the period March 2005 to March 2006, Trinidad and Tobago
saw an increase in productivity by 15.3 per cent. For the
same period, wages rose by a mere 0.7 per cent, according
to The Economic Bulletin of the Central Bank of Trinidad
and Tobago last September pp 11.
Production is normally defined by economists as the
process that transforms scarce resources into useful goods
and services. And for the sake of completeness, wages
refer to the pay we get for our labour hours.
It may not mean that we are working more and getting paid
The better assumption is that more people are working. In
fact, the increased productivity was aligned with increased
exploration and supply of oil and gas reserves. But does
that make us more competitive?
To establish those kinds of data, economists tend to look
at what they call comparative advantage.
Generally, comparative advantage is the advantage in the
production of goods that one country has over another because
it can produce the same goods cheaper. But does that make
us more competitive?
In the same report, we are told that our competitiveness
declined. This is in terms of the trade weighted real effective
exchange rate commonly called the TWREER. This indicated
that locally produced goods were not being generated as
efficiently, as the same type of products in foreign markets.
The reason put forward for that falling competitiveness
was that prices on the domestic market were rising at a
higher rate than in the foreign markets. This was reflected
in the inflation rate rising to nine per cent in August
2006, as compared with the August 2005 statistic where the
inflation rate was 7.3 per cent.
The report continued that in general T&T was experiencing
an inflation rate that was at least 3.2 per cent higher
than in the countries with which we traded goods and services.
Hence we lost competitiveness.
So with the average wage remaining the same for most of
us, and with higher prices for goods and services, we effectively
saved less in our individual purses. This too is reflected
in the report which to use a single example, showed that
for certain types of accounts deposits in commercial banks
fell from US$1,591 million to US$1,514 million.
At the same time the return we could get for the little
that we could save fell. The rate we could have got from
finance companies and merchant banks in year 2000-2001 for
a two-year term deposit hovered around 10.5 per cent per
The rate we could get for the same quantum of savings invested
in 2006 was a mere 6.5 per cent per annum.
So we looked to other sources for better returns, but the
stock market was not a good place last year, for most investors.
The end of the story is that we saved less, generated less
returns on our savings, but produced more. We sold more
on the world market. We sold more of our scarce resources.
In fact, our real domestic output expanded by 8.5 per cent.
So the economists tell us that we experienced a strong
growth performance in the economy. And therefore things
are looking up for the country as a whole.
The question remains is the sum of the parts really the
same as the whole?