#1Education, Diversification and Development Challenges For Trinidad and Tobago: Insights from a study that combines data from the Global Entrepreneurship Monitor database and the Global Competitiveness Report of the World Economic Forum for Trinidad and Tobago. Henry H. Bailey1,2 PhD, Balraj Kistow¹ DBA. 1 Arthur Lok Jack Graduate School of Business, 2HEU, Centre for Health Economics, The University of the West Indies. T#2Presentation Outline WEF Study: Overview and Key Findings • GEM Study: Overview and key Findings • Education, Diversification and Development • Insights from the combined reports: - Innovation ― National culture - ― The institutional - - framework Recommendations Insight Report The Global Competitiveness Report 2016-2017 Klaus Schwab, World Economic Forum WORLD ECONOMIC FORUM COMMITTED TO IMPROVING THE STATE OF THE WORLD ARTHUR LOK JACK GEM UWI IDRC CRDI Canada Global Entrepreneurship Monitor Trinidad & Tobago 2014 Report 076 Henry Bailey Marvin Pacheco Miguel Carrillo Gerard Pemberton. Gabrielle Ghany#3The Global Competitiveness Report WORLD ECONOMIC FORUM COMMITTED TO IMPROVING THE STATE OF THE WORLD Produced by the World Economic Forum • Based on the Global Competitiveness Index (GCI) Captures information on the micro and macro economic foundations of national competitiveness. Data from public sources (MLAs etc) and survey of 151 people drawn from business & academia. 3#4GCI - Implied Framework Competitiveness: "The set of institutions, policies, and factors that determine the level of productivity of a country." National Competitiveness Firm Competitiveness Firms compete- not nations. Government largely responsible for the raw conditions Enabling Environment 4#5Global Competitiveness Report 2016-2017 Edition 2012-13 2013-14 2014-15 2015-16 2016-17 Rank 84 / 144 92 / 148 89/144 89 / 140 94 / 138 12th pillar: Innovation 1st pillar: Institutions 2nd pillar: Infrastructure 11th pillar: Business sophistication 10th pillar: Market size 9th pillar: Technological readiness 8th pillar: Financial market development 3 2 сл 6 3rd pillar: Macroeconomic environment 4th pillar: Health and primary education 5th pillar: Higher education and training 6th pillar: Goods market efficiency 7th pillar: Labor market efficiency Trinidad and Tobago Latin America and the Caribbean ம UT#6Sub-Indices & Pillars 2016-2017 2015-2016 2014-2015 Rank Score Rank Score Rank Score Basic Requirements 82 4.4 62 4.6 52 4.8 1st pillar: Institutions 107 3.4 108 3.4 95 3.5 2nd pillar: Infrastructure 54 4.3 51 4.5 52 4.5 3rd pillar: Macroeconomic environment 114 3.9 54 4.9 38 5.4 4th pillar: Health and primary education 61 5.9 60 5.9 59 5.9 Efficiency Enhancers 76 4.0 78 3.9 81 3.9 5th pillar: Higher education and training 74 4.3 73 4.3 77 4.2 6th pillar: Goods market efficiency 103 4.0 104 4.1 101 4.1 7th pillar: Labor market efficiency 89 4.0 96 4.0 96 4.0 8th pillar: Financial market development 61 4.1 56 4.0 52 4.3 9th pillar: Technological readiness 50 4.7 59 4.2 64 4.0 10th pillar: Market size 99 3.0 102 3.0 112 2.9 Innovation and Sophistication Factors 83 3.5 81 3.5 88 3.5 11th pillar: Business sophistication 67 3.9 68 3.9 69 3.9 12th pillar: Innovation 105 3.0 101 3.1 100 3.0 6#7Rank / 138 Value Trend 1st pillar: Institutions 107 3.4 1.01 Property rights 87 4.1 1.02 Intellectual property protection 98 3.6 1.03 Diversion of public funds 114 2.6 1.04 Public trust in politicians 118 1.9 1.05 Irregular payments and bribes 102 3.3 1.06 Judicial independence 55 4.2 1.07 Favoritism in decisions of government officials 134 1.9 1.08 Wastefulness of government spending 107 2.5 1.09 Burden of government regulation 87 3.2 1.10 Efficiency of legal framework in settling disputes 106 3.0 1.11 Efficiency of legal framework in challenging regs 1.12 Transparency of government policymaking 95 3.0 80 4.0 1.13 Business costs of terrorism 74 5.2 1.14 Business costs of crime and violence 132 2.5 1.15 Organized crime 116 3.8 1.16 Reliability of police services 126 2.8 1.17 Ethical behavior of firms 123 3.1 1.18 Strength of auditing and reporting standards 83 4.3 1.19 Efficacy of corporate boards 90 4.7 1.20 Protection of minority shareholders' interests 1.21 Strength of investor protection 0-10 (best) 111 3.6 36 6.3 7#8GEM Overview: GEM • Not for profit academic research consortium • Mission: Contribute to economic development through entrepreneurship. - Research that: . • Measures the level and characteristics of entrepreneurial activity within & across countries Identifies the principal factors which encourage or hinder entrepreneurial activity Provides guidance for formulation of effective & targeted policies to improve the quantity & quality of entrepreneurial activity. 8#9Global Entrepreneurship Monitor: Largest Study of entrepreneurial activity in the world. Unique Dataset: - Focus is on the individual, as opposed to firms Perceptions, Aspirations, Intent • Includes informal sector • Captures pre-launch activity - ― Harmonized Approach to measurement and reporting Allows for meaningful comparison between countries Independent of local registration requirements & norms 6#10Key Instruments • APS - - - Minimum 2000 Adults Entrepreneurial perceptions, aspirations, attitudes, intentions Perceived opportunities, barriers, capabilities, fear of failure. • NES - 36 Experts - Framework / Entrepreneurship Environment: Gov't policies, programmes, infrastructure, culture etc. 10#11Attitudes and Perceptions Media Attn for Entrep Good Career Choice Perceived Opportunities 80 60 Perceived Capabilities 20 Fear of Failure High Staus for Entrep Trinidad and Tobago CARICON Average World Average 11#12Nascent Entrepreneurship New Business Established Necessity Driven TEA Opportunity Driven Ownership Rate Business (% of TEA) Rate (% of TEA) Argentina 9.5 5.2 14.4 9.1 28 43.5 Barbados 8.5 4.2 12.7 7.1 14.6 53.1 Belize 4.3 3 7.1 3.7 13.1 47.6 Bolivia 21.5 7.1 27.4 7.6 22.8 51.7 Brazil 3.7 13.8 17.2 17.5 29 57.8 Chile 16.6 11.1 26.8 8.8 17.6 62.2 Colombia 12.4 6.7 18.6 4.9 33.3 51.6 Costa Rica 7.6 3.7 11.3 2.5 19.3 63.5 Ecuador 24.5 9.9 32.6 17.7 29.4 35 El Salvador 11.4 8.7 19.5 12.7 32 54.5 Guatemala 12 9.2 20.4 7.4 40.6 38.9 Jamaica 7.9 11.9 19.3 14.4 32.1 33.5 Mexico 12.7 6.4 19 4.5 22.5 50 Panama 13.1 4.1 17.1 3.4 26.3 60.2 Peru 23.1 7.3 28.8 9.2 16.4 58.9 Puerto Rico 8.8 1.3 10 1.3 20.5 51.1 Suriname 1.9 0.2 2.1 5.2 5.4 39.8 Trinidad & Tobago 7.5 7.4 14.6 8.5 12 64.3 Uruguay 10.5 5.8 16.1 6.7 16 27.3 Unweighted Average 11.4 6.7 17.6 8.0 22.7 49.7 12#13The GEM Model: Performance on 3 Key Dimensions: - Growth Potential - Export Competitiveness - Innovation Performance: 5 yr Projected Growth and Job Creation Performance : Int'l Orientation 60% 50% 40% 32% 30% 20% 14% 10% 0% 48% 38% 70% 64% 61% 60% 50% 40% 34% 32% 25% 30% 19% 13% 20% 11% 10% 6% 2% 1% 0% 0% 20+ Jobs None Under 25% 25-75% More Than 75% No Jobs 1-5 Jobs 6-19 Jobs ■TEA Established Business ■ TEA Established Business#14Performance: Innovation Uses no new technology Uses new technology (1 to 5 years) Uses very latest technology (only available since last year) Uses no new technology Uses new technology (1 to 5 years) Uses very latest technology (only available since last year) Many businesses offer same product Few businesses offer same product No businesses offer same product Many businesses offer same product Few businesses offer same product No businesses offer same product Product new to no customers Product new to some customers Product new to all customers Product new to no customers Product new to some customers Product new to all customers Active in technology sectors (high or medium) New product market combination (customer, competitor) 0% 20% 40% 60% 80% 100% TEA Active in technology sectors (high or medium) New product market combination (customer, competitor) 0% 20% 40% 60% 80% 100% Established Firms 14#15GCI on Innovation 12th pillar: Innovation 105 3.0 12.01 Capacity for innovation. 110 3.7 12.02 Quality of scientific research institutions. 77 3.7 12.03 Company spending on R&D 124 2.7 12.04 University-industry collaboration in R&D 112 2.9 12.05 Gov't procurement of advanced tech. products 120 2.7 12.06 Availability of scientists and engineers 54 4.2 12.07 PCT patent applications applications/million pop. 84 0.4 • Availability of professionals produced by tertiary education system, but low capacity to innovate. 15#16R&D Transfer GCR: - Level of innovation is reduced by low level of collaboration between academia and industry: Exec survey: both sides 'blame' the other! 12.04 University-industry collaboration in R&D 112 2.9 GEM New technology, science, and other knowledge are efficiently transferred from universities and public... New and growing firms have just as much access to new research and technology as large, established firms. New and growing firms can afford the latest technology. There are adequate government subsidies for new and growing firms to acquire new technology. The science and technology base efficiently supports the creation of world-class new technology-based ventures in... There is good support available for engineers and scientists to have their ideas commercialized through new and... I Completely False Somewhat False 0% 25% 50% 75% 100% Neither True nor False Somewhat True Completely Trulб#17Rank / 138 Value Trend Goods Markets 6th pillar: Goods market efficiency 103 4.0 6.01 Intensity of local competition 58 5.2 6.02 Extent of market dominance 118 3.1 6.03 Effectiveness of anti-monopoly policy 119 3.0 6.04 Effect of taxation on incentives to invest 35 4.1 6.05 Total tax rate % profits 47 32.2 6.06 No. of procedures to start a business 6.07 Time to start a business days 76 7 71 11.5 GCR 6.08 Agricultural policy costs 117 3.2 6.09 Prevalence of non-tariff barriers 6.10 Trade tariffs % duty 25 4.9 117 10.8 GEM 6.11 Prevalence of foreign ownership 6.12 Business impact of rules on FDI 6.13 Burden of customs procedures 6.14 Imports % GDP 75 4.4 52 4.8 124 3.2 65 44.4 6.15 Degree of customer orientation 6.16 Buyer sophistication 136 3.3 72 3.4 0% 25% 50% 75% 100% The markets for consumer goods and services change dramatically from year to year. The markets for business-to-business goods and services change dramatically from year to year. New and growing firms can easily enter new markets. New and growing firms can afford the cost of market entry. New and growing firms can enter markets without being unfairly blocked by established firms. The anti-trust legislation is effective and well enforced. Completely False Somewhat False 17 Neither True nor False Somewhat True Completely True#18Insights: Institutional Framework • GCR: Most problematic factors for doing business Source: World Economic Forum, Executive Opinion Survey 2016 Poor work ethic in national labor force 19.8 Corruption Inefficient government bureaucracy 14.4 13.9 11.9 10.7 Crime and theft Foreign currency regulations Access to financing Insufficient capacity to innovate 4.9 Inadequate supply of infrastructure 4.3 Inflation 2.9 Restrictive labor regulations 23 Inadequately educated workforce 2.3 Policy instability 1.9 Tax rates 1.6 Tax regulations 1.1 Government instability/coups 1.0 Poor public health 04 6 10 16 20 18#19• The Education System The Education System contributes to innovation, diversification and development in several ways: - Develops Human Capital - Standards for training/accreditation - Directs R&D activity - Influence on the evolving society: ● · Sociological & social dynamics Norms, expected behaviours; culture • Attitudes towards work, entrepreneurship/career 19#205th pillar: Higher education and training 74 4.3 Education 5.01 Secondary education enrollment rate gross % 86 85.5 5.02 Tertiary education enrollment rate gross % 110 12.0 5.03 Quality of the education system 38 4.4 5.04 Quality of math and science education 31 4.8 GCR 5.05 Quality of management schools 33 4.9 GEM 5.06 Internet access in schools 66 4.3 5.07 Local availability of specialized training services 5.08 Extent of staff training 36 5.0 53 4.1 Teaching in primary and secondary education encourages creativity, self-sufficiency, and personal initiative. Teaching in primary and secondary education provides adequate instruction in market economic principles. Teaching in primary and secondary education provides adequate attention to entrepreneurship and new firm creation. Colleges and universities provide good and adequate preparation for starting up and growing new firms. The level of business and management education provide good and adequate preparation for starting up and growing new firms. The vocational, professional, and continuing education systems provide good and adequate preparation for starting up and growing new firms. Completely False 0% 25% 50% 75% 20 Somewhat False Neither True nor False Somewhat True I Completely True 100%#21GEM: Profile of the Entrepreneur 35.0% 28.4% 30.0% 25.0% 20.0% 15.0% 13.0% 10.0% 5.0% 0.0% 18-24 25-34 31.0% 35-44 18.4% 7.7% 1.5% 45-54 55-64 65-99 Age breakdown of TEA participants Tertiary Less than secondary Secondary Post-Sec non Tertiary Vocational 21 21#22Insights: Government in the Economy • GCR: - ― Private sector distracted by allure of gov't contracts. • GEM: - "Low hanging fruit" in replicative and gov't contract businesses. 22 22#23National Culture • T&T: Low capacity to innovate (GCR & GEM). • Question: Where does this problem lie? - – Do we possess: ● Imagination to innovate? Technical skill to innovate? • Hofstede & Hofstede (2005). T&T: - Low Uncertainty Avoidance: Great for creativity Bad for implementation 23#24Recommendations Recognize the barrier to diversification brought about by low hanging fruit: – Gov't contracts - - Transfers – Opportunities for replicative businesses - Initiatives to overcome this: - ― Refocus incubator & support programmes to high growth, potentially export competitive, innovative firms. Agencies to support entrepreneurship: — - Streamline- eliminate 'competition' and duplication. 24#25Recommendations • Profile of the entrepreneur: - Examine the incentives that actually-or can potentially divert activity away from innovative, high growth potential endeavours. 25 25#26Recommendations • Recognize the strengths and weaknesses of T&T in the innovation chain. Use institutions to: - Harness the creativity & ingenuity of the people - ― Channel this towards developmental, productive enterprise. Thank You ! 26