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posted 29 Aug 2016, 10:37 by Gerry Kangalee

For many years Professor Mary King has written extensively on the need for the government to diversify the on-shore economy. While the various political parties that controlled the government agreed with her positions in principle, each party has so far failed to pursue any meaningful policies that will diversify the economy away from oil and natural gas. Instead, we are witnessing the private-sector embark on a new kind of diversification that I term “Franchise capitalism.” 

Image result for mcdonaldIt is the investment by a franchisee in an established business owned by a franchisor. In the case of Trinidad and Tobago, these investments are mainly in the fast food industry. Over the years, we have seen the proliferation of such enterprises like TGI, McDonald’s, Wendy’s, Burger King, Subway, Starbucks, and Chuck E Cheese, etc. These investments are not creating added-value to the economy because of their high import content. For example, the inputs used are imported which causes a drain on the country’s scarce foreign reserves.

Additionally, when fees and other payments are factored in, it further exacerbates the nation’s current financial situation. Additionally, these enterprises employ non-unionized workers at minimum wage. While jobs are created, the investments don’t significantly impact the high unemployment rate because of high job turn over in the fast food industry.

Is “Franchise capitalism” the best way to diversify the economy? In this dispensation of neo-liberal globalization, there are those forces in Trinidad and Tobago who contend that the country must open its markets to foreign companies. They argue that citizens of Trinidad and Tobago have the right to consume goods and services from other countries.

Moreover, they assert that the county has to modernize and become like any city in North America. Alternatively, others note that the proliferation of franchises damages the country economically, politically, culturally, and physically. Given the country’s agreements with the International Monetary Fund and the government’s position that the private-sector should be the prime mover of the economy, it appears that for now that there is consensus among the ruling elites that “Franchise capitalism” is the
best policy to diversify the economy. Professor King, where are you? Please say it is not so.