The Role of Knowledge-Based Services | Local Business

[ad_1]

Trinidad and Tobago’s economy enters 2025 with cautious optimism for the continuation of a sustained post-Covid recovery.

This year, economic growth is projected at 2.3%, driven by growth in the energy and non-energy sectors and low levels of inflation.

Amid looming geopolitical uncertainties, the 2025 Budget Statement, presented by the Hon. Minister of Finance on September 30th, 2024, highlighted the importance of ‘creating’ pathways to prosperity (more appropriately, ‘New’ Pathways). In the face of increased global uncertainties regarding global oil and gas prices and the limitations of traditional models of trade growth—based on comparative advantage and resource endowments—there can be no doubt that Trinidad and Tobago must embrace the opportunities for developing and leveraging the competitiveness of the services sector, particularly the immense potential for the development of knowledge-based services (KBS).

Chief executive officer & Technical Director of the Caricom Private Sector Organisation (CPSO), Dr Patrick Antoine.

Through the development of industries in business process outsourcing (BPO), information technology (IT), telecommunications, and the creative sector, among others, knowledge-based services (KBS) have emerged as a significant and fast-growing component of global trade.

Today, the prosperity and economic resilience of several global trading partners rely on KBS activities and sectors. Indeed, 2025 will witness an acceleration in the frenetic pace of KBS industry development by countries in the Latin American and Caribbean (LAC) region, which reflects global trends.

Insights from the IDB’s 2024 Trade and Integration Monitor [https://publications.iadb.org/en/trade-trends-estimates-latin-america-and-caribbean-2024-edition], as well as the vision outlined by the Trinidad and Tobago Chamber of Industry and Commerce (TTCIC) Orange Economy Standing Committee, highlight the immense transformative potential of KBS in generating sustainable economic growth and development for the economies of Trinidad and Tobago and Caricom.

This article highlights the key findings of these two contributions and outlines/seeks to establish a forward-looking agenda for the Trinidad and Tobago and Caricom economies to meaningfully develop a globally competitive services economy, thus realising the economic and social benefits for society.

Knowledge-Based Services:

The Global Perspective

Globally, trade in KBS grew at an average annual rate of 7.0% between 2013 and 2023, significantly outpacing growth in traditional goods and services trade. This growth reflects a shift toward the “servitisation” of production, advances in technology, and its ability to satisfy rapidly evolving consumer and business needs. Moreover, the resilience of KBS sectors and industries amid economic shocks and disruptions has reinforced their reliability as robust drivers of competitiveness for economies in the future.

For Latin America and the Caribbean (LAC), KBS exports have also demonstrated dynamism, growing at a rate of 4.7% annually over the past decade. This growth has been more rapid than the growth of goods exports (2.9%) as well as other services (4.3%).

Even with KBS dwarfing other sectors in growth terms, the LAC region lags behind global performance, partly due to the region’s KBS offerings being concentrated in less sophisticated sectors that are more vulnerable to technological disruptions, including those related to innovations in automation and artificial intelligence (AI).

Unlocking the sector’s potential now focuses on the dual strategy of rapidly incorporating and leveraging the transformational potential of automation and AI in KBS sectors and industries, coupled with targeted interventions to enhance competitiveness and market access.

The Caribbean Opportunity

It is undeniable that Trinidad and Tobago, Caricom, and the wider Caribbean stand on the threshold of a new economic model, one based more on services innovation, cooperation, and integration. The Chamber’s key partner in this mission, the Caricom Private Sector Organization (CPSO), works and advocates for a ‘Sustainable Caribbean Services Hub’ that emphasizes the urgent strategic imperative of transitioning from an over-reliance on resource-based sectors in economic development towards knowledge-intensive economies via the development of KBS.

According to the CPSO, over 60% of services firms in the region are small and medium-sized enterprises (SMEs), underscoring the need for tailored policies and capacity-building to enable their participation in this critical transformation into the services- and knowledge-based economies that are so urgently required.

The Caribbean’s burgeoning creative economy, part of the broader “orange economy” (including, among others, cultural industries, entertainment, and content production), is a ‘bright spot’ that is well supported by data.

These “orange economy” exports are well aligned with the high-value, low-carbon footprint global opportunities and trends and point to the immense untapped development and export potential that could result from a focus on and further investment in the services sector, including KBS.

Overcoming Challenges

Despite the promise of pro-development outcomes, Trinidad and Tobago and Caricom’s KBS sectors currently confront significant hurdles. According to the IDB’s 2024 Trade and Integration Monitor, these barriers include:

1. Regulatory Bottlenecks: Complex administrative procedures and inconsistent regulations across markets hinder cross-border trade in services.

2. Limited Market Access: Intraregional trade in services remains underdeveloped, with higher restrictions compared to access to extra- regional markets like the United States and Europe.

3. Insufficient Human Capital: A lack of alignment between educational systems and industry needs constrains the development of a workforce ready for KBS roles.

4. Digital Infrastructure Gaps: Weaknesses in connectivity and digital tools reduce the competitiveness of regional service providers.

5. Data Deficiency: Accurate, comprehensive data on services trade is needed to inform policy and investment decisions. This is an area of focus for the Chamber in 2025.

Trinidad and Tobago and other Caricom states have been addressing many of these barriers. However, with few exceptions, the interventions have under-delivered due to a lack of a clearly articulated strategy for the services sector and KBS, too wide a focus, underfunding, and weak coordination of the various components.

Other required interventions at the policy level, nationally and/or at the Community level (such as those required to address digital infrastructure gaps), have suffered from delayed decisions. Still, the potential for services and KBS development and exports is immense, with significant dividends from implementing appropriate public policy and private sector action at both the national and Caricom/Community levels.

A Roadmap for Transformation

Addressing these challenges requires a multi-stakeholder approach, where governments, private sector leaders, and regional organisations work together to implement the following strategies:

1. Investing in Human Capital:

• Transition to STEMAD (Science, Technology, Engineering, Mathematics, Arts, and Design) education to produce a workforce that excels in both technical and creative fields.

• Develop targeted training programs in areas such as AI, cybersecurity, and digital marketing.

2. Enhancing

Regional Integration:

• Harmonize regulations and establish mutual recognition agreements (MRAs) for professional qualifications.

• Promote the free movement of service professionals across Caricom member states.

• Leverage Free-Trade Agreements to advance the development and effective market access for services on the best possible terms and costs.

3. Leveraging

Digital Transformation:

• Accelerate the creation of a single ICT space to enable seamless communication and collaboration.

• Support SMEs in adopting digital tools and e-commerce platforms.

• Critical decisions by Caricom Heads of Government to support the achievement of the Gigabit Caribbean Society (an essential element of the delivery of a single ICT space), ensuring that all people of the Caribbean have access to 5G mobile broadband networks and fiber-to-the-home (FTTH) connections of at least 100 Mbps down at affordable prices by 2030, for employment, social services, and global competitiveness.

4. Strengthening

Policy Frameworks:

• Reform trade, tax, and financing policies to incentivize investment in the KBS sector.

• Establish mechanisms for the protection of intellectual property to encourage innovation.

5. Promoting

Diaspora Engagement:

• Build networks with the Caribbean diaspora to facilitate knowledge transfer, investment, and market access.

• Encourage collaborations in key sectors such as ICT, music, and professional services.

6. Expanding

Global Partnerships:

• Deepen trade agreements with key partners, including CARIFORUM-EU, Caricom-Cuba, and Caricom-Africa.

• Collaborate with international organisations such as the IDB and UN agencies to access funding and technical expertise.

The Role of Knowledge-Based Services in Economic Resilience

KBS offers Trinidad and Tobago and Caricom a pathway to economic diversification and mitigation of vulnerabilities associated with plateauing performance by traditional resource-based sectors, including oil and gas. The services sector’s resilience—as evidenced during the Covid-19 pandemic—highlights its potential to drive sustained growth and create high-value employment opportunities.

However, achieving this vision will require collective commitment by all stakeholders, intentional leadership by government, closer public-private cooperation and partnerships, and, where possible, a ‘whole of Caricom’ approach to fostering innovation, achieving scale, and gaining access to the central drivers of human capital, ideas, financial capital, and perhaps even location-based infrastructure and other prerequisites.

Building Trinidad and Tobago and the region’s economic resilience will require strengthening the ability to anticipate risk, evaluate how that risk may impact key economic sectors and industries, and build a response capacity to respond and benefit from inherent opportunities that emerge. Simply put, it calls for the ability to plan, adapt, and evolve.

This evolution calls for a mindset shift that recognizes that globally, new economic drivers of innovation and prosperity have emerged, augmenting—and in some instances, completely displacing—the conventional drivers and growth sectors. Trinidad and Tobago and Caricom must take deliberate action to prioritise creativity, technology adoption, and regional collaboration in their development strategies.

Call to Action

As 2025 unfolds, the Trinidad and Tobago Chamber of Industry and Commerce and our regional collaborator, the CPSO, stand committed to leading the private sector charge towards accelerating the shift towards realizing the services and KBS potential as central components of the ‘New Economy.’ By driving dialogue and engagements, influencing policy through research and advocacy, and supporting businesses, the Chamber continues to demonstrate its commitment to positioning Trinidad and Tobago and Caricom as leaders in the Latin American and Caribbean region’s transition to a knowledge-driven services economy.

Undoubtedly, the path ahead will not be without challenges, but the rewards are undeniable. Already, knowledge-based services have demonstrated the potential to transform global economies, and first-movers in the Latin American and Caribbean (LAC) region are fostering economic resilience, reducing inequality, and enhancing global competitiveness. The time to act is now.

Vashti Guyadeen, CEO, T&T Chamber, with contributions from Dr Patrick Antoine, CEO & Technical Director, CPSO

[ad_1]

Source link : http://www.bing.com/news/apiclick.aspx?ref=FexRss&aid=&tid=677e27a848884e859888a052ecd70f54&url=https%3A%2F%2Ftrinidadexpress.com%2Fbusiness%2Flocal%2Fthe-role-of-knowledge-based-services%2Farticle_76680846-cd64-11ef-94a6-dfbd23f71152.html&c=7719302271523743615&mkt=en-us Author : Publish date : 2025-01-07 13:01:00 Copyright for syndicated content belongs to the linked Source .