Thriving in ’60; struggling in ‘06

Dr Saman Kelegama, Executive Director of the Institute of Policy Studies launched his latest publication “Development under Stress” recently at the OPA Auditorium. The introduction was made by Dr Buddhadasa Hewavitharane Chairman IPS and the reviews were made by Dr Nimal Sanderatne Chairman CEPA, Prof W D Lakshman of the Colombo University and Vijitha Yapa Chairman/CEO Vijitha Yapa Publishers.

This publication by Dr Saman Kelegama fills a timely need to present an analytical review of the factors that caused Sri Lanka’s slow growth and development in contrast to rapid advances made by countries that had lower per capita incomes at the time of Sri Lanka’s independence.

‘Sri Lankan Development’ since independent is an uneven story, characterized by slow adjustment to internal and external shocks, missed opportunities and policy errors.

Referred as the “best in Asia’, Sri Lanka could not live up to those expectations. In 1960 for instance Sri Lanka’s per capita GNP- USD 141- was substantially higher than that of Thailand (US$ 96) and Indonesia (US$ 51), about the same as Korea (US$ 156) and only 50% lower than Malaysia (US$ 273). By 1995 however a totally different picture emerged. While Sri Lanka has risen to only US$ 700, the per capita has increased in South Korea (US$ 9700), Malaysia (US$ 3890), Thailand (US$ 2740) and Indonesia (US$ 980). The whole thrust of the book revolves around this picture not forgetting some of Sri Lanka’s unique positive features.
The book unfolds Sri Lanka’s development patterns since independence to the present government of President Mahinda Rajapaksa analyzing errors, policy mistakes focusing on the highlights. Elaborating indirect and direct costs of he war, the author explains how such global giants such as Motorola and Harris Corporation who had finalized plans to establish plants in Sri Lanka and Motorola having commenced physical activities withdrew from Sri Lanka after the 1983 ethnic crisis. Other lost opportunities were from Marubeni, Sony, Bank of Tokyo and Chase Manhattan who put off their investment plans.

In the concluding paragraph, the author analyses the 2004- 2006 period and stresses that overriding objective on which the economic take off depends on a solution to the North –East conflict within a unitary state of Sri Lanka. He argues that the government needs to increase the investment from current 25% to 32% of the GDP to achieve an 8% economic growth and cannot depend nor be complacent on positive factors working in favour of Sri Lanka.

The challenge for the government is to carve out a mixed economy with selected deregulation for unleashing more sectors for private sector participation.

The author sounds an optimistic note in stating that the challenge will be easier with political realignments that strengthen the ruling political coalition in the parliament. However he cautions that the extent to which the present government will work in all these areas and move to meet the economic challenge remains to be seen. “Development under Stress” is a publication that will be of interest to most students of economics to understand Sri Lanka’s development patterns and why and how we failed. Communal conflict is well on to a quarter century, however as the book suggests this is not the only cause for Sri Lanka’s present state within a South Asian economic boom.

Today’s younger generation has grown within barricades, road closures, curfews and destruction to property and human lives and this book presents a fairly good story to this lost generation.

Some issues that may have merited greater analysis are the underlying causes of post independent land mark events such as the official language policy, April ‘71 insurrection, the nationalization spree of the 70’s , the communal bubble of ‘83 and the ‘88-‘89 southern insurrection. The impact of these setbacks no doubt played a major role in Sri Lanka’s debacle and what’s even more important are the failures of the governance system that prevailed through these events.

Most developed countries have had their share of internal conflicts and external shocks and the South Asian countries were not an exception.

The difference was good governance and strong leadership. It is the sincere wish of every Sri Lankan to look with interest at Dr Kelegama’s next publication probably explaining how Sri Lanka resolved its long suffering ethnic conflict and put the country back in to the race to be a NIC, a dream that did not materialize in 2000 as enthusiastically envisaged by the Sri Lankan President at that time! Comments on this article could be sent to suvink@eureka.lk