Economic growth

…The trajectory of the US economic growth path ranges from the early pioneers who went west to raise cattle, plant grain etc., to the innovators who now inhabit the likes of Silicon Valley. This trajectory we see being repeated in South Korea, China, India, Singapore, Brazil.

The further uncertainty challenge that faces us is that economic development of the past 100 years depended on the copious availability of cheap oil. This era is fast coming to a close given that one of the main causes of the current global recession is the supply-demand mismatch of oil-Peak Oil.

Prof Porter’s stages of growth are based on the concept that economic development depends on increasing the productivity with which the national resources, economic factors of production, are deployed. This is reflected in the kinds of industries and segments in which national firms can compete. Hence, economic progress depends on the continual upgrading of the nation’s competitive advantage via the utilisation of higher orders of economic factors and developing the capability to compete in newer and higher productivity industries.

This is the process that Prof Porter defines as the stages of economic growth, progressing through factor-, investment-, innovation- and wealth- driven stages. In the factor-driven stage the country depends on the exploitation of its basic factors, eg its natural resources, and its income is subject to the vagaries of global prices.

While the possession of large petroleum resources could deliver high per capita income for a sustained period of time, such factor-driven economies have poor foundations for productivity growth and hence sustained economic development, (our latest productivity rating shows economic un-development).

Trinidad Express