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by Ruwantissa Abeyratne

Economic growth is the process which sustains the increase of a nation's wealth. Usually applied in reference to affluent or developed nations, the concept of economic growth involves increases over time in the volume of a country's per capita gross national product.

A market place in the North - economic activity , a vital aspect of peace

It is critically important that economic growth should not be confused with economic development - the latter term being relegated to developing nations and represents a process which makes a country recover from a state of economic destitution and impoverishment beyond the level of subsistence.

Sri Lanka has happily long transcended the economic development stage and has headed, commencing the early eighties, toward a process of transformation which portended rising per capita incomes. It is arguable that Rostowian economic theory (economist W. W. Rostow placed economic growth somewhere between the stage of take off and the stage of maturity) would place Sri Lanka in the early eighties at the take off stage and the present time as the pre maturity stage.

This does not, however, detract from the fact that the most critical issue for any nation emerging from civil turbulence involves consensual resolution among decision makers as to what precisely constitutes economic growth in a particular country and how the major ingredients and conditions that facilitate economic growth would interact. initial stages

The seminal role in a nation's economic growth should incontrovertibly be played by government and the entrepreneur sector, which are not necessarily mutually exclusive.

Historically, it can be observed that some economies have grown through a process of subsidy granting by the government to the entrepreneur and others have thrived by the injection of aid by the government to transportation, power and other utilities. Another important contribution by government could be in the establishment at the initial stages of revival of capital and money markets in which investors will have confidence.

As for the role of the entrepreneur, modern economic theory places the entrepreneur on centre stage in economic growth. Joseph A Schumpeter, an economist who pioneered modern economic theory was of the conviction that the quality and performance of a nation's businessmen would determine the rate of capital growth in that nation. central to this theme lie two key elements: the development of new products; and new productive techniques. Intrinsically linked to these two elements is the effect of globalization.

Today's commercial competition has transcended the past era, where dominant markets protected their established market shares. Most mega commercial activity was then the purview of governmental control under instrumentalities of State which were mostly cumbersome bureaucracies at best. Perhaps the best analogy is the biggest commercial market! the United States! which had, until recently, extensively regulated larger commercial activities pertaining to energy, transportation and telecommunications.

The determinants of economic growth, when measured in technological and business terms in the backdrop of globalization, clearly point to the compelling need for the increase of trade volumes which are essentially endogenous variables reflecting a wide range of factors affecting a nation's trade policy.

A nation's trade policy would be significantly influenced by geographical factors as well as investment policies. Whatever be the determinants, the most important consideration would be to implement pragmatic economic planning which eschews attempts at applying preconceived ideological doctrines. An integral part of prudent economic policy lies in the privatization of utilities and public enterprises and in bridging the digital divide that has become an essential part of the information revolution.

Privatization

Privatization involves a whole spectrum of economic activities which affect infrastructural services and could extend to such facilities as power generation and clearing services. Two of the main advantages of privatization are of course maximizing profit and improving efficiency of the services offered by utilities. Public enterprises, in sharp contrast, tend to focus on job creation, supporting national identity and pride and stimulating tourism, all of which could have a stultifying effect on profit making and efficiency. Be that as it may, public enterprise has largely lost its appeal, not only due to the cumbersome bureaucracy involved but also because of the evolution of globalization which has changed economic reality and made enterprises move toward markets and efficiency from being mere non profit making services and facilities.

The liberalization and globalization of markets were a necessary corollary to the shift in perception of world leaders from the evils of monopoly to the advantages and virtues of competition. This change in attitude was mainly due to the realization that with liberalization comes more entrepreneurs and companies who in turn, with their market entry, make larger markets potentially available. Furthermore, with liberalization and globalization come better opportunities for entrepreneurs to enter markets, thus intensifying competition. the result is of course more quality service at more competitive prices. For example, if one takes the case of airports this effect can immediately be seen in the typical reduction of consumer goods in some airport shops immediately after they are privatized.

Major advantage

In 1994, the World Bank reported that privatization provides countless examples of dramatic improvements in efficiency as a result of the alleged superiority of the private enterprise system and pointed out that, in developing countries in which utilities were largely run by instrumentalities of State, 40 per cent of power generating capacity was out of commission. A counter argument which is capable of criticizing the World Bank's thesis is that the major advantage of the privatization movement is not that the private sector can reduce costs or improve service to a great extent, but that consideration of privatization encourages public officials and public employees to innovate and to breakdown obstacles to improving public employee efficiency.

One could continue with this argument - that privatization would not necessarily lower costs - by showing the inherent disadvantages of privatization as encouraging corruption; reducing quality of service; and reducing access to service by disadvantaged citizens. Concern has also been raised elsewhere with regard to disadvantages which may accompany privatization with the possibility of private owners taking on projects or opening new businesses within the umbrella of activity which are not related to the core business.

There is also the apprehension that the sale of equity shares may lead new owners to hasten towards quick profit making and a short term mentality that would effectively preclude the essential act of reinvesting of profits for infrastructure development. Another negative throwback of privatization could well be related to public accountability or lack thereof where privatization may lead to cutbacks in expansion programs and a reluctance to invest in infrastructure expansion.

On the balance, however, it could be argued a fortiori that the advantages of privatization outweigh the disadvantages. For instance, privatization usually results in improved operational efficiency and aggressive market related business practice such as opening up new non traditional capital sources calculated to contribute towards financing infrastructure and service development. Privatization remains a part of an overall strategy to replace the public sector culture with a private sector culture by more efficient use of resources and modernization of the economy concerned. legal liability Perhaps the most important feature of privatization is that it is essentially a political process involving a change in the role of the State with the sale of State or publicly owned property, or with transfer of management from State to private sources. This inevitably leads to issues of responsibility and legal liability. For instance, an airport previously publicly owned may not be under the same rules of legal liability as it would once privatized. The information revolution has created unprecedented opportunities for all nations of the world.

The process has assisted nations to acquire knowledge, enhance educational systems, improve policy execution, and widen the range of opportunities for their citizens. It has also enabled developing nations to catch up with the developed countries by making quantum leaps of technological, industrial, and infrastructural development. Moreover, it has enabled nations meet more effectively their vital development goals, such as poverty reduction, health, sanitation, and education. The use of advanced information technology has also enabled nations to gain stature and recognition in the international community, thus attracting foreign tourists and investors and enabling the country to benefit from global e-commerce.

Internet connection

The information revolution does not only serve the less developed countries, it also assists and benefits the developed countries. Through Internet's powerful "network effects" wherein more computers are connected and more information technology is deployed, nations are enabled access to a vast storage of information bringing to bear the value of the internet connection.

The inevitable corollary to this approach is that through an increase in internet penetration the less developed countries could increase the benefits of internet users and service providers in the developed world. Building bridges in the global digital divide could also facilitate information flows from the less developed countries to the developed countries. In the context of globalization and its beneficial effects on national and international economies, information pertaining to foreign countries and the international community becomes increasingly important and the Internet and new communications technologies would enable citizens and businesses in the developed countries to make more informed decisions about matters concerning the international economic system.

Maintaining unity

Access to advanced information technology wold further provide nations with what Dean Joseph Nye and Professor Robert Keohane of the United States identified as "soft power", which is the power to influence other countries by attraction, rather than coercion. For example, a country such as the United States may derive its soft power from the appeal of ideas such as democracy, the rule of law, human rights, and individual freedom. By increasing awareness and acceptance of these ideas among the less developed world and bridging the global digital divide, the United States is able to save costly economic and military resources and valuable political capital.

It would not be illogical to apply this international analogy to the context of a nation state, which could effectively apply its soft power in maintaining unity within that State while saving on costly expenditure to counter discontent and discord within fragments of its own society.

In many countries in Asia, the Middle East, Europe, and Latin America, greater freedom is found on the Internet than in the traditional news media, purely because the internet, by design, is decentralized and inherently difficult to control. Bridging the digital divide therefore would facilitate and encourage information flow that helps subvert anti establishment regimes and hate propaganda.

Information could be an expedient and efficient tool in promoting democracy, human rights, and civil society, as well as transparency, openness, and accountability of governing agencies. The internet and new communications technologies could also help create opportunities for expression through the electronic media by individuals and groups who otherwise would not have media access. A good example of this possibility was demonstrated by continued broadcasts of the Kosovo radio station - Radio B92, via the Internet after the Serbian government had shut the station down.

The internet and new communications technologies would alter the balance between established organizations and outside challengers through shrinking costs, maximizing speed, and a wider reach that is associated with the internet. A more liberal approach to information technology access would also facilitate independent, objective and investigative journalism, thus allowing the media to function as the Fourth Estate, providing diversity and a multiplicity of viewpoints, and facilitating informed deliberation by citizens.

There is no room for doubt that economic development is intertwined with the growth of information technology. While use of digital technology could lead a nation to greater economic development, the converse also could be true, in that, if nations expend their wealth wisely, they might be able to acquire information technology, connect their citizens to the internet, and participate in the information revolution. individual freedom

Contrary to popular misconception, that for a nation to successfully participate in the information revolution in order that it may progress in its economic growth, every home will need a computer, people would not need a computer at home to participate in the digital economy. A single, centralized computer to which many have access can be equally effective.

As a New York Times journalist once described, a single well-placed computer in an isolated village in the southern tip of India can provide essential information to an entire village, pertaining to such critical issues as storm warnings and crop prices. It also can provide medical services, legal land records, and distance learning opportunities.

In the modern perspective, personal computers and online web access are no longer luxuries. Nor are they arcane implements of futuristic ideologies. They are basic development tools and a critical means to make the world a better place.

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