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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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