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Caribbean Islands

 
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Caribbean Islands

Manufacturing

Although the manufacturing sector remained relatively small in the 1980s, it spanned a wide range of activities from sugar processing to automobile assembly. In 1985 manufacturing output reached approximately US$542 million, or 7 percent of GDP. Light manufacturing in particular experienced sharp declines of over 10 percent annually during the mid-1980s; nonetheless, the sector as a whole was growing by the late 1980s because of the inclusion of petrochemical and steel production in manufacturing data.

Historically, manufacturing was an insignificant sector in the economy, dwarfed by agriculture and oil. In the postwar era, however, import substitution industrialization development strategies provided generous fiscal incentives toward new investment in manufacturing. The Aid to Pioneer Industries Ordinance of 1950 provided accelerated depreciation allowances and duty-free importation of machinery and raw materials, which was instrumental in attracting foreign investment to Trinidad and Tobago. Likewise, the establishment of the Industrial Development Corporation (IDC) in 1959 served to expand the sector's role in the economy. By the 1960s, producers of manufactured goods were protected through increased tariffs as well. These measures encouraged the establishment of over 100 new manufacturing operations by the mid-1960s. Increasingly, the sector moved beyond agricultural processing and easily substituted goods toward the assembly of consumer durables, such as televisions, refrigerators, and automobiles. By the 1980s, most locally manufactured goods remained protected through quantitative import restrictions.

The structure of manufacturing in the 1980s was a highly protected, inward-looking industry that produced mostly for the domestic and Caricom markets. Exports of manufactured goods in the early 1980s, before petrochemicals and steel manufacturing were in full force, accounted for as little as 2 percent of domestic exports. Since the manufacturing industry tended to emphasize mixing, bottling, and assembly, the value added of the final product was generally low. As such, these activities often did little to link various sectors of the domestic economy. Price controls were also used by the government to reduce the power of a few local producers, who faced minimal competition as a consequence of import controls. The implementation of a heavy industry strategy changed manufacturing by the late 1980s. Although light manufacturing declined with the economy's general contraction in the mid-1980s, it was believed that Trinidad and Tobago was consuming more locally produced goods because it could not afford the import splurge of the 1970s.

The manufacturing sector was broken down into six principal subsectors: assembly, chemicals and nonmetallic products, food processing, beverages and tobacco, printing, and wood products. Discussion of manufacturing generally excluded oil and sugar, which if included would have accounted for 45 percent of manufacturing in 1985. Assembly was the most important subsector, contributing more than a quarter of manufacturing's output. Assembly included radios, televisions, refrigerators, gas stoves, vehicles, batteries, tires, and boat building. Less than 1 percent of assembly manufacturing was exported. The second most important subsector was chemicals and nonmetallic products, contributing 19 percent of the sector's output and consisting of petrochemicals, paints, pharmaceuticals, bricks, cement, and glass. This subsector grew rapidly in the 1980s with the development of petrochemicals and new cement factory capacity. Food processing, such as edible oils, feeds, meat, baked goods, and dairy products, was the third most important subsector, accounting for 16 percent of manufacturing. Trinidad and Tobago continued to produce its world-famous flavoring, Angostura Bitters. Beverages and tobacco, textiles, printing, wood products, and miscellaneous manufacturing followed in importance, all contributing between 5 and 10 percent of total manufacturing.

Data as of November 1987

Caribbean Islands - TABLE OF CONTENTS

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