Can SL drive for inclusive growth?
The Davos Economic Summit every year intrigues me not because of the
eminent personalities that attend it but, more for the ground breaking
reflections that are made.
My pick from this year’s summit were the argument that the black
money in circulation can be attracted to India, it can be more than the
annual FDI’s of the last five years. The second being importance of a
government in power to instill inclusive growth in a country.
There were many other themes that were being debated like the issue
of food security in the world and women’s empowerment.
But, the logic for focusing today’s argument on inclusive growth is
because I strongly believe that when a country is on a high growth
agenda unequal distribution automatically takes form.
The recent floods will affect the inclusive growth agenda of the
Which is where the role of the government comes into play, in the
macro economic agenda of the country.
If not, the gap between the rich and the poor will further widen that
will result may be even in a political backlash like what we have seen
in many countries in the world.
What is IG?
Inclusive Growth (IG) means all sectors of the economy contributing
to the overall growth of a country which in turn results in a
substantial reduction in poverty.
In more simple words growth must be broad based and inclusive where a
larger part of the country is engaged in the development agenda.
But a point to note is that a country can achieve all the Millennium
Development Goals (MDGs) but yet not register inclusive growth due to
the skewed pattern of growth that has not been properly distributed.
Which is where the importance of the role of the government comes
into play in a country.
It is important that a country highlights growth not only from its
sheer pace but also from the pattern of growth which will in fact give a
new image to a country is my view.
For instance in the case of Sri Lanka where we highlight the eight
percent growth that we have been registering, it must also state the
pattern of growth in different parts of the country so that a real view
can be captured. To name a few Jaffna, Muttur, Kalpitiya, Moneragala or
Mannar. It’s also important to note that Inclusive Growth refers to
areas such as equality, equity and protection from markets and
employment which are essential ingredients of a successful growth
strategy of a country in my view.
If growth does not happen in this manner it can become toxic and
result in adverse behaviour that includes revolts and political
IG the cause of terrorism?
For instance successive governments have been focusing on the top
line where Sri Lanka has a pretty picture to boast.
In 1996 it had been reported that the overall poverty indicator stood
at 24.3 percent while in 2002 it moved down to a 19.2 percent and in
2007 it went down to magical mark of 15.2 percent and then it came down
to a magical 12 percent which kept getting flashed in different media.
However, digging deeper I unearthed some facts based on the 2003 and
2004 socio economic survey done. Access to pipe-borne water in the
Northern Province was only 3.1 percent while in the East it records a
17.4 percent. The National average stood at high a 30.8 percent. Even
though we cannot be proud of the National Performance, the fact remains
that for a majority of people who live in North East, life is not as
comfortable as the people in the neighbouring regions. Can this be due
to inclusive growth are deliberations that must be made especially post
the devastating floods that has ravaged the east of Sri Lanka.
Even though there are counter arguments that countries that have an
intermediate range of rights experience a greater risk of terrorism,
there is no conclusive studies that have been done if its nurture of
nature that fosters terrorism in a country.
The former World Trade Organization head Michael K Moore once said,
“Poverty in all forms is the greatest single threat to peace, security,
democracy, human rights and the environment”, which to my mind is an
indication of the possible relationships that can exits.
However, Alberto Abadie Public Policy Professor at Harvard
University’s Kennedy School of Government says development aid is
important but it is not clear that it is an effective tool for reducing
terrorism, at least not in the short run which weighs heavily for a
country to practice Inclusive Growth strategies to avoid a repetition of
same in the history of Sri Lanka in the future.
May be the census that are scheduled to be implemented later this
year will through more light on this area.
SL in a catch 22
Whilst accepting the importance of Inclusive Growth in a country we
must note that Sri Lanka’s growth agenda is fuelled by the private
sector which means that based on the strengths that the company posses
that aggressive growth strategies will be conceptualized which is
essentially what we saw post the very private sector savvy budget that
was presented on November 22, 2010.
The billion dollar question that one can challenge now is that if
this strategy in fact works against the principle of Inclusive Growth.
The answer can be yes. But it’s only in the short term as, in the long
term this will trickle down to the next strata of the socio economic
landscape just like what the world saw in Chile during the Pinochet
Long term perspective
I believe that Inclusive Growth approach must take a longer term view
especially when a country is planning for a aggressive growth agenda in
the near future just like Sri Lanka. This was essentially the view
expressed by the Indian Minister P. Chittambaram at the recently
concluded Davos summit. Let me attempt to argue this point in favour of
The Government’s commitment to provide skill development to 300,000
youth in the emerging new areas of business and trade will be key.
At the last budget 16 billion rupees has been allocated for the next
three years which is opportune. Now the challenge is to drive inclusive
training so that Sri Lanka is on line to practicing inclusive growth.
I guess the private sector must practice inclusive growth and
specifically in the area of tourism where the current demand is. May be
private sector hotel schools can be set up across the country where new
hotel projects are being approved so that inclusion naturally takes
The apparel industry’s recent drive to boost the image of working in
the industry away from the current image of ‘Juki Girls syndrome’ as
described at the recently held press conference augurs well in this
drive to inclusive growth.
May be the tea industry must follow suit whilst in Jaffna the
Atchuveli Industrial Zone will play an important part in preparing the
youth of Jaffna to be strongly connected to the business and trade
agenda of the country.
I yet hold the view that Sri Lanka has a supply chain challenge and
not a marketing issue in developing the export industry. Hence this
focused increase in the skill area will stimulate the supply chain
development of the country.
English - life skill
At the recent budget the proposal to develop 1000 equipped schools
across the island as secondary schools which will be linked to the
primary education system driving English as a life skill is an
The reason being with the knowledge of English and the expanding
network of Nana salas the reach to global media and knowledge houses
will take form which makes rural Sri Lanka connect to the world.
Given the high penetration of mobile phones and access to internet
via mobile the inclusion of people to the main stream communication also
will drive inclusive growth in my view. I guess the privatization of the
higher education system that is in the process will also drive a higher
inclusion and stronger equity for the youth of tomorrow to be part of
the developmental agenda of the country.
A key point that was highlighted by the Indian Home Minister P
Chithambaram was the number of people that get treated by the government
of India which must be also taken into account when discussing the
concept of inclusion in a country.
I guess on this form Sri Lanka can take the high ground with the
country being ranked first in the world in the area of health and
survival indicators. May be the recent flood will throw its own
challenges into the process but the good news is that statistics
indicate the strong inclusion that exists in the country with over 700
hospitals and almost seventy thousand beds that are available.
Does in-equality matter
While one can argue on the importance of inclusive growth from a very
private sector perspective it’s sometimes important to have some degree
The logic being that it means there is a sense of reward for
enterprising individuals and those who are innovative in their behaviour.
In fact it can force a person to repeat ones behaviour and drive for
a new economic order like for example a youth from Horana who earns over
two hundred thousand rupees a month by doing caricatures for the global
However, this must be regulated so that this in-equality will not
result in a widening gap that causes destructive behaviour like land
grabbing and avoiding the payments of taxes to name a few.
Role of ADB and WB
If one analyses a countries portfolio the areas where funding is
required initially is in energy, finance, transport and communication
which are essentially large-scale infrastructural projects.
Once a typical country progresses to middle income status then the
need for such traditional lines of support will decrease as there will
be many private sector institutions that will come into the funding
Hence it will be more prudent for organizations like ADB and World
Bank to drive a smoother inter phase between regional and local
government level as well as focusing on driving trade between countries
supporting governments in bilateral and multi lateral trade agreements
is my view.
This can also generate stronger inclusive growth within a region
specially in South Asia where inter regional trade is at a low ebb of
around 5.3 percent.
While Sri Lanka is going through drastic change having to absorb
external shocks namely the looming food crisis and the oil price hike,
we can see that if one is to practice inclusive growth there will have
to be a focused effort on a slight change of strategy.
This has to be done by the public and the private sector and this is
what makes this concept interesting.
I guess Davos 2011 set the stage for Sri Lanka to take this concept
forward. In fact, it is one strategy that will ensure the avoidance of a
I guess this will drive a stronger implementation in countries that
are governed on a political economy.