T&T productivity grows ‘significantly’ over last four years | Local Business

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THE productivity levels in Trinidad and Tobago have grown significantly over the last four years, according to a recently published report on Caribbean Economics by the Inter-American Development Bank.

The report is titled “Innovation for Faster Economic Growth in the Caribbean: Are We There Yet?”

“A key factor determining growth is productivity, the measure of efficiency by which firms can produce more with the same amount of resources. Productivity levels of firms in Trinidad and Tobago have significantly improved since 2021,” it stated,

The IDB stated that the Central Statistical Office (CSO) produces an Index of Productivity, defined as the volume of production divided by hours worked.

“The index shows significant gains over time, especially beginning in 2023, when the index for the non-energy sector increased from 4,129 in the first quarter of 2023 to 17,674 in the second quarter of 2024. Similarly, the Index of Productivity for the whole economy increased from 1,302 in the first quarter of 2023 to 5,230 in the second quarter of 2024,” it stated.

“These trends suggest that productivity improvement in the non-energy sector is outpacing the energy sector. Some sectors with relatively high productivity levels in Trinidad and Tobago include food processing, textiles and garments, and metal-related production,” it stated.

The IDB report highlighted that, in terms of GDP growth, the non-energy sector in Trinidad and Tobago has consistently outpaced the energy sector in growth since the start of the Covid-19 pandemic recovery in 2021, reflecting the higher productivity levels in the non-energy sector.

“GDP grew by 1.4% in 2023, with the energy sector contracting by 5.4% and non-energy sector, driving growth, expanding by 2.5%,” it stated.

The IDB stated that largest non-energy sector, wholesale and retail, which accounts for 21% of the economy, grew at an average quarterly rate of 8.1% from the first quarter of 2022 to the second quarter of 2024.

“The manufacturing sector (excluding energy), making up about 7% of the economy, grew at an average rate of 9.6% over the same period, while the finance and construction sectors, making up almost 7% and 5% of the economy, recorded average contractions of 1.2% and 1.8%, respectively. The energy sector contracted by an average quarterly rate of 2.5% from the first quarter of 2022 to the first quarter of 2024,” it stated.

The IDB report stated that a major contributing factor supporting productivity is human capital, as high levels of human capital contribute to greater creativity and innovation.

“In Trinidad and Tobago, levels of educational attainment are relatively high and surpass Caribbean averages. In 2022, Trinidad and Tobago was ranked 60th worldwide on the United Nations Development Programme’s Human Development Index with a score of 0.814, above the Latin America and the Caribbean average of 0.76 (UNDP, 2024). In fact, of the Trinidad and Tobago nationals in the United States, 56% have at least some college education compared to the Caribbean average of 52.3% (Figure 3). At the national level, in 2022, about 86% of men and 82% of women over the age of 25 in Trinidad and Tobago had at least some secondary education, compared to the Caribbean average of 74.6% for men and 70.6% for women (UNDP, 2024),” it stated.

However, the IDB said according to 180 firms in Trinidad and Tobago that responded to the Compete Caribbean Partnership Facility’s Innovation, Firm Performance, and Gender (IFPG) 2020 Survey, human capital remains one of the most important challenges to doing business.

“The top six obstacles, rated as ‘very severe’ or a ‘major obstacle,’ were access to finance in the form of collateral requirements (65% of respondents), an inadequately educated labour force (63%), customs and trade regulations (54%), corruption (44%), the macroeconomic environment (43%), and tax administration (42%),” it stated.

The IDB stated that the same survey has information on firms in the Caribbean that have taken measures to improve productivity.

“Some of the main forms of innovation analysed in the Regional Overview of this report include ‘general innovation’ (new or improved services or methods), ‘digital innovation’ (information technology), and ‘green innovation’ (energy efficiency and environmental sustainability). In fact, in the 13 countries surveyed in the Caribbean 40.5% engage in general innovation, 7.8% in digital innovation, and 50% in green innovation. In Trinidad and Tobago, the respective shares are 44.7%, 8.8%, and 47.4%,” it stated.

The IDB said in Trinidad and Tobago, some indicators related to technology and innovation improved between 2014 and 2020.

“For example, the share of firms reporting that they have groups of professionals dedicated to innovation increased from 5.3% in 2014 to 8.8% in 2020, while this trended in the opposite direction for the Caribbean a whole, falling from 10.2% in 2014 to 4.3%, which is of concern considering the gains that technology is making throughout the. On another measure of productivity and innovation, the share of firms in Trinidad and Tobago filing patents increased from 7.1% in 2014 to 11.4% in 2020, while this measure also improved across the Caribbean from 6.9% to 8.8% over the same period,” stated.

It highlighted the creation of the Ministry of Digital Transformation in July 2021, tasked with facilitating the delivery and consumption of goods and services through digital technology.

“Some of its main goals include increasing access to information and communications technology, improving digital literacy, achieving greater efficiency in governance, and supporting more opportunities for developers and entrepreneurs. The ministry launched the National Strategy for a DigitalTT: 2023–2026, built on the pillars of a digital society, economy, and government, with the objective of achieving a digital nation,” it stated.

“Some specific programs include the Developers’ Hub (D’Hub), which aims to support local software development by providing training and development opportunities; and AccessTT, which expands access to devices and technologies in underserved communities, among other objectives. Other initiatives include developing a Government Data Centre, which will centralise critical data, software, and digital infrastructure, and the E-Commerce Strategy 2024–2029, which will promote e-commerce nationally and internationally,” the IDB stated.

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