Lanka's development dilemmas
SPEECH made by Dr. Sarath Amunugama, Minister of Finance and Planning
at the opening of the international seminar on "Poverty and Economic
Policy"
WHEN I was told by Dr. Kelegama, that the subject of today's seminar
would be "Poverty and Economic Policy", I had a strange feeling that it
was a job description of a Minister of Finance in a developing country.
That is because the subject is of utmost importance to developing
countries and I am most grateful that you have decided to hold this
conference in Sri Lanka at a time when considerable attention is being
paid to our antipoverty programmes.
I will begin by adverting to a very important issue raised by Dr.
Even Due. He referred to the symbiotic relationship between research and
policy.
It is one of the marks of underdevelopment that in our countries
there is no close fit or close relationship between research,
particularly in areas of poverty and development, and the actual
translation of such research and research prescriptions into policy by
governments.
This is a problem not only in Sri Lanka, but throughout the
developing world. I think, one of the most important aspects of
promoting economic growth in our region is the need to ensure that
governments listen to what is being found out, particularly at the grass
roots level such as household surveys.
The accumulation of such grass roots research leads middle level and
high level theory. Thus we should have a large amount of field research
which feeds into constant evaluation and revaluation of theories which
would become useful to policy makers.
As Minister of Finance, as Dr. Kelegama will confirm, I have done my
best to keep in touch with the research community. We strongly support
the IPS in Sri lanka and many other organizations, which are related to
economic and social research. But I am not satisfied with that.
We have to take note of the constant additional data, which comes to
us not only through local research but also the networks which you
represent at this meeting.
So I look on this seminar not merely as an opportunity for us to
discuss each other's work, but also to situate our research within the
total framework of ongoing research in the world. We must also undertake
advocacy for the conversion of that research into policies.
In no other area of policy is research more important than in the
area of poverty. Here we are dealing with lives of human beings.
They have specific human needs and if there are delays in the
transformation of our research to policy and action then we are not only
failing in our duty but also reducing the life chances of the poorest
people in this part of the world.
So I welcome very much what you have highlighted as a priority item
which is translating research into policy. I would welcome any
suggestions by you as to how this interfacing could take place.
Very often we make policy prescriptions but we don't work out the
modalities by which such an interface can take place. I would suggest
that you also look into this lacuna during your deliberations.
The second point I want to make is that Sri Lanka is a very good case
study in poverty alleviation. From the time of the State Council, or I
would say basically from the time of the granting of adult universal
franchise which is 1933, just a few years after the suffragettes in
Europe managed to gain the franchise, the British colonial government
extended that facility to Sri Lanka.
We were one of the earliest countries in the developing world to have
adult universal suffrage and many of the anti-poverty programmes are
largely a result of this expansion of the franchise. Politicians had to
be responsive to the demands of the largest voter segment of the
population, who happened to be poor.
There was constant competition from that time up to today to appear
to be the poor man's friend. If you were politically not identified as
the poor man's friend then you have to go home.
So there is constant pressure on politicians right from the 1930s to
follow policies, which were in reality policies created for poverty
reduction. It is as a result of that pressure that Sri Lanka has a very
high position in human development.
If you take the Physical Quality of Life Index, and all its new
variations that researchers like you have been suggesting, Sri Lanka
figures comparatively high on that list.
If you look at our infant mortality rate, at life expectancy, at
literacy, at the spread among genders of literacy and life expectation,
if you look at maternity benefits and so on, which make a whole range of
items depicting the physical quality of life then I think we have done
quite well.
What is not so well done is that we have not had commensurate growth.
As a consequence Sri Lanka is in economic terms a schizophrenic country.
On one side we have a very high human development. But it is human
development with a low per capita income. This is I think is a
fundamental problem in Sri Lanka.
This has been adverted to in economics literature. When we were young
students in the university, Prof. Warnapala and I, Demography was a key
element of our training.
Then debates were conducted in the Population Journal as to whether
Sri Lanka's demographic change was a single cause affair, particularly
the wiping out of Malaria.
There were some other scholars who suggested that Sri Lanka's
demographic pattern, the demographic transition was a result not only of
the wiping out of Malaria in the dry zone and the opening up of
colonization schemes.
Rather it was a package of benefits which certainly gave pride of
place to the eradication of Malaria but also included very significantly
the rural hospital schemes of that time and other social welfare
measures. There were rural maternal benefits, midwives and a whole
series of measures which cumulatively led to a spurt in population
growth.
We had this spurt from the 40s to the 70s depicting rapid population
growth. There were debates as to what the reasons were but there was
certainly to debate about the astronomical population growth of this
period.
This emphasis on social welfare was the focus of several studies
particularly by Dr. Amartya Sen, who won the Nobel Prize for Economics.
He takes Sri Lanka as a model where due to this investment in social
welfare, particularly in education and gender equality, we were able to
not only have a pace of growth which seemed satisfactory at that time
but also have political stability.
So that over a period of about 70 years Sri Lanka is one country in
the world where there has been a very regular turn over of governments.
Governments have come and gone but the social stability of the country
has been preserved.
The work of Amartya Sen has added to the corpus of studies of Sri
Lanka's social welfare. Subsequently there had been many other studies
particularly about the Janasaviya and Samurdhi programmes which were
specifically targeted anti-poverty programmes.
There is also a contemporary interest in the consequences of tsunami
for the poverty reduction programmes in this country. As Minister of
Finance, we have a continuous dialogue with the World Bank and IMF
regarding our poverty reduction programmes.
Secondly, I would place great emphasis on the question of population
growth and the population policies of a country.
In the 60s and 70s there was a lot of interest among economists and
among planners in the World Bank and other financial institutions on
population growth and its implications for per capita income as well as
basic policy issues regarding economic growth.
There was, for example, a special fund that was set up by the United
Nations, the United Nations' Fund for Population Activities. UNFPA was
one of the fast growing specialised agencies of the UN system.
But I must say they had to contend with the Reagan administration in
the USA and the growth of fundamentalism in the Western World. We always
talk of fundamentalism in other countries but US fundamentalism which
started with the anti-abortion lobby is a powerful one.
Family planning took a backseat. What was earlier called 'population
control', then got a much more acceptable name of 'family planning'.
So little by little the emphasis by economists of that age who I
think rightly placed considerable focus on the question of population
policy has now been abandoned. I want to raise this question with the
academic community.
Is this not really a fall out of the political concerns of US
fundamentalists. Funds for UNFPA dried up. There were attacks on the
one-child policy of the government of China. Her abortion policies were
attacked. Moral imperatives were raised and economic imperatives were
put in the backburner.
There was a time when there was a large funding in the area of family
planning. Today that funding has been, I believe, virtually removed.
Other areas have been emphasised. But I would make a plea to you to take
a good look at the interface between population policies and economic
growth.
I think, we are just dodging a real issue if we are emphasising other
important but nevertheless peripheral issues. Take Sri Lanka for
example. Thanks to the progressive population policies of that time,
which were really initiated by the late S. W. R. D. Bandaranaike, as
Minister of Health, by 2020 the Sri Lankan population will begin to
plateau.
Many of the facilities for which every year the Ministry of Finance
has to find more and more money will begin to level off and we will have
those funds to invest on development.
Today we are spending a lot of money because the cohorts of the time
of rapid population growth are demanding expansion of services. We have,
of course, now gone beyond the hump of primary education and very soon
even for university education the demand will begin to falloff. Even now
you would see the phenomenon in Sri Lanka of Grade 5 schools being
closed.
There is no demand for them. Lots of schools are being closed, more
rationalisation is taking place. Funds for education are being now
targeted on key areas like science and technology. There are greater
possibilities of sophisticated policy making rather than dumping all the
money on kindergarten education.
So economic and social transformation is taking place on the basis of
changes in demography. I would suggest to this seminar that we should
again bring back the question of population growth and its implications
for economic policy making.
May I add a few words about the tsunami. In Sri Lanka a phenomenon
that has been clearly identified and which I articulated in my budget is
the growing disparity between the urban and rural areas.
Sri Lanka's economic growth has been largely, I would even say
exclusively, centered around the Western Province. 50 per cent of Sri
Lanka's wealth is concentrated in the Western Province.
In the rural areas there has not been a proportionate increase of
wealth and consumption. It is the top 20 per cent of the Sri Lankan
population that has enjoyed rapid economic growth.
Our annual growth rates since independent are in region of 5 per cent
over a 50-year period. So one of the problems we have in Sri Lanka about
poverty reduction is to see how much of emphasis we could place on the
deprived areas which are contributing even less than 5 per cent to the
national income.
It is ironic and tragic fact that the tsunami had affected the
poorest of the poor of Sri Lanka. Long before the tsunami, I had
identified precisely those districts as the poorest in Sri Lanka. We
identified those districts to which we should begin a shift of
resources.
If you take the North and East, that is to say the Mullaitivu
district, the Trincomalee, Batticaloa, Amparai and then Hambantota
district; those are the districts that were badly affected.
The most affected regions of Sri Lanka in the tsunami happens also to
be the poorest of the districts in the island. If we look at tsunami
relief, it has been given in ample measure by the global community.
In the recently concluded Donor Conference, we had an unprecedented
commitment of over 2.2 bn US Dollars for tsunami relief and
reconstruction.
We want to use that to stimulate growth in the tsunami affected
areas. That is at the core of the present controversy as to what
mechanism we should device to ensure that all these areas are treated
equitably. So we have our problems on one side and an unprecedented
global commitment on the other hand.
We have started talking to all the groups that are politically
organised in those regions and now we are engaged in working out the
mechanism by which we can undertake the economic development of the
tsunami affected areas. The government will concentrate on the areas
which are the relatively deprived districts of this country.
These matters will be discussed by you in this seminar. Your policy
advise as to how we can tackle these problems will be greatly
appreciated. I do appreciate also that we have probably the best brains
in the field of poverty research all gathered here together.
I discussed with Dr. Kelegama how the Ministry of Finance can make
best use of your contribution. We would like very much to participate in
these discussions and to benefit from your experience. |