Daily News Online
   

Thursday, 15 September 2011

Home

 | SHARE MARKET  | EXCHANGE RATE  | TRADING  | OTHER PUBLICATIONS   | ARCHIVES | 

dailynews
 ONLINE


OTHER PUBLICATIONS


OTHER LINKS

Marriage Proposals
Classified
Government Gazette

Competitiveness and development

Last week it was announced that Sri Lanka has made an impressive jump of 10 places to 52nd from 62nd in the rankings of the latest Global Competitiveness Report (2011-2012) issued by the World Economic Forum (WEF).

The Institute of Policy Studies (IPS), the local partner of the WEF and the body responsible for the Sri Lanka section of Global Competitiveness Report, which made this revelation, also said that the country had steadily improved its ranking, from 79th in 2009-2010 and 62nd last year (2010-2011).

Business people

The country's overall index went up from 4.0 in 2009-2010 to 4.2 last year and 4.33 this year. If this trend continues, Sri Lanka could reach the level of competitiveness of, say Canada within ten years.

However, before becoming too complaisant, it would behove us to consider what this all really means.

The GEF defines 'Global Competitiveness' as 'the set of institutions, policies, and factors that determine the level of productivity of a country'.

This seems very reasonable, but unfortunately the methods by which these factors are measured may be found wanting.

The indicators on which the GEF defines its indices are based partly of figures and partly on the opinions of business people. Granted that it is the opinions of investors which determine how much investment goes where, this is nevertheless too subjective to be considered a realistic measure.

Education index

Sri Lanka tends to score higher in the areas in which solid figures are available, lower when the indicator is based more on opinion.

Trading at Colombo Stock Exchange

For example, the education index is partly measured by enrolment rates, partly on opinions of quality. In the former, measurable field, Sri Lanka consistently outperforms India while in the latter, subjective area, India is streets ahead.

Another example is credit rating - an 'expert assessment of the probability of sovereign debt default'. Sri Lanka, which has an excellent credit history, comes out at 101 - below wobbly Ireland (51st) and Greece (75th) and failed Iceland (80th).

This is despite the fact that Sri Lanka has a lower government debt than these failed economies, has better budget balancing, has a higher savings rate, and so on.

On the other hand, business people have an excellent opinion of themselves.

On corporate governance by investors and boards of directors, they rated Sri Lanka at 4.9, on par with the Chinese special autonomous region of Hong Kong and above the Chinese province of Taiwan.

Labour management

On labour management relations, again there is a divergence. Sri Lanka is 50th on rigidity of employment, but opinion rates Sri Lanka at 111th on ease of hiring and firing employees - just above Italy, where it is well nigh impossible to sack anyone.

However, it is in the field of technology and innovation that the widest convergence of the subjective view from measurable reality seems to occur.

In availability of the latest technologies, Sri Lanka was ranked at 63rd, above Italy - a major generator of new technologies - Thailand and China, whence come much of Sri Lanka's 'latest technology'.

The bias towards the private sector was again observable. For technology absorption at the level of the firm, Sri Lanka ranked 42nd, ahead of technology-driving economies such as Hungary, Slovakia and Slovenia.

Again, the production process was deemed to be more sophisticated in Sri Lanka than in Slovenia, Poland and Hungary. Sri Lankan companies' spending on Research and Development was ranked on par with Hong Kong, New Zealand and Slovenia.

Meanwhile, the measurable technological index, that of international patents granted, ranked Sri Lanka in 77th place, compared to Hong Kong's 22nd, New Zealand's 24th, Italy's 25th, Slovenia's 26th, Hungary's 29th, Slovakia's 38th, China's 46th and Poland's 56th.

Private sector

What the GEF's calculation of Sri Lanka's competitiveness index really means is that Sri Lanka has got most of its act together, but the perceptions of business people need some adjusting.

Obviously, the private sector needs to improve its personnel management capabilities. Management does not do enough to exploit the potential productivity of employees. Productivity actually appears to have declined over the past three decades.

Neither does the private sector take advantage of the innovative capacity of the people, not even of its own employees. The students of the technical universities and colleges come up with innovative projects in their final years. Hardly any of these are taken up by the private sector.

To put things in perspective, Deshan de Mel of the IPS has mentioned two recent examples of innovation by Sri Lanka's private sector: a Tamil language Short Message Service (SMS) adaptation and mid-range lingerie specially designed for South Asian women. These are notable achievements and the organizations concerned are to be commended. Nevertheless, the level of innovation remains very much lower than in the 1960s and 1970s.

We have nothing now on the scale of Colombo Commercial Company's fluidised bed tea drier, or the Ceylon Transport Board's foolproof ticket machines.

The Kantha Kavaya (Women's Circle) in the 1970s proposed to Ministry of Trade the creation of a new Sri Lanka range of sizes to take into account the difference of South Asian woman's body shape from the prevalent European size ranges.

It has taken over three decades for this to be acted on - for which MAS holdings, the lingerie innovator, really stands out from the rest of the pack.

Sri Lanka is probably more competitive than is indicated by the GEF's index.

However, the key areas of labour-management relations and technological and scientific innovation need improvement.

The state needs to be more active in promoting competitiveness. This does not necessarily mean the relaxation of regulations.

It means guiding both the public and private sectors to better management practices and to better innovation.

 

EMAIL |   PRINTABLE VIEW | FEEDBACK

ANCL Tender - Saddle Stitcher
www.lakwasi.com
www.apiwenuwenapi.co.uk
LANKAPUVATH - National News Agency of Sri Lanka
www.army.lk
Telecommunications Regulatory Commission of Sri Lanka (TRCSL)
www.news.lk
www.defence.lk
Donate Now | defence.lk

| News | Editorial | Business | Features | Political | Security | Sport | World | Letters | Obituaries |

Produced by Lake House Copyright © 2011 The Associated Newspapers of Ceylon Ltd.

Comments and suggestions to : Web Editor