Three out of four workers in Trinidad and Tobago are employed in services, and the country still runs a services trade deficit north of USD 500 million. Translation: this economy is fully staffed to do the work, and paying someone abroad to do it anyway.
Introduction
The concept that Dutch disease has been a continuous burden on Trinidad and Tobago’s economy is one rightly advanced by local economic thought-leaders. Defined as the circumstances where a natural resource boom leads to the deindustrialisation of non-energy sectors, typically manufacturing and agriculture, Dutch disease is a complex phenomenon engaging several economic models. Among these is Baumol’s cost disease, where salary increases in productive sectors, for Trinidad and Tobago the energy sector during boom periods, drive unsustainable growth in services.
In these models, services are treated as non-tradable: domestically consumed outputs unable to compete in foreign markets. This framing is a relic of the original Dutch disease model of the late 1970s, and it is precisely here that local application of the theory becomes questionable.
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