Political economy of development

Sri Lanka is on a threshold of development, many agree. The Government wants to make it the miracle of Asia.

It is also planned to double the per Capita GDP in seven years to make it US $ 4,000. All these are laudable goals. However, it is necessary to decide upon the path of development and its priorities.

Sri Lanka opened its economy in 1977 and embraced neo-liberalism with much enthusiasm then. Now after more than three decades it is not much ahead of what it was in 1977. Though GDP has increased it has no meaning for many, especially for those in the peripheries.

That development hitherto has been lop-sided with most of it limited to the Western Province is now officially acknowledged. It is here politics comes into prominence.

It is necessary to choose a path of development. The economic advisors and the international financial institutions that advise the Government have not given up neo-liberalism. They still prescribe the same old recipe of privatization, liberalization, and export orientation that does not take citizen welfare into consideration.

There are several issues that should be addressed and decisions taken. What is the role of the State sector? How to ensure a safety-net for the marginalized and the poor? How to ensure equity in development? All these require not just economic decisions. They involve political decisions.

Political decisions are needed not only on the path of development and economic priorities. Even in other areas such hard political decisions will have to be taken. One area that needs such decision making is education. What is the role of the private sector in education? Should there be private Universities? Or should the State go for partnership with the private sector in the sphere of education? All these questions need political answers.

The Government has already decided to discontinue the practice of privatization where profit making State ventures were sold to foreign investors or local crony capitalists. This does not negate the need for structural adjustments in State owned ventures.

The resurrection of the Paddy Marketing Board and the rehabilitation of the Transport Board have already paid dividends though much remains to be done to improve their profitability and management. State sector as a whole needs comprehensive management revision. There has also been a cry for the revival of the Shipping Corporation.

In the context of the global recession the low income strata of the population needs a safety net. Besides, development has to ensure equity in distribution of its fruits. Hitherto only a few really benefited from development. The gap between the haves and have-nots had widened.

No development is possible if the economy does not expand and if sufficient domestic savings are obtained. Hence cutting down waste and corruption as well as raising the productivity of labour become urgent imperatives.

It would also call for comprehensive development of human resources. Increasing scientific know-how and the IT literacy and knowledge is part of the required development in human resources.

Sri Lanka being a small country it is necessary to produce material goods and services to the foreign market. It is naive to believe that concessions such as the GSP plus facility would be available throughout. In face of the contraction of the world economy foreign funding may diminish in the coming years. At least the traditional donors may find it difficult to maintain the current aid volumes due to constraints in their domestic economies. This necessitates the search for new markets for our products and the need for bilateral and multilateral arrangements to ensure fair prices for our commodities.

Ensuring food security of the population is another priority. Development of agriculture and industries based on it are very essential. The same goes for dairy and livestock farming industries.

It is necessary to charter an independent economic development policy for the country. It should be a policy that safeguards local farmers as well as local entrepreneurs while integrating with the world economy for trade, technology and expertise.

The miracle, however, will only be a result of hard work, commitment and dedication.