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Recipe for balanced growth

If there were any lingering misconceptions among the people on the economic policy of the United People's Freedom Alliance, they would have been effectively dispelled on Tuesday when Media and Communications Minister Lakshman Kadirgamar spelt out in detail its fundamental parameters.

Contrary to the unfounded fear in some circles that the private sector would be given less than primary status in the development process of the country, under an UPFA administration, the Minister explained that every effort would be made to ensure full private sector participation in enhancing Sri Lanka's economic prospects, when the UPFA comes to power. The private sector, in other words, would be made an equal and vibrant partner in the country's growth process.

What more assurance does the country's private sector need to put its best foot forward - courageously and optimistically - in helping out in Sri Lanka's material advancement? Equity with growth should remain the prime principle in ushering in Sri Lanka's advancement and it is obvious that this has not been lost sight of, by virtue of the UPFA's commitment to a mixed economy.

Accordingly, we wouldn't be having a fully State-regulated and rigorously regimented economy in which the public sector would rule the roost, but one in which the private and State sectors would function in equal proportion - as partners in progress.

This would be a welcome change from the liberalized economy which was stridently touted by mainly UNP governments since 1977. The consequences of this policy speak for themselves.

Have neo-liberal economic principles brought about a reduction in the number living in poverty, for instance? Have we established a sound industrial and agricultural base in Sri Lanka, founded on economic liberalization? The answer is 'no'. In fact, our growth has been sluggish under previous dispensations.

This dismal failure could be traced to the adoption in the past of a lop-sided growth strategy. What we need to seek is not only material advancement but such growth coupled with equity and redistributive economic justice.

Hence the advisability of combining the State and private sectors in dynamic growth. As pointed out by the UPFA, we will continue to be open to Direct Foreign Investment as long as this does not damage our indigenous industrial and business base. While committing itself to transparent governance, the UPFA intends taking infrastructure development from the centre to the periphery, in a bid to energise local industries.

All in all, the UPFA would have a Sri Lanka-friendly policy, which would give local capital a strong fillip.

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Global economic recovery

Good times are here again, according to a global survey by the International Chamber of Commerce (ICC) and the Munich-based economic research institute Ifo. The survey, released yesterday in Paris, indicates that the world has finally emerged from a decade-long economic rut. Sustained growth is now expected in all regions.

The overall economic climate indicator of the joint ICC/Ifo poll, conducted in January, hit 7.3 out of a possible 9 - its highest level since 1995, pointing to a pronounced upswing of the world economy. The poll, the only one of its kind to give a global overview of business confidence, also found that favourable conditions are expected to have a beneficial effect on world trade.

Perhaps the most surprising finding is that Asia has managed to survive a serious economic battering almost unscathed. SARS and bird flu dealt a devastating blow to the region. Most pessimists predicted that Asia would take years to recover from this disaster. But the survey says otherwise: "The region's overall economy appears not to have been noticeably affected, with domestic demand forecast to strengthen in almost all Asian countries."

Asia's commendable performance against all odds points to the resilience and strength of Asian economies. Asia is likely to overtake other continents in terms of economic development and social empowerment if present rates of growth are maintained or increased.

Asia and other continents cannot remain oblivious to the trend of globalisation. Trade quotas are being removed, regional trading blocs are coming into operation and lending institutions are playing a bigger role. 'Trade not aid' is the mantra of the new millennium. The coming years will see a greater shift towards free trade.

Developing countries must strengthen their economies to meet the challenges posed by impending tariff and quota removals. Entering into free trade agreements with major economic powers as well as forming regional blocs such as the South Asian Free Trade Area will prepare them for the future.

Our region has remained impoverished because there was no free trade or sense of economic inter-dependence. Increased trade and economic cooperation within the region could lead to improved ratings in the next ICC poll and better times for the people.

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