'Economic change making investments risky'

Hemanthi GURUGE

Political change is slowing down and Economic change is making investments risky, George Mason University Professor and Academic and Policy Specialist in International Political Economy and Development Hilton Root said delivering a lecture on the economic governance on the East Asia experience on Monday.

He said that there should be strong ties between governments and business that will lead to build the capacity of powerful business groups to lobby the government.

The early pattern of East Asian corporate organization is not novel. Family ownership is crucial in the initial stage of economic development. The importance of family ownership diminishes as capital markets develop, he said.

Family businesses once dominated the US business scene. Today almost all large companies are public owned. He further said that the development of the capital market was essential to the transition of family firms into public owned firms. Asian governments used the power of the state to expand the family economy.

Today many countries find that they can stay in business by issuing bonds to finance current expenditures. But they are finding it difficult to raise long term capital expenditures.

"When promises of public policy outcomes are doubted rival candidates promise target goods. When bureaucracy is weak, programmatic policy appeal lack credibility, according to the South Asia's political development trap," he said.