2016Preeya Mohan
The reliance on oil and gas has long been Trinidad and Tobago’s strength and weakness. The country is rich in oil and gas resources and considered the most industrialized economy in the English-speaking Caribbean. Its first-class oil and gas and downstream petrochemical industry is over 100 years old, with a growing number of oil and gas Knowledge Intensive Business Services (KIBS) firms operating regionally and internationally. The oil and gas services sector where KIBS firms operate employs about one third of all oil and gas sector workers, and globally the share of knowledge intensive services to total output has been steadily increasing over time.
Yet, the challenges and opportunities for the future are many, not to name the drastic fall in international oil and gas prices along with falling oil and gas production locally. While the government invested in education and training and the country has a highly educated workforce, the country has been less successful at diversification and entrepreneurship. In transitioning from an extractive to a knowledge based economy Trinidad and Tobago’s public policies now need to focus on science, technology and innovation and on creating and diffusing knowledge.
While the T&T government has stated its intention to diversify the economy and increase innovation there has been little success. Trinidad and Tobago’s oil and gas KIBS firms may play a major role here and for the analysis of the future of extractive industries in Latin America and the Caribbean. KIBS firms are likely to be one of the main engines for future growth.
The objective of this study is to empirically examine the role of Trinidad and Tobago oil and gas KIBS firms in diversifying the economy away from an extractive to a knowledge intensive sector. The paper also examines the role of oil and gas KIBS firms in building employment capabilities, human capital development, environmental protection and sustainability given their importance in knowledge-based economies. The paper uses primary and secondary data sources and firm specific case studies. The case of TOFCO for instance, illustrates diversification into new subsectors within the oil and gas services sector, as well as new sectors outside of oil and gas services. The paper identifies opportunities for cooperation, knowledge sharing and experiences from Trinidad and Tobago that can be replicated in the region. The paper concludes by making policy recommendations, identifying opportunities and obstacles for their implementation and possible institutional implications to further develop the sector by using examples of successful policies and strategies in other countries.