Sri Lanka’s five challenges for development: World Bank


Feb 16, 2016 (LBO) – Sri Lanka’s has five main challenges that need to be addressed In order to sustain progress and fulfill development potential, the World Bank said. Releasing the Systematic Country Diagnostic report for Sri Lanka the World Bank said the country has ample opportunities to build on its success due to its enviable location for trade, relatively educated work force and remarkable natural assets. The Systematic Country Diagnostic is a comprehensive assessment of constraints and drivers of progress towards the twin goals of ending poverty and boosting shared prosperity. Sri Lanka is in many respects a development success story, the World Bank report said. Growth has averaged over 6 percent per year in the past decade and poverty declined from 22.7 percent in 2002 to 6.1 percent in 2012/13. “Sri Lanka performed very well on the Millennium Development Goals and has ended its internal armed conflict.
” the report said. “Effective leadership will be needed to steer Sri Lanka forward on a path that will continue its strong progress in ending poverty and promoting shared prosperity,” the report further said. The report however highlights five main challenges which need attention. The relevant sections are reproduced below. The Fiscal Challenge Sri Lanka has one of the lowest tax-to-GDP ratios in the world, with a tax and customs systems characterized by a large number of exemptions and weak administration. While the government has maintained solid fiscal discipline, the revenue squeeze undercuts its ability to invest in people and infrastructure. The Challenge of Fostering Growth and Jobs for the Bottom 40 Percent Sri Lanka’s industrial policy has been broadly market-oriented since liberalization in the 1970s, but the degree of outward orientation has wavered in the past decade. The introduction of para-tariffs has effectively doubled the protection rates, making the present import regime one of the most complex and protectionist in the world. Foreign direct investment (remains below 2 percent of GDP, far lower than the levels of FDI in other middle-income countries, particularly in Southeast Asia.
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Sri Lanka also suffers from a skills mismatch, a result of the education system not equipping people with the abilities that businesses want. The Social Inclusion Challenge The highest numbers of people living in poverty and the bottom 40 percent are located within the multi-city agglomeration areas of Colombo, Kandy and Galle-Matara. A critical means to end poverty and achieve greater shared prosperity is to harness urbanization for inclusive growth. There are also pockets of high rates of poverty in the Northern and Eastern Provinces, in Moneragala, and within the estate sector. The high poverty rates in these areas are characterized by weaker access to services and poor links to the labor market.
Women can play a stronger role in Sri Lanka’s development. Females made up 53 percent of the working-age population in 2012 but only 34 percent of the employed population, a figure that has remained static for decades. The Governance Challenge Ineffective governance critically impedes the ability of the state to mobilize revenues and spend effectively. Governance issues are integral to problems with regulation that have resulted in restrictive land and labor markets and inefficient subsidies. An additional issue is the 50 percent increase in the size of the public sector in the last decade and the continuing large state presence in key economic sectors, including banking. The Sustainability Challenge Over the longer term, the country will need to provide for a durable framework for reconciliation to address grievances which fueled past conflict, carry through with institutional reforms, proactively manage the challenge of an aging population as Sri Lanka moves past its demographic peak, and preserve its natural assets and provide for resilience to climate change.
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Nirmalan Dhas
Nirmalan Dhas
8 years ago

The world bank is not as clear as it should be in its prescriptions and their rationale. In relation to its Systematic Country Diagnostic report for Sri Lanka the diagnostic process it
adopts as the basis of its report and its underlying rationale is not at all clear. The outcome in a single word is DISSAPOINTING and it does a disservice to the immense resources placed at the disposal of the officials of this institution that is expected to conceptualize and guide the global developmental process towards the generation of a sustainable resilient and more credible global civilization for the species Homo sapiens than the current one based on the incredible and untenable “growth model of development”.

1. The Fiscal Challenge:
What is the money required for and how much money is required. Money is required for the generation of sustainability and the building of resilience. This can be met by “object driven quantitative easing” with the objects being clearly defined and documented and their achievement supported by policies and legislative and regulatory frameworks and driving and monitoring mechanisms tasked with ensuring compliance. Attempting to meet this through taxation that Joseph Stiglitz appears to think necessary and believe to be possible and hence vigorously advocate will on the contrary only slow down growth and take too much time. Quantitative easing is in itself a hidden tax BUT it is not PERCEIVED as such and its outcome in the form of development will be welcomed by the population and will have a psychologically stimulating impact that will be felt as positive EVEN AS PRICES RISE!

2. Growth and jobs for the bottom 40%:
What is the growth going to consist of that will generate these jobs for the “bottom 40%” who are mostly “unemployable” on account of ingrained anti work and anti process attitudes, near total lack of integrity, gross dishonesty and unwillingness to subject themselves to work place discipline. This alleged 40% will have to be exported as unskilled labor to low skilled jobs in large economies that operate on large scale production. Hopefully they will learn basic workplace conduct required to function in modern economies.

Such work cannot be provided in Sri Lanka if the island is going to realize its inherent potential to emerge as an entrepot through which capital flows into massive production bases in the IOR_ARC, SAARC, BIMSTEC and Antarctic and platform from which goods and services produced in these regions are marketed and supplied to the greater global economy.

The kind of highly educated and highly trained human resources required for the generation and sustenance of this modular function required by the global developmental process as it moves towards the generation of a sustainable and resilient global civilization for the species Homo sapiens are not available in Sri Lanka which has a small population of only 20 million people and a national average IQ of only 79 which borders on mental retardation.

A quick shift to the required structure, infrastructure, processes and systems through the medium of object driven quantitative easing is the quickest way to get the island into the position it must occupy.

3. The Social Inclusion Challenge:
This has nothing to do with the 40% whose prospects lie in the export of labor and not in the realization of the modular function described above. The largest source of employment will be that of the generation and sustenance of global processes of environmental repair, rehabilitation, regeneration and development (GPE3RD) and this will require human resources who have been able to understand, internalize and activate the underlying conceptual framework supporting these processes. There are very few Sri Lankans – even the supposedly educated ones – who are capable of understanding these concepts let alone internalizing and activating them and so the human resources required to formulate, initiate, support, monitor, drive and guide these processes will have to be imported.

Social inclusion has everything to do with the reigning concept of nationalism and the consequent relationship between the majority ethnic community – which thinks that its numerical strength translates into “ownership” of the island and its confused understanding of democracy as being majoritarianism and nationalism as being racism – with minority communities and the large expatriate population of advanced human resources which will be required to reside and work on the island and settle on the island permanently if they so desire. The addressing of this problem requires structural adjustments as well as the formulation, initiation and sustenance of processes of mass perceptual modification. Such mass perceptual modification was first successfully carried out in the USA by Edward Bernays – a nephew of Sigmund Freud who was familiar with his uncles work in field of psychology and the possibility of its use in social management and perceptual modification. And used it to generate the “growth model of development” or what is popularly known as the “consumerist culture” or even better still as “The American Dream”.

Such initiatives will have to be supported by the setting up of a National Institution for Organizational Development and Design that can train the corporate sector and government administrators in how to formulate, initiate, sustain, guide and develop processes and design, generate, service and sustain systems and structures. This requirement – along with an elaboration of the decisive developmental role that similar mechanisms with similar objectives have played in the postwar development of Japan and Korea with remarkable outcomes in very short times – has been brought to the notice of the President, the Prime Minister and certain key members of the government – who seem to take pride in their conceptual capacity and strategic competencies and see themselves as the blue, or perhaps green, eyed boys of the good governance bandwagon, with no sign of any initiative in this direction so far. It is quite likely that the concept has flown far beyond and above heads and that foreign intervention will be required in order to set up this vital mechanism and foreign human resources imported in order to man its structures and generate and sustain its dynamics.

4. The Governance Challenge:
This has nothing to do with the task of “mobilizing revenues” on which the officials of the world bank appear to be fixated and on the contrary what it requires is the immediate setting up and commissioning of the National Institution for Organizational Development and Design which can commence the analysis of the existing legislative framework and its underlying policy nexus and consequent regulatory framework and streamline and modify it and simultaneously educate government legislators to the long forgotten fact that their job is to ensure that the legislative framework is compatible and synchronized with the policy nexus and to ensure that regulatory frameworks are designed to secure compliance with the
legislative framework and hence realization of the policy nexus and NOT to engage in development activities such as building toiletts and roads and railways. This is the government challenge and NOT the raising of revenues.

5. The Sustainability Challenge:
As can be seen the global requirement to generate sustainable development and the building of resilience has already been addressed through 1 – 4 above rendering a separate approach unnecessary which indicates clearly that these global objectives have been mainstreamed within the recommendations made above. If the officials of the world bank are serious about their work and capable of approaching it independently with creativity and resourcefulness they are welcome to enter into a dialogue aimed at the generation of the kind of dynamics described above in Sri Lanka and their hopeful outward spread through the regions of the IOR_ARC, SAARC, BIMSTEC and Antarctic that are unavoidably linked to the island by virtue of its geophysical and geo strategic location instead of recommending outdate approaches that will generate the same problems that they have historically been associated with.

8 years ago
Reply to  Nirmalan Dhas

Mr. Homo sapient, on what basis you conclude the followings ” Sri Lanka which has a small population of only 20 million people and a national average IQ of only 79 which borders on mental retardation “?
You better consult a psychiatrist at first instance.

Nirmalan Dhas
Nirmalan Dhas
8 years ago
Reply to  ajith

Most psychiatrists are well aware of the fact that a) Sri Lanka has a very small population of 20 Million people and b) this small population of 20 million people has an average IQ of 79 and c) an IQ of 79 borders on mental retardation. If the average IQ is 79 there will be several members of that population who have an IQ of LESS than 79 and these people will be of a level of mental functioning that makes it impossible for them to research a question and find the information they require. They will also probably be unaware of the fact that they belong to the species sapiens of the Genus Homo and of course they will be unaware that their level of mental functioning contributes to the failure of the population that they belong to to reach a higher functional capacity and complexity.

There are search engines that will bring you face to face with the available information at various levels of complexity. This link takes you to one of the SIMPLEST and most BASIC ones… contents of which you may be able to understand. You can then trace your own path to the underlying research by Richard Lynn who is emeritus professor of psychology of the University of Ulster. Good luck with your education.

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