The resurgent economy in the North should not be a mere revival of the economy that was there before the war but an economy vastly different in structure and performance. The last thirty years have seen astounding global changes, structural changes in our economy, social transformations and new opportunities. As the North enters the mainstream of the country’s economy, it has to readjust, change and modify in tandem with these changes.
The North has also undergone tremendous change in its population composition, human resources, value orientation and perspectives of its new role. All these have occurred in an environment that is devastated, its infrastructure destroyed and its people traumatised. The challenges of reconstruction are massive though the opportunities for economic development are immense in the long-run. The economy of the North should be different from what it was in the past, if the full potential and new opportunities are exploited. The challenges facing economic planners and administrators are difficult in a context of limited and strained domestic resources.
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An earlier generation of readers would recall their visits to Jaffna and the unique products they savoured in Jaffna, such as palmyra toddy, jaggery and treacle, grapes, the sweetest of mangoes and kotakulagu, among others. With the resumption of transport there has already been a flow of goods in both directions, south to north and north to south. This initial commerce has already had benefits. Goods from the south to the north have improved the availability of essential items and even more significantly reduced cost and prices. Still the flow of goods is inadequate but with an increased flow of goods the people in Jaffna would have their essentials at more reasonable prices, the quality of goods would be better and a greater variety of goods would be available.
The benefits to the south would be much, for the new traffic provides new markets for goods. In due course there would be a flow of consumer durables, be they sewing machines, refrigerators, fans, air conditioners, television sets, radios or investment goods such as machinery. It is not that these items were totally unavailable but in most cases they were prohibitive in price. At the worst of times the north had a demand for goods even at high prices and savings in institutions were high. The south would also benefit from the availability of several vegetables and fruits grown in the area including potatoes, chillies, onions grapes and mangoes and an increased supply of fish.
These developments are however rudimentary. The Jaffna economy of the future is not likely to be merely the resuscitation of the old economy or its economic profile writ large. What is expected and must be achieved is a transformation of Jaffna to a modern economy where agriculture would be developed, made more productive and expanded. Nonetheless agriculture would be of lesser significance than the industrial and service sectors that have to be developed. The economy has to be diversified to be industrial and service oriented. The real potential of the Jaffna economy lies in the development of industry and services. That must be the objective of economic policy for the North.
With respect to agriculture that many would focus on as the sector that must be developed, it must be realised that significant changes have occurred. With the closure of the North to commerce much of the agricultural produce of the North have been cultivated elsewhere. This applies to agricultural produce such as chillies, onions and potatoes, among others. Therefore the market for such produce would be limited in other parts of the country. Nevertheless, where such commodities could be produced at a cheaper cost they may be competitive. Besides, there would be a market in the North and East itself for these commodities.
The essential issue to realise in planning the economic development of the North is that the Jaffna community cannot be sustained by agriculture alone at standards of living they have a right to expect. This expectation would also drive youth away from agriculture. The employment opportunities the Sri Lankan youth in Jaffna would seek are employment in different types of activities. Agriculture itself would have to be transformed into agribusiness enterprises and agro processing must be an essential complement to such development.
It is noteworthy that during the period of the Cease Fire Agreement as well as after, the economy in the North grew significantly but agriculture declined. According to Dr Rohantha Authukorala: “Contrary to the belief that many people have, that it was only during the cease-fire period that the N-E economies grew, the latest research reveals that during the period 2005-2007 economic activity continued to be sustained, which has resulted in the northern economy showing a 12% growth rate while the east grew by 13.3%. However a point to note is that whilst the overall economy has grown, the agricultural sector growth had declined by almost 10.3% during the period 2005-2007 which is alarming, given that almost 70% of the livelihoods are sustained by this sector.”
This is a strong indicator of the direction of economic growth in the North and vindicates the position argued earlier that the economy of Jaffna will not be the old economy revived and writ large one that would be transformed into a different dynamic and modernised one. In fact it is the potential to achieve this that requires to be exploited. There are industries in the North including cement, chemicals and paper that must be revived swiftly. These would probably provide employment to about 30,000. Domestic and foreign tourism could be revived fairly quickly.
Although there were disruptions in education owing to the conflict, it is a well-known fact that education continued largely uninterrupted. In fact the University of Jaffna remained in session more than the universities in the South. The youth educated in the North, from the University of Jaffna and other educational institutions that trained professionals in accountancy, management and information technology have produced skilled youth for employment in non-agricultural enterprises. Some of the cream of skilled personnel may find employment abroad, others would drift to the South and still others would seek employment in the North itself. Two important implications are that, on the one hand these youth should be provided employment opportunities but they would not be seeking employment in traditional agricultural pursuits.
The main constraint to developing a diversified economy is infrastructure, both economic and social infrastructure. Roads, transport and power require to be restored. The devastation of roads is well known and is an urgent prerequisite to development. There have been some improvements in transport; much more needs to be done. Power is indeed one of the most important constraints. There appears to be enough schools and buildings but teachers are inadequate in the context of a young population profile. Similarly medical and para-medical personnel would have to be increased. It is not necessary to underscore this need for infrastructure that is well recognised as a pre-requisite to development, even in other parts of the country.
The potential economic gains in the North cannot be achieved immediately. It is possible to achieve a significant development only in the medium and long-run. Immediately there is a need to rehabilitate displaced people and rebuild social infrastructure and economic infrastructure in tandem. The costs of these requirements are indeed massive. It is recognised that it is beyond the capacity of the Sri Lankan government to meet more than a fraction of these costs. Foreign assistance is vital. The leadership of India and China to reconstruct the North is significant. The vast economic potential can then be achieved. |
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