Monday, 8 June 2009

North must be allowed to decide economic

*Strengthen provincial councils, set up independent commissions

By Devan Daniel

An economist based in Jaffna said the people of the peninsular, emerging from a bloody war that lasted almost three decades, will have to do some soul searching about the political strategy that needs to be adopted for medium and long term sustainable economic growth.

"It is up to the people of the North, also of the East, to decide and chart the way forward. There will be a need for advice and finances from the central government and other external sources but by and large, the people will have to decide for themselves," said Dr. Muttukrishna Sarvananthan, Principal Researcher of the Point Pedro Institute of Development.

He was addressing a public seminar on Economic Revival of North of Sri Lanka organised by the Pathfinder Foundation which also brought together a former public official and a businessman both of whom like Dr. Sarvananthan are based in Jaffna.

"There has been too much emphasis on issues such as language and land but little attention is given to economic growth and this is something that we need to grapple with," Dr. Sarvananthan said.

The economies of Japan and Germany recovered by leaps and bounds after WWII and Dr. Sarvananthan believes the North is poised on a similar threshold.

"We need to do a lot of soul searching, change and adjust our attitudes if we are going to replicate the kind of economic growth Japan and Germany managed to achieve in a remarkably short time soon after the Second World War," he said.

He said democracy was necessary in order to empower the people to decide for themselves and while the immediate expectations of the displaced civilians receive the government’s attention he said the government should not try to impose its will on the people.

"I am not in favour of any political point of view. What needs to be done is to foster the thinking of the people and not push the way of thinking of anyone else," he said.

"When Cambodia came out of its violent internal conflict there was a lot of expectations that the country would emerge as a model democracy, unfortunately the opportunity was not taken and the country is still grappling with many problems," Dr. Sarvananthan said.

He said strengthening Provincial Councils to take on greater responsibilities and finance its own development needs, without having to rely too heavily on the central government, would be key in fostering the kind development envisioned by the people and the government.

"The Provincial councils of the North and East will have a lot of catching up to do but on the positive side they will be relatively new so there will be new thinking and the bureaucratic baggage plaguing other councils in the rest of the island would not be visible," Dr. Sarvananthan said.

But bureaucratic red-tape has emerged as a major obstacle in the East.

The size of the government and public expenditure patterns are areas that will need all the attention of the government because they have been and will be potential road blocks to sustainable development.

Dr. Sarvananthan said legal structures, financial systems, labour markets and an enabling business environment with little government intervention will have to be created in the North. Implementing independent commissions at provincial level will also be crucial to the development of the province.

"There has to be strengthening of regulations but the most important factor would be public-private sector partnerships," he said.

"The IMF is being delayed and the country’s economy is going through some tough times. It will be even more difficult for the government to carry out its plans. We will need more foreign aid. But if the North and East are to stand on their own feet, the provincial councils should be enabled to take on a greater responsibility in managing the capital and current account expenditures of the provinces," Dr. Sarvananthan said.

Dr. Sirimal Abeyratne, Senior Lecturer, Department of Economics, University of Colombo who also took part in the seminar said the government will have to move away from the political-economic path governments have traversed on for decades, where bad budgets have been the norm.

"Why is this necessary? It is good economics. But good economics is not always good politics and now is the time government will have to engage the public to make difficult decisions for the sake of the future," he said. (See Island Financial Review of Saturday, June 6th).

Human development and fairness

Much work needs to be done to develop the human capital of the North and East and it all starts with reforms to the education system, which suffers from irregularities and fosters disparities country-wide despite over 60 years of independence.

Dr. Sarvananthan said opportunities, especially in the area of university education, must be based on merit rather than a quota system.

"This would help the two provinces of the North and East become more competitive. A quota system is, ethically, an area that creates distortions. Selections must be based on merit and will go along way to address the problem of brain drain the whole country is faced with," he said.

He said the government should take a proactive role to bring about reforms to the education system and encouraging investments to tertiary education was as equally important as breaking the state’s monopoly on education as it would mold a competitive work force from among the youth.

The Institute of Policy Studies and the Government Peace Secretariat have both identified and highlighted the disparities in the country’s education system.

Dr. Sarvananthan received a special award for economic research from the Sri Lanka Economic Association last year for a study he published titled ‘Children of War’ were he showed that the youth of the war-torn regions longed for more opportunities and held aspirations to join the public sector work force.

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