Curing Dutch disease: UWI economist calls for focus on tourism, manufacturing

Dutch disease is an economic illness that is easy to catch, but almost impossible to cure.

It refers to the correlation between a boom in a nation’s natural resources which could result in economic prosperity, but at the cost of growth in other sectors in a nation’s economy.

TT has been, for more than a century, enjoying the fruits and benefits of a growing oil and gas industry, which experienced a series of oil booms and busts since TT’s independence in 1962.

But while the energy sector flourished other industries such as tourism and manufacturing have fallen by the wayside, creating the perfect circumstances for this economic phenomenon.

TT was diagnosed with this disease by Prof Roger Hosein in his lecture at the University of the West Indies on April 24, days before the April 28 general election.

The cure, he suggested, would involve a complete rethink of TT’s fiscal policies, that would focus on developing manufacturing and tourism, rather than continuing to breathe life into a now dying energy sector.

He said policy makers need to put a focus on earning foreign exchange to face the “very rough” outlook coming in the medium term.

Non-energy fiscal imbalance

Hosein pointed out what many have in the past few years – that TT is heavily dependent on the revenue from its energy sector, while its non-energy fiscal balance remains in the negative.

He noted that TT’s non-energy trade balance averages to about ­– $23 billion. He said manufacturing sector employment has also decreased significantly over the years, despite having ten times the output of the agricultural sector.

Factors such as crime have also contributed to flight in human and fiscal capital.

“Once people feel threatened (by crime) they will leave. We don’t want our young, bright students leaving and not coming back because we would lose the primary school and secondary school education and all the money that we spent on them.”

He also said as far as tourism is concerned, data suggested that there was a gap in TT’s tourism sector when compared to other countries in the region who depend on tourism for revenue.

“If you look at the data, from 1999 to 2024, you will see, as compared to other countries, our arrival traffic has not done so well.”

According to Tourismanalytics.com TT saw 97,901 visitors for the first quarter of 2025. Countries such as Curacao saw 215,366 visitors.

Hosein said in order for TT to break the Dutch "fever" caused by a dependence on a declining energy sector, TT will have to focus on growing its manufacturing and tourism sectors significantly.

“I am standing here today and I don’t think we have a choice,” he said. “We are at a point that unless we push tourism inflows from remittances in relation to other countries we will be way behind.”

He suggested that TT bring up its remittances from tourism to the regional average, which would mean that TT would bring in over US$650 million in additional revenue.

“In order to reach 50 per cent of the revenue of the energy sector, we need to reach about 2.6 million tourists by 2040,” he said.

“If we were to set up a timeline so we could get the infrastructure in place, we would have a fighting chance in terms of our tourism revenue.”

He added that TT has the capacity to accommodate that number of tourists.

“When you look at the tourism multiplier (a calculation of how tourist spending generates a larger economic impact than what was initially spent), it is one of the highest in the Caribbean. When you look at the tourists per square metre it is one of the lowest in the Caribbean. In other words, we have a lot of spare capacity.

“You do not have a plant and keep it running with spare capacity… it just doesn’t make sense. Therefore, we need to change the way we use our possibilities in the tourism sector. We also need to go after more diaspora resources and remittances.

He added that the use of industrial parks such as Eteck could help improve non-energy revenues and that will again bring up TT's foreign exchange reserves with what it produces.

“You can use analysis to determine what Guyana, Suriname and the world would need in the next ten to 15 years and use the Eteck park mechanism to specialise in it.

“I think, given the ease of doing business in the country, that is where the easier transactions will take place.”

He said economists could design a formula that would see the manufacturing sector employment from 39,000 to about 75,000 through the Eteck park mechanism.

He also suggested a widening of TIVET (technical, industrial, vocational and entrepreneurship training) education to make changes in the nation’s skillset.

But that would only solve half the problem, he noted.

“While we need to educate more people with TIVET education, the challenge in the economy is really the structure of production.

“If we take an approach that expands manufacturing, agriculture and services, those are areas that will help to open up employment opportunities.

Hosein said while he has developed his academic journey through a series of mentors, colleges and reading, he learned the most about economics while selling in a market for about three years.

“When I went to Cambridge, all I did was learn mathematics, compared to what I learned in the market. The market is a real place. I can debate and probably have an edge on some of my colleagues because I understand real, dynamic, action/reaction equilibrium in a wide format.

“Most of my colleagues can explain it on a whiteboard, but they cannot explain it when the rain is falling and the sun is beating on you and people are telling you ‘I eh want no leg,’ and things like that.”

He said economists can assist leaders with proper analysis and fact-based suggestions, but, most people do not listen.

“We spend days and thousands of hours thinking about this (the economy) and mapping it out and understanding how I can help and support my people and my country, but I have learned the hard way that you could provide this guidance with all the sincerity in the world, then you put it in the public domain and it reaches where it sometimes reaches.”