Sept 12, 2009 (LBO) – Sri Lanka should resist calls by special interest groups to increase trade protection and reverse outward oriented policies amid the current downturn, an Australian based economist said. “We all know that the market economy of course combined with the rule of law and civil liberties have obvious advantages assuring tolerable level of material well-being and security,” Premachandra Athukorala from the Australian National University in Canberra said.
“The alternative no longer exists. That system has collapsed. Muddling through the market oriented way is the only way forward.”
He was speaking at the annual session of the Sri Lanka Association of Economists, in Colombo which was themed on The way forward to recovery from the fall-out of the global recession.
The crisis was not going to be as bad as the great depression due to the existence of floating exchange rates which acted as a buffer.
International trade has collapsed but authorities in most countries have managed to resist calls for increased protection. This was allowing the world economy to recovery faster.
During the great depression the US has enacted the “infamous” Smoot-Hawley Act which had mad