Ricardo Hausman’s Incisive Summary of Lanka’s Forum Discussions and Prospects

Professor Ricardo Hausman, from Center for International Development Harvard University


Tonight (Jan. 9) I am flying back from Sri Lanka to Boston after a 3 day visit. The <http://cid.harvard.edu/> Center for International Development at Harvard University (which I am so happy to lead), helped organize the Sri Lanka Economic Forum, together with the Prime Minister’s Office and George Soros’ Open Society Foundation. We had a half day open seminar and a day and a half closed door seminar with policymakers including all the economic area ministers, the governor of the Central Bank and the senior staff. Besides George Soros, the meeting had a great set of word class economists and policymakers including Joseph Stiglitz, Montek Ahluwalia (India), Alan Hirsh (South Africa), Erion Veliaj (Albania), Robert Conrad, Christopher Woodroof, Filipe Campante, Frank Neffke, Ljubica Nedelkoska, Daniel Stock and Tim O’Brien.SL ECON FORUM

In addition, I had three very good and substantive meetings with the Prime Minister Ranil Wickremasinghe. I was also privileged to have not just the PM, much of the cabinet, our international guests, some 600 local participants, be present during my talk on the economic challenges of Sri Lanka but also President Sirisena.

I mentioned 5 challenges that Sri Lanka must face if it is going to sustain a process of accelerated and inclusive growth. First, I pointed out that the country was giving signs that its growth rate was limited by the growth of its export (and remittance) income. Second, and related to the previous point, the country faced the challenge of structural transformation, with too much employment in low productivity agriculture, very large gaps in productivity between agriculture and the rest of the economy and a relatively static composition of its exports, composed mainly of tea, rubber and garments. Third, the country faced the challenge of efficient urbanization with something between 20 and 40 percent of the population living in urban areas (depending on definitions) instead of the 60+ expected of countries at Sri Lanka’s income level. Fourth, and related to the previous points, the country faced the challenge of regional and social inclusion, as the structural transformation and urbanization process is bound to have some lagging regions and sectors (tea, rubber, simple garments), while others such as BPO, Knowledge PO, IT, tourism and more advanced manufactures would expand, in different regions, hiring different social groups. Finally, to accompany and even lead this process, the state would be hampered by a tax revenue of barely 12 percent of GDP.

The closed door meetings had some spectacular presentations by Sri Lankan officials and local experts on these issues.

Today, I visited three plants: two in garments and one in tires. The two garment plants were quite different but incredibly impressive. Both – owned by MAS holdings – are the most advanced I have ever seen and supply Nike, Victoria’s Secret and others. The tire company is the world leader in solid tires.

For a country that started so much poorer than Venezuela when I was born and that had a 26-year civil war that ended in 2009, the country has made incredible progress. I flew to Sri Lanka on January 5th while the Venezuelan National Assembly was being sworn in. The following day, Maduro announced a new cabinet. I was struck by the dramatic difference in the quality of the debate between Sri Lanka and Venezuela. While the debate in Sri Lanka featured real challenges with tough choices, the statements of the new ministers in Venezuela exhibited plain lies (such as the “economic war”) and absurd theories (such as the idea that inflation is caused by xwgjrnswqe$@/ or something like it).

A country can be destroyed by people acting on lies and wrong ideas. Today, the Sri Lankan parliament was convened as a constitutional assembly in order to pass a constitutional reform that would reduce the powers of the President in order to prevent a new Chavista-like abuse of power as that which is attributed to previous president Rajapaksa. What a sight: a President that is willing to forgo powers to make sure that future presidents do not abuse it. That is one thing that the Venezuelan National Assembly could do: re-establish the division of powers by re-appointing the Supreme Court, the Attorney General, The Comptroller General, the Electoral Council, free all political prisoners, re-establish freedom of the press and hold ministers accountable for gross violations of the law. Sri Lanka is one more country that was dramatically poorer than Venezuela 20 years ago but now offers a better quality of life than what Venezuela can offer. We must change this!

ricardo hTags:  <http://ricardohausmann.com/?tag=economic-growth> Economic growth, <http://ricardohausmann.com/?tag=sri-lanka> Sri Lanka, <http://ricardohausmann.com/?tag=venezuela> Venezuela

ALSO SEE https://en.wikipedia.org/wiki/Ricardo_Hausmann … AND … http://www.hks.harvard.edu/about/faculty-staff-directory/ricardo-hausmann



Filed under accountability, economic processes, governance, island economy, life stories, modernity & modernization, performance, politIcal discourse, power politics, Rajapaksa regime, social justice, sri lankan society, unusual people, welfare & philanthophy, working class conditions, world events & processes

5 responses to “Ricardo Hausman’s Incisive Summary of Lanka’s Forum Discussions and Prospects

  1. What is scary is the load of ‘foreign experts’ that he lists. It is like the crows landing on the meat trash. The Western experiment of socialism based on the Christian model of hierarchical global government did not win. The other, free market system is proving that amoral business enterprise leads to the big business and banks seizing the government. So, the short history of the Western civilization is at a point of reassessment. Sanders and Corbin ‘phenomena’ are indicators of grass roots reaction to the bad trend. Businesses foresee the erosion of customer base in the West and they are looking for opportunity in the under-developed countries. Lanka should be careful.

    Having lived for three decades in the US curiously having watched the Reagan MBA revolution, I know that they know in US that decision makers in India and Sri Lanka suffer from colonial after effect of irrational subservience to anybody that resembles the former master. The British crafted an education system that perpetuates a ruling class of this mindset: — English + White = Educated + Superior. Britain did not intend malice, it was for the convenience, at least in Sri Lanka, to cultivate a self-satisfied native community living peacefully with a ruling class suitable for the purposes of the Empire. (Remember that Britain did not have any intention to give independence to India. It is US’s sudden demand in 1946 that Britain immediately repay war debt and allow US equal status in trading with India that precipitated independence for India and Sri Lanka).

    This thinking that we need to ask the ‘advanced’ people what is appropriate for us in Lankans (and Indians) can be observed if you compare them with Asian countries that did not stay as colonies of the British Empire. Japan, Thailand and Taiwan are examples where the people do not believe fairer skin color means superiority.

    Lankans should understand that we are in the digital era and knowledge is available openly to everyone equally. If you want to learn what is taught at MIT, got to Youtube and watch the lectures! (And learn from it how classes at Royal College could be broadcast to schools cheaply equalizing education. It can be done in few months. Ask George Soros to help equip schools with classroom projectors).

    Lankans should understand the western mind. It is self focused. Their sales pitch sounds ‘I am my brother’s keeper’ — smooth talking. Lankans customarily would sway the head left and right and say ‘Okay (and thank you for calling me by my first name, it elevates me)’. Instead, they should learn to say, ‘I did not understand that. Could you elaborate why we have to take bank loans?’ They should keenly watch the next revolution coming in the West and avoid becoming victims of the rats rushing for new sources of cheese.

  2. Ashley de Vos

    Mr. Ahangama,has got it correct

  3. Thank you Ashley.

    You know what keeps me sleepless now? Microsoft descended upon PM Wickramasinghe in Davos at the World Economic Forum. How can the poor man resist highly trained marketers from Microsoft? My wife has prohibited my going to the door when the door bell rings because Americans are so smart at selling, and I fall victim every time! This is after living here 32 years. Microsoft has said that they have new innovations that they want to give Lanka. There is no such. MS tried to join with hardware manufacturers to demand people buy new computers for Vista. The Federal Government refused to go along. So they made Windows 7. In Sri Lanka MS is the computer Guru with training shops all over while Europe is going with Linux, the open-source Operating System.

  4. Pingback: A Grounded Demolition of Richard Hausmann’s Economic Thinking for Lanka | Thuppahi's Blog

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