Sri Lanka: Thriving in '60; struggling in '06

Harold F. Schiffman haroldfs at
Sun Jan 7 16:23:31 UTC 2007

Thriving in 60; struggling in 06

By Sunil Karunanayake

Dr Saman Kelegama, Executive Director of the Institute of Policy Studies
launched his latest publication Development under Stress recently at the
OPA Auditorium. The introduction was made by Dr Buddhadasa Hewavitharane
Chairman IPS and the reviews were made by Dr Nimal Sanderatne Chairman
CEPA, Prof W D Lakshman of the Colombo University and Vijitha Yapa
Chairman/CEO Vijitha Yapa Publishers. This publication by Dr Saman
Kelegama fills a timely need to present an analytical review of the
factors that caused Sri Lankas slow growth and development in contrast to
rapid advances made by countries that had lower per capita incomes at the
time of Sri Lankas independence.

Sri Lankan Development since independent is an uneven story, characterized
by slow adjustment to internal and external shocks, missed opportunities
and policy errors. Referred as the best in Asia, Sri Lanka could not live
up to those expectations. In 1960 for instance Sri Lankas per capita GNP-
USD 141- was substantially higher than that of Thailand (US$ 96) and
Indonesia (US$ 51), about the same as Korea (US$ 156) and only 50% lower
than Malaysia (US$ 273). By 1995 however a totally different picture
emerged. While Sri Lanka has risen to only US$ 700, the per capita has
increased in South Korea (US$ 9700), Malaysia (US$ 3890), Thailand (US$
2740) and Indonesia (US$ 980). The whole thrust of the book revolves
around this picture not forgetting some of Sri Lankas unique positive
features.  The book unfolds Sri Lankas development patterns since
independence to the present government of President Mahinda Rajapaksa
analyzing errors, policy mistakes focusing on the highlights. Elaborating
indirect and direct costs of he war, the author explains how such global
giants such as Motorola and Harris Corporation who had finalized plans to
establish plants in Sri Lanka and Motorola having commenced physical
activities withdrew from Sri Lanka after the 1983 ethnic crisis. Other
lost opportunities were from Marubeni, Sony, Bank of Tokyo and Chase
Manhattan who put off their investment plans.

In the concluding paragraph, the author analyses the 2004- 2006 period and
stresses that overriding objective on which the economic take off depends
on a solution to the North East conflict within a unitary state of Sri
Lanka. He argues that the government needs to increase the investment from
current 25% to 32% of the GDP to achieve an 8% economic growth and cannot
depend nor be complacent on positive factors working in favour of Sri
Lanka. The challenge for the government is to carve out a mixed economy
with selected deregulation for unleashing more sectors for private sector

The author sounds an optimistic note in stating that the challenge will be
easier with political realignments that strengthen the ruling political
coalition in the parliament. However he cautions that the extent to which
the present government will work in all these areas and move to meet the
economic challenge remains to be seen. Development under Stress is a
publication that will be of interest to most students of economics to
understand Sri Lankas development patterns and why and how we failed.
Communal conflict is well on to a quarter century, however as the book
suggests this is not the only cause for Sri Lankas present state within a
South Asian economic boom. Todays younger generation has grown within
barricades, road closures, curfews and destruction to property and human
lives and this book presents a fairly good story to this lost generation.

Some issues that may have merited greater analysis are the underlying
causes of post independent land mark events such as the official language
policy, April 71 insurrection, the nationalization spree of the 70s , the
communal bubble of 83 and the 88-89 southern insurrection. The impact of
these setbacks no doubt played a major role in Sri Lankas debacle and
whats even more important are the failures of the governance system that
prevailed through these events. Most developed countries have had their
share of internal conflicts and external shocks and the South Asian
countries were not an exception. The difference was good governance and
strong leadership. It is the sincere wish of every Sri Lankan to look with
interest at Dr Kelegamas next publication probably explaining how Sri
Lanka resolved its long suffering ethnic conflict and put the country back
in to the race to be a NIC, a dream that did not materialize in 2000 as
enthusiastically envisaged by the Sri Lankan President at that time!

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