Figure 1
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The
World Bank has released a new report on Sri Lanka.
The title, ''Sri Lanka: Connecting People to Prosperity'',
sounds very attractive. Looking at the title of the
report, one may wonder if the report professes something
different from making people prosper since one may
connect people to prosperity but at the same time
leave them as poor as they were before. The report
has revealed, using three dimensional maps, that 17
per cent of Sri Lanka's poor people (421,000), in |
fact, live closer to 'the mountain of prosperity', i.e.,
in the Western Province. Figure 1 shows that density
of poor people and the mountain of prosperity have close
association. In other words, more poor people live in
and around the prosperous areas. Of course, as the report
has explicated both 'pull' and 'push' factors have been
in operation compelling the poor to migrate internally
to prosperous areas in anticipation of a better way
of life. And it is much easier for them to do so. The
presence of slums and shanties in the middle and outskirts
of big cities in the developing countries may be attributed
to these dynamics; the process David Harvey painted
as the primitive capital accumulation by dispossession.
This process is somewhat similar to the process that
Jayati Ghosh described in another context. She wrote:
"But it is a darker process, often more perverse
and painful, always more fraught and fragile, indicating
in depressing ways the continuing failures of our development
projects and how little we have actually achieved for
most of our citizens. In fact, the nature of our economic
growth-which incorporates people in the process even
while excluding them from the benefits of growth-may
be forcing more of them to be mobile at great human
cost" (Outlook India, Counter Column).
What is the solution the World Bank has come up with
in this report? Let me recap its main arguments. The
premise on which its argument is based is that "policies
that have tried to push economic activities into economically
lagging areas have not been successful" (p. ix).
Economic production has become more and more concentrated
in the Western Province that contributes more than 50
per cent of the GDP (the proportion has reduced somewhat
recently). "Industrial relocation policies end[ed]
up hurting productivity and profitability" (ibid).
What does the World Bank suggest? "The journey
through middle income will be rapid if the economic
mountains around Colombo are encouraged to grow. And
the journey will be geographically inclusive, if people
throughout the country can be connected to the rising
prosperity in a few places." If I use the same
metaphor, the report suggests that public policies be
reoriented and directed by focusing growth-led activities
in 'dense' areas (the Western Province, maybe minus
the Kalutara District). Public policy space should be
confined to the provision of basic facilities in 'distant'
areas (namely, Uva, North Central, North Western provinces,
maybe part of Sabaragamuwa, Southern and Central Provinces)
and to the provision of special services to 'divided'
areas (namely, the Northern and Eastern Provinces).
(See Figure 2) The report in this sense confronts directly
the policies of the present regime that aims at developing
multiple growth centres in different parts of the island.
Figure 2
The main weakness of the report
stems from its neo-liberal premise that places market
and market forces at a pre-eminent position. It implies
that government can play a role but its role should
be limited to trailing behind the signals given by
the market forces. In explaining the East Asian miracle,
the World Bank will look either for human capital,
social capital or spatial distribution of resource
(as in the present report), but refuses to refer to
the principal element of development there, namely,
the industrial policy of the state. The economic development
anywhere of the world, maybe with the exception of
a handful of countries, has resulted from the correct
industrial policy rather than the unconditional faith
in market forces. In this sense, it was not Adam Smith
but Karl Marx, Abraham Lincoln and Joseph Schumpeter
who revealed the secrets of development. Of course,
it is of great importance to examine why economic
activities are concentrated around Colombo. Such a
study would definitely help in designing correct policies
for the development of new growth centres in different
areas of the island to make the development that is
necessarily uneven, more even. The report says that
de-centering economic policies have failed and market
forces created more concentrated economic space. This
takes us to the basics of economic development. Just
de-centering development expenditure by the government
will not promote rural and regional development; it
needs proper focus, namely focusing on growth augmented
economic activities. If we look at the developments
in the US, the distant states adopted not market-led
policies, but conscious industrial policy promoting
through many incentives growth augmented production
and service activities. In the last 30 years, the
only significant effort to follow such conscious economic
policies in Sri Lanka is Hambantota development.
An explanation of the concentration of wealth and
economic activities in and around Colombo needs more
sophisticated geography that also focuses on space
of power and economics that goes beyond over-arching
focus on market. Geography does limit its spatial
analysis to physical, demographic, and resource space,
but extends to multiple spaces, including the space
of power. In case of Colombo, the concentration of
power in the capital has effected significantly the
concentration of economic activities around it. Developing
more power centres and economic centres, and connecting
them through networks of transport and communication
associated with correct industrial policy that promotes
growth augmented production and service activities
would definitely contribute to Sri Lanka's progress
towards high middle income status. An increase in
the proportion of industrial goods in total exports
is a positive sign, but to take the next turn the
proportion of increasing return and high-tech products
and services should be promoted. Hence a change in
industrial structure is a must.
The reduction and alleviation of poverty and wage
increases depend not on connecting people to prosperity
but directing economy towards the production of increasing
return and high-tech products and services.
This article has appeared in
The Island, 22 August 2010. http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=5004
August 31, 2010.
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