Many developing and more particularly ex-colonial, now powerful industrial-based countries, such as China, Korea, India, Mexico, Malaysia, Vietnam, Indonesia, and Mexico, according to Gelb, appear to have been remarkably successful in diversifying their economies and their export structures. He suggested that in these countries, the most prominent change has been the shift towards industry. He observed, for example, that in the 1960s, as some of these countries attained independence, 80% of exports were primary commodities. By contrast, he notes that currently almost 80% of the exports are industrial products. He attributes what he terms as ‘massive transformation’ in the export structure with the integration of these countries into global production networks across a wide range of products as well as their participation into the rapidly growing South-South trade.

He contends that a number of other countries have taken the advantage of the potential for upgrading their resource-based sectors. For instance, he suggests that during the periods 1975 and 2004, Latin America’s share of global markets in metals expanded by 175%. During this time the share of ores and unwrought metals doubled, but that of worked products increased eight-fold. In addition, he suggests that diversification in other countries includes horticulture, floriculture, and fresh fish. He also cites the case of sub-Saharan Africa, which has shifted to resource-based services with high logistical and technical requirements including tourism which now represents the equivalent of over 10% of merchandise exports and IT-related exports.

While these countries have had success in diversification away from their primary commodities, many formerly, referred to as, ‘resource-rich’ countries have had limited success. Indeed, many developing countries have been struggling with the challenge of expanding and diversifying their export baskets beyond their primary product bases for a long time. A central question, then, according to Samen (2010), is what can and should be done in developing countries to boost their export growth, accelerate their export diversification, and enhance their competitiveness in international markets? There is no doubt that a number of prescriptions offered including export diversification, reduction of monopolies, tax incentives for foreign partners, and widening of the resource base of the country are primarily economic in nature. This book, however, extends the debate. It argues that economic policy prescriptions must be accompanied by what many term ‘soft skills’ such as constitutional and administrative reforms, culture change, societal change, and more importantly political will.

This book is a collection of chapters from academics and scholars across different disciplines at the University of the West Indies, Trinidad and Tobago. The 15 chapters in this book focus on the attempts of various countries to diversify their economies and their societies in countries such as Trinidad and Tobago, Jamaica, Martinique, and Cuba. The skill sets of the various authors are cross-disciplinary. The second chapter, ‘The Diversified Economy: Possibilities from Modern Portfolio Management’, for instance, is written by Chandra Shekhar Bhatnagar, Vaalmikki Arjoon, and Prakash Ramlakhan, who are experts in risk management. In their chapter they borrow from the tenets of modern portfolio theory and they apply these tenets to investigate diversification benefits for the economy of Trinidad and Tobago. By considering the economic system as a portfolio of various sectors, they examine the extent to which policymakers would gain from allocating resources to these sectors in a way that could either reduce risk, maximize the per unit reward for risk, or both. In their chapter the theoretical foundations of financial portfolio analysis are enunciated. They employ data from the Central Bank of Trinidad and Tobago to demonstrate the probable optimum weighting schemes for economic sectors. No doubt, Bhatnagar et al.’s chapter presents some controversial viewpoints. In addition, their chapter suggests possible implications for the future of the country.

The third chapter, by popular economists Vaalmikki Arjoon, Chandra Shekhar Bhatnagar, and Prakash Ramlakhan, entitled ‘What Drives Economic Diversification in CARICOM Economies?’ explores the determinants of economic diversification for a panel of 15 CARICOM (Caribbean Community and Common Market) countries. The authors contend that successful diversification in these countries remains largely elusive, despite several policy initiatives put forward by their governments to establish well-diversified economies and develop a multitude of different industries. This raises an important policy question—what are the factors that drive diversification in these economies? Using panel cointegration econometric methods, their chapter shows that macroeconomic fundamentals, including an increased current account balance, foreign direct investment inflows, and credit to the private sector, improve diversification. On the other hand, increased national debt, government investment expenditure, and exchange rate volatility stymie diversification efforts. They also show that another obstacle to diversification is corruption, an important measure of institutional quality. Using a panel quantile regression framework, they further uncover that the effects of corruption and private sector credit are more meaningful in economies which have already achieved higher levels of diversifications.

Chapter 4 in this collection is by Daren Conrad and Asif Cassim entitled ‘Human Capital as a Catalyst for Economic Diversification in Trinidad and Tobago’. In their chapter they argue that it is widely accepted that in order to achieve weak sustainable development in a resource-abundant economy, the resource rents derived from the exploitation of non-renewable resources must be reinvested in produced forms of capital to generate future income when the non-renewable resource is exhausted, the Hartwick Rule. Human capital, they suggest, is one of the most important forms of reproducible capital. It ensures, according to these authors, that a country can produce an appropriate quantity of goods and services in the aftermath of resource depletion. This chapter focuses on human capital as this is the produced asset with the greatest significance for enhancing total wealth and maintaining constant consumption. Specifically, it examines human capital injections in Trinidad and Tobago as a way to operationalize the Hartwick Rule, thereby underscoring the importance of reinvesting resource rents in human capital accumulation honing in on education at the secondary and tertiary levels. Operationalizing the Hartwick Rule is an integral part of diversification plans as it necessitates the accumulation of human capital as dictated by long-term development goals. The focus on investment in human capital at the secondary and tertiary levels is based on the fact that the school system is hierarchical in nature and that the return on investment, while differential, is higher at the secondary and tertiary levels and more directly linked to labour productivity than that of primary school given Trinidad and Tobago’s economic structure. This chapter also explores human capital depreciation which also includes high migration rates as this too causes human capital loss and is therefore another reason for continuous reinvestment of resource rents in education at the secondary level. The chapter by Conrad and Cassim provides a theoretical and empirical case for the development of human capital as a Hartwick Rule response in repositioning a resource-abundant small island developing state (SIDS) in order to spur the process of economic diversification.

‘Corruption as an Impediment to Diversification: The Case of Trinidad and Tobago’ by Conrad and Ali notes that economic diversification encourages growth and development as it redirects economic activity away from reliance on a primary product or a few resource-based industries. The authors argue, however, that in resource-rich countries, the ‘resource curse’ or Dutch disease often manifests itself in the form of corruption, weak institutions, and misaligned currency values as a result of poor management of economic rents derived from the natural resources. The rent-seeking behaviour, weak institutional frameworks, and poor governance create the perfect conditions to breed corruption, stymie the development of modern mixed economics, and perpetuate poverty. This chapter examines how natural resource dependence led to the institutionalization of corruption in Trinidad and Tobago, a symptom of the Dutch disease, which in turn had a negative effect on diversification efforts and continues to be an impediment to diversification.

Cheryl-Ann S. Boodram in her chapter (Chap. 6), ‘Asset-Based Community Development as a Vehicle for Economic Diversification: Place-Based Strategies for Building Stronger Economies in the Caribbean’, focuses on the need to build civic engagement and social capital as critical elements in the economic diversification for SIDSs. She observes that while this factor has been recognized by the economist as important, despite this recognition, the approach as to how to engage communities has evaded the discipline of economics. This chapter argues for the use of a social work approach to asset-based community development (ABCD) as a tool in the economic diversification of the Caribbean. Following a description of the four principles of the ABCD model, this chapter shows how ABCD has been applied to community-driven economic development in urban and rural communities. The chapter argues that the strength of the ABCD lies in its premise that people can participate in organizing to drive the economic development process and create innovative and sustainable programme-based solutions in times of economic uncertainty. Certainly, in her chapter, Boodram’s major focus is on the softer factor, the citizenry.

The seventh chapter is presented by two economists, Jeetendra Khadan and Inder Ruprah. Their chapter is entitled ‘The Economic and Political Costs of Diversification as a Way Out of a Recession: The Case of Trinidad and Tobago’. Their chapter suggests that this topic is once again at the forefront of policy discussions following the recent oil price decline. They observe that in Trinidad and Tobago having experienced a lost decade (despite an international oil boom) and facing another lost decade, the question of diversification as a way out of the recession becomes highly pertinent. In this chapter they review the policies and their costs (both economic and political) of the period 1986–1991, when Trinidad and Tobago last faced a recession derived from an oil price drop and simulate (using structural vector autoregressive models) the economic costs (inflation, unemployment, poverty) of similar policies, particularly of an exchange rate devaluation, today. The chapter uses the framework of the politics of a small, oil-dependent, and ethnically diverse country, as is Trinidad and Tobago, on the earlier discussions and is used to explain why there is policy inertia.

The next chapter (Chap. 8), ‘Niche-Focused Tourism Development in Small Island Developing States: The Case of Trinidad’, by Acolla Lewis-Cameron and Narendra Ramgulam argues that the sustainability of SIDSs depends in part on the extent to which these islands can diversify their product offerings in the midst of an increasingly competitive global tourism marketplace. Several approaches to niche-focused tourism development have been identified. This chapter is an analysis of the stakeholder-informed approach adopted by Trinidad in determining its niche tourism products for development. This approach allowed for the inclusion of diverse perspectives and generated a high degree of consensus among the stakeholders. However, there was insufficient focus on external factors that influenced niche product development. A more balanced approach is required that considers both the internal and external environments. Further, the authors recommend that a balance scorecard model be adopted to rank identified niches as it provides a quantitative dimension to a qualitative process of niche selection.

The chapter ‘Managing through a recession: Sustainable Climate-Smart Agricultural Solutions to Improve Food and Nutrition Systems in Trinidad and Tobago’ by Wendy-Ann P. Isaac, Nkosi Felix, Wayne G. Ganpat, Duraisamy Saravanakumar, and Jessica Churaman (Chap. 9) contends that agriculture in Trinidad and Tobago is challenging, especially now in these recessionary times. They note that food and nutrition insecurity is compounded by increased vulnerability to changing weather events, disasters, land degradation, pests and disease incidence, inefficient and outdated technologies in food production and processing, low investments in research, and a high food import bill and heavy inflation. An urgent, transformative, new vision for agriculture is critical in achieving many of the post-2016 Sustainable Development Goals (SDGs) for Trinidad and Tobago to circumvent the current recessionary period. In this chapter, sustainable agriculture intensification, as well as climate-smart agriculture technologies that have the potential to mitigate many of the challenges facing agricultural development, is presented with the focus on making Trinidad and Tobago more climate resilient and self-sufficient in food. Policies and recommendations, which play key roles, are suggested. Such a transformative path may seem a daunting challenge in the light of political volatility and continuity every five years, but this chapter seeks to offer alternative pathways for the agricultural sector in Trinidad and Tobago.

My chapter (Ann Marie Bissessar—Chap. 10), ‘Whose Governance? IMF Austerities and Diversification in a Small Island State: The Case of Jamaica’, as the name implies, focuses on Jamaica. In particular, it interrogates the relationship of the IMF and the World Bank in this country. It notes that the IMF and the World Bank has for a long time embarked on what can be described as a ‘trustee’ relationship with countries in the Commonwealth Caribbean. From the latter half of the 1970s, countries such as Trinidad and Tobago, Guyana, Barbados, as well as Grenada were ‘forced’ because of their chronic need for ‘hard’ currency loans to approach the IMF and the World Bank. These loans were accompanied by structural adjustment measures. This chapter attempts, for the first time, to evaluate, in the case of Jamaica, whether the measures introduced by the lending agencies resulted in some measure of economic growth in the countries under review. The chapter then examines the new agreements entered into by these countries and the measures that accompanied them. The overarching argument is that the forces of globalization as well as austerity measures introduced by lending agencies such the IMF and the World Bank prevent rather than encourage small island governments to embark on ‘national’ development plans and programmes. In other words, the primary argument of this chapter is that these countries are constrained in their ability to ‘govern’ themselves; rather, their economic decisions are largely crafted by the forces of globalization and further reinforced by international lending agencies such as the World Bank and the International Monetary Fund.

Jacqueline Laguardia Martinez, a native of Cuba, now lecturing at the University of the West Indies, Trinidad and Tobago, narrows her focus to Cuba, an area in which the literature is limited at this time. Her chapter (Chap. 11) is titled ‘Cuba: A Caribbean SIDS Reinventing Itself’. She offers a preamble noting that Cuba is the largest island of the Caribbean, with an area of almost 110,000 km² and a population of 11.3 million. She suggests that while the country seems vast when compared to its Caribbean neighbours, nevertheless, Cuba is considered a SIDS and shares similar development challenges with the rest of the Caribbean States. She observes that as th...