Written by: Dr Ananda Kulatunga
Sri Lanka changed its political climate according to the mandate received on 8 January presidential elections. It has a new theme of development under good governance.
Sri Lanka is focusing on long-term strategic and structural development challenges as it strives to transition to an upper middle-income country. Key challenges include boosting investment, including in human capital, realigning public spending and policy with the needs of a middle-income country, enhancing the role of the private sector, including the provision of an appropriate environment for increasing productivity and exports, and ensuring that growth is inclusive.
Economic growth in Sri Lanka has been among the fastest in South Asia in recent years. Growth averaged 6.3 percent between 2002 and 2013, with Gross Domestic Product (GDP) per capita rising from US$859 in 2000 to US$3,256 in 2013. The GDP growth in 7.8 per cent in 2014 and expected growth rate for 2015 is 6.per cent.
For most of the past decade, growth has been pro-poor, with consumption per capita of the bottom 40 percent growing at 3.3 percent a year, compared to 2.8 percent for the total population. Other human development indicators are also impressive by regional and lower middle income standards. Sri Lanka has surpassed most of the Millennium Development Goal (MDG) targets set for 2015, outperforming nearby country comparators on most MDGs. Notwithstanding declining poverty, 13 districts comprising 36 percent of the total population remain below the national poverty headcount. In four conflict-affected border districts, poverty rates are at or above 20 percent. While the national unemployment level is low at 4.4 per cent in 2013.
Sri Lanka’s growth and competitiveness are constrained by a skills gap that has emerged with the changing labor market conditions which needs to address by the new government. Therefore it is an integral part of development strategies to look at Sri Lankan higher education system as a matter of urgency and work towards aligning school education curriculum to fit with new higher education system. Currently the world Bank has initiated few projects such as Skills Development Project, approved in May 2014, which aims to expand the supply of skilled and employable workers by increasing access to quality and labor market–relevant training programs. Several innovative reforms are being supported under the project. The IDA credit of $101.4 million for the project will be complemented by a $100 million loan from the Asian Development Bank (through parallel financing), which is financing the implementation of the government’s Skills Sector Development Program for 2014-2020.
It is a good indication that Sri Lanka’s headcount poverty rate has declined dramatically; falling from 23 per cent in 2002 to seven per cent in 2012.This impressive performance has largely been driven by three factors: a rising return to farm employment resulting from the increase in food prices; productivity growth among wage workers, particularly in secondary cities outside of Colombo; and declines in the dependency ratio. Growth has been pro-poor. Real per capita consumption of the bottom 40 percent grew between 2006 and 2009 by an average of 3 per cent annually, while shrinking 0.4 percent overall. As a result, inequality in per capita consumption expenditure fell during this period, as reflected by a decline in the GINI coefficient from 0.41 to 0.36. Shared prosperity has been associated with dramatic declines in poverty. Among rural, urban and estate sectors, poverty reduction has been particularly dramatic in the estate sector, where it however remains highest at 11 percent.
Industry contributes 32.3 per cent of Sri Lanka’s gross domestic product whilst Services contributes 57.6 per cent and agriculture 10.1 per cent. I believe that Sri Lanka should explore opportunities available in the globalized market. Having far better political climate together with required infrastructure, comparatively higher literacy rate among its population Sri Lanka should produce its good and services to cater niche market in America, Europe, China, India and other countries. Sri Lanka will not able to compete with low cost product produced in other countries such as China, India and Bangladesh. Total agricultural exports in 2014 were US$2,793.9 million and 14.6 per cent of this amount was tea exports. Total industrial exports in 2014 were US$8,262 million and 44.3 per cent of this amount was from textiles and garments. Mineral exports were US$59.5 million.
There are number of business institutions in Sri Lanka already catering this niche market. If Sri Lankan policy makers think ‘out side the box’, am sure that all fellow Sri Lankans would benefit by such policies uplifting quality of life in majority of Sri Lankan population.
Aiming such economic environment, government and the private sector should have policies in place for its stakeholders to access required training on quality aspect of their inputs and the productivity. According to policy circles that the majority of Sri Lankan workforce lacks in above aspects. The accelerated economic growth would have very positive and effective results if the quality and productivity issues addressed promptly.
However good governance concept would continue in Sri Lanka for its development effort, if suitable legislatures are elected to the parliament in forth coming general election.
Thanks LMD
