This article was first published almost four years ago. But please read it. You will see that what was stated then yet holds true today. Merrill Cassell
SRI LANKA TIMES June 2, 2002 Business Section; On web at http://www.sundaytimes.lk/020602/bus/bus2.html Economic challenges ahead By Merrill Cassell
Having travelled to more than 50 countries I have not seen a country as beautiful as Sri Lanka. In spite of the beauty of Sri Lanka, on another comparison, I have not seen a country deteriorate so visibly as Sri Lanka has. Sadly though, the long civil war has been the major contributor to the decay of the country.
Going back to the 1950’s is going back to paradise. Then came the demise in the late 1950’s and thereafter. The rapid nationalisation of the language and business of the country was the primary cultural and economic disaster.
Government took over the major portions of the private sector at a very rapid pace and those government industries were inefficient. Some stunning examples were that projects completed by government run corporations were taking 5-6 times longer than before (private sector era) and there was big cost overruns. Government just got too big.
Privatising the public sector was a very good move, but in some ways that privatisation was overdone, notably, the bus transportation in Colombo and other parts of the country. In those good old days, the bus service provided by the Ceylon Transport Board (CTB) was an example par excellence of a public good. However, when that public good was denationalised, the Galle Road became crowded with thousands of small vehicles.
Cluttered traffic
In other words, 20-30 smaller vehicles plying the narrow stretch of Galle Road now replaced one double decker load. This is one of the major reasons now why the Galle Road is cluttered with traffic. Since there are no strict emission controls in the country, it is common to see vehicles spew black smoke that increases the intensity of the pollution. In the 1970s, the late James Grant (former Executive Director of UNICEF) published a book on the Physical Quality of Life Index (PQLI).
Basically, that statistical study attempted to take three social indicators: literacy, life expectancy and infant mortality and mold it into one static, the PQLI. The PQLI attempted to see how the variables related to the per capita Gross National Product (GNP). For instance, in the period 1970-75 Kuwait had a per capita GNP of $13,787 and a PQLI of 75. On the other hand, Sri Lanka with an average GNP of only $179 had a PQLI of 82.
The late James Grant was always proud of the fact that Sri Lanka, with such limited resources was able to achieve the highest levels of literacy, life expectancy and the lowest levels of infant mortality.
This index, though it appears to be simple as it sounds, showed that Sri Lanka with limited resources was yet able to match the rest of the world with some very important key social indicators. Obviously, Sri Lanka had some superior development planning and practices. With the nation in turmoil (civil war), it will be very difficult to see tangible progress in the development of Sri Lanka.
It should be hoped that in the new millennium the parties concerned (government and others) would find an amicable solution to restore peace, tranquillity and prosperity to this once-upon-a-time, beautiful nation.
Peace in Sri Lanka and the end of the civil war will help government and all private citizens to get the country back to prosperity again. In tandem to reaching settlement of the civil war, Sri Lanka should also have to focus its attention to development programmes to benefit the population. Population growth and population densities pose serious threats to the living standards of Sri Lankans. The transfer of resources for programmes to benefit mankind to those of the civil war has undercut the rise in the per capita GNP.
Big challenges
The Sri Lanka government no doubt has a big challenge ahead. After bringing peace and harmony (end of civil war) the government should enact measures (conducive to all parties) to avoid a resurgence of the disease (civil war).
Other primary policies would be growth and to avoid policies that impede growth. The government will have to continue to increase the quality of the labour force, enhance capital accumulation and slow population growth for its path to progress. Sri Lanka already has an edge over many other developing countries because of its high literacy rates. With the devastation of the country, Sri Lanka will need a lot of aid. Sri Lanka would need loans and grants to further improve its labour force (technical training, apprenticeships, etc.), accumulate capital and increase the efficiencies and effectiveness of the production process.
Foreign aid alone cannot help Sri Lanka. The government must establish an economic climate that is favorable to capital accumulation (local and foreign entrepreneurs alike).
Then the government will have to rebuild the infrastructure, schools, roads, sanitary and water supply, power plants, cement factories, communication and transportation and other agricultural and scientific facilities and so on.
All this will have to be substituted with imports of much needed raw, semi-finished and finished materials of equipment and spare parts for all sectors of industry. Sri Lanka ought to upgrade the quality of its labour force so that more raw materials could be converted to finished products within the country for added job creation and economic prosperity.
Given a stable economic and political climate, a higher proportion of technical assistance will flow to Sri Lanka, bilaterally from industrialised countries and through the World Bank and United Nations Organisations. Donor countries have limited resources as they must also keep aside money for the many problems facing their own nations.
As there are so many problems in developing countries and limited donor money, developing countries must compete to receive aid. The degree of competition is such the recipient country must be able to substantiate that aid is used as intended and without waste of resources. The responsibility of donors is great. Donors have to ensure that their hard-earned money is put to best use.
In addition to promoting peace and stability, the government will need to give top priority to the rebuilding of its road network and communication network, as this infrastructure will greatly contribute to efficiency.
Among many other sectors, Sri Lanka would need a lot of town planning to ease traffic congestion and pollution and improve the cleanliness of its environment. An underground subway system in Colombo would be an ideal public good but unfortunately that can be very expensive and may not be the highest priority, given limited resources.
Other lesser expensive ways would be for the government to provide transportation as a public good and use the price system to discourage parking in central parts of Colombo.
With its limited resources, economists in Sri Lanka will have to help the government in establishing its priorities. Sri Lanka would require top notch town planning, including a master plan for the whole country. It would be wise to seek the assistance of the United Nations Development Programme and the World Bank for a project of this magnitude.
You throw a seed anywhere in Sri Lanka and a tree will grow. With such a fertile climate and a literate population, it is only peaceful co-existence and good governance that will guarantee economic prosperity for Sri Lanka into the new millennium.
(The writer is a Sri Lankan and former Budget Director at the UN Children’s Fund (UNICEF) in New York). Copyright 2001 Wijeya Newspapers Ltd. All rights reserved Webmaster
I blogged this article because when I read it it seems to recurrect that what was said so many years ago, still hold true today.
Merrill
Posted by: Merrill Cassell | February 11, 2006 at 07:48 PM