substitution policies like negative lists, where there were restrictions on the importation of some products.
There were also incentives to domestic producers. Negative lists were only abolished during the liberalisation period in the 1990s.
The third development plan (1969–1973) again recognised “the need for diversification to overcome structural problems”. This plan also sought to strengthen technical knowledge in the agriculture and manufacturing sectors, and use energy revenues to fund diversification efforts.
There was a movement away from these types of development plans in the 1970s, but the intent to diversify did not die.
The state became heavily active in various areas of the economy and established several state-owned enterprises. Notable examples included the incorporation of National Flour Mills (1972), the EximBank of T&T (1973) and the now-closed Caroni (1975) Ltd.
The 1980s and early 1990s were difficult periods for T&T as the energy sector took a hit. This amplified calls for diversification.
As Gypsy sang at the time: “Captain, the ship is sinking”. The early 1990s sought to correct some of these economic imbalances. It was a period of structural adjustment and an International Monetary Fund (IMF) programme.
The late 1990s and 2000s brought significant growth driven by the energy sector. But still, diversification was on the agenda.
The Ministry of Finance website provides budget statements from 2002 onwards. Diversification is mentioned in each budget statement. All 23 years. Undoubtedly, diversification will feature in Budget 2026 when it is read in the coming weeks.
Copyright: Office of the Parliament 2025.
This period saw the establishment of many state-owned enterprises to promote private sector development and support diversification. Examples include Nedco (2002), eTeck (2004), InvesTT (2012), ExporTT (2012), and The Cocoa Development Company of Trinidad and Tobago Limited (2013).
In both periods of boom and bust, whether PNM, NAR or UNC, diversification has always been part of successive government policy. In an increasingly polarised world, the fact that there is broad agreement that diversification is important and necessary is indeed heartening.
The simple historical fact is that we have tried. Many times. But despite these efforts, our economic fortunes are still heavily tied to the energy sector.
Photo: OPM.
Sluggish economic growth, foreign exchange challenges, continuous budget deficits and increased borrowing are all symptoms of this in recent years. These are symptoms of structural problems.
This is not to say that there have been no changes since the late 1950s. Some aspects of manufacturing have done well, and our financial sector has blossomed. However, these changes have not diminished our reliance on the energy sector. This begs the question, why?
A thorough examination of the past 65 years of diversification efforts would shed light and mitigate the chances of reproducing the same mistakes. Beyond this, we can learn from others.
A recent (2024) IMF research report offers some lessons based on the diversification efforts of six developing countries: Costa Rica, Gabon, Georgia, India, Senegal, and Vietnam. These six countries have different economic structures and levels of development, but some common patterns emerge.
First, and perhaps most importantly and most obviously: diversification takes time. It is not something that can be achieved in a five-year parliamentary term. It requires time and policy continuity.
Second, it requires a coming together of several complementary factors: macroeconomic stability, infrastructure quality, appropriate workforce skills, credit access, and a conducive regulatory environment. Greater income equality also eases the process as citizens are more likely to buy in.
Photo: OPM.
Looking at the current T&T economy, some of these conducive factors need to be strengthened. This does not mean that diversification is not possible, just that it might take more time to get there.
And where is there? What will be our (economic) future in T&T?
On paper, we have tried tourism, agriculture and fisheries, culture, and some types of manufacturing. A truly diversified economy would see all these sectors contributing to GDP, government revenues and foreign exchange earnings in non-negligible ways— alongside the energy, finance, technology, medical and education sectors, for example.
(via Ministry of Culture and Community Development.)
Diversification is challenging. But diversification is necessary. It is now time to move past intentions, to long-term actions.
Dragon or no dragon, we should be dancing to the beat of diversification.
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