Righteous economic development

Ravi RANDENIYA

Fmr. Senior Policy Analyst, Ministry of Trade and Economic Development Govt of British Columbia, Canada

At Federal and Provincial levels, strategies have been employed for years to solve depressed regional economies. In broad terms, economic development, whether at provincial or national level, refers to those measurers taken to improve employment, income and elevation of the standards of living, the end goal being the elimination of impoverishment. Theoretically, these measurers usually entail activities that lead to job creation and wealth distribution within a nation.

Firstly, economic development requires that a country undertake a systematic process. Relying on large-scale developments to come to a country is a hit-and-miss approach, since a country does not have control or influence over their coming and going. Secondly, the status-quo leads to a "brain drain" with those who are best educated being forced to migrate to developed countries resulting in a loss of invaluable HR for strategic capacity building.

Generally, economists use three major indicators to measure economic performance: Gross Domestic Product (GDP) - the value of all goods and services, employment figures and per capita income. Performances of these three areas and relative comparison with the regional economies give us a clear indication of our economic prosperity. GDP alone may not give a clear picture as to how well the people are benefiting from the economy, however, better measures are the employment levels and per capita income.

Strategies for capacity building

All governments use indicators to track economic performances. The sectors used to measure total GDP are trade activities, business and personal services, real estate, transportation, communication, utilities, construction activities, manufacturing, mineral mining, agriculture, primary industries and public administration.

Time and again, some sectors outperform others and those are underperforming will contribute to falling GDP. It all means that some sectors are increasing employment while others are shrinking affecting the income levels respectively. To ensure that the overall economy is performing satisfactorily it is vital to assess the performances continuously at each sector by rationalizing the strategies employed at federal and provincial levels. This allows the strategists to identify weaknesses in strategy development and implementation, and thereby giving opportunities to fix before an industry collapses.

There are several factors contributing to our disproportion of sector performances, one being the underdevelopment of our key resource - human capacity. Building human capacity at national level is fundamental in many ways: It enhances skills to receive, process and re-pack technologies for export, advances our manufacturing capabilities to compete in the global marketplace and becomes a key source for FDI.

To achieve the benefits of capacity-building we must create a nationwide capacity-building program. Our economic development is regionalized, therefore the economic activities will only benefit a specific community or smaller areas. This may address regional underdevelopment, however, the impact on capacity-building at national level becomes insignificant as these investments are solely focused at alleviating poverty at regional level. Added to this dilemma are the developments that will come and go depending on the regional need, ROI, the sustainability of the local resources that are being exploited, and often smaller communities have less say in the project longevity. Therefore, many rural communities will remain vulnerable unless the Government continues to identify other opportunities that will serve them best. This creates the need for regional economic development solutions where most of the opportunities are found for the communities.

In real terms, setting up of a centralized capacity-building is knowledge management at best, employing our skills to manage our own natural resources to minimize the export in the raw or unprocessed state. It ensures increased local employment and income to many through secondary benefits that would otherwise pass to other economies to their profit. When regional development is launched, there must be mechanisms to transfer this knowledge from the centre so that those investments can compete on par with the rest of the island.

There is a fundamental need for developing calculated strategies aimed at bringing a multitude of benefits for any national economic development agenda. What is universally accepted is investing in every new project, whether it is large or small, will contribute to the growth of GDP, employment creation and income level. A sense of nationalism must prevail in us to ensure spin-off activities from such projects are quantified, and grant local entrepreneurships in new start-up ventures with assistance for skills development to meet technical knowledge to meet quality standards. The purpose is to minimize our over-dependence on foreign contractors and suppliers when the same can be provided locally giving employment to ours. This strategy must be followed up with state-of-the-art facilities for industrial development programs that seek out building partnerships with outside agencies to improve our capacity for technology transfer, hence elevating our industry capability.

Examples of similar successes are Japan, South Korea and China, who exploited their lack of abundance of raw material by raising their raw material processing capacity to generate a massive export industry unmatched by the Western economies.

Linking key strategies

We must link development strategies identified in regions through strategic planning with external opportunities. This leads to developments that rely not only on the exploitation of our resources, but on skills and knowledge of our human resources.

It opens up new opportunities in advanced technologies in oceanography, renewable energy and environmental protection. It is a clear message to our educationists that if we want to employ our youth, we must show that there are opportunities in our communities that require their education and knowledge. Added to this, we need mentoring programs and identifying points of access to capital investment.

For such agenda we must sustain the following strategies: Continuously seek domestic and foreign investment, Public sector programs and infrastructure development to improve facilities and employment, Entrepreneur development by providing assistance in seeking opportunities and counselling, Encourage existing firm expansion in forward and backward integration opportunities, Grant community control and ownership to encourage collective ownership requiring commitment, an entrepreneurial attitude and recognition of self-help approach, Local sector strategies to target specific "growth sectors" that have the best potential and pursue development within that sector, Import substitution must be encouraged to exploit opportunities for local entrepreneurs and Constantly search for niche markets for all products and services originating from the country.

Role of Government in Economic Development

Countries like Sri Lanka must adapt a balanced approach to development. We must exploit traditional industries like fisheries, tourism and small - medium scale manufacturing and take full advantage of opportunities in information and green technologies. Smaller community based enterprises ought to complement large-scale industries. This approach will provide diversity and guarantee greater stability to help build a stronger economy.

Any national agenda must have a built-in mechanism to identify sectors that are underperforming to find solutions.

If the origins of the problems lie outside the country then we must find and take advantage of other developments of opportunities in secondary processing and diversification into other products or services and provide the industries with support services to sustain. That responsibility lies with the government of the day. Often times we are faced with global crises of not our making, but opportunities are always there. But it must take a crisis to force us to recognize them. Proposed capacity-building grants us that capability to seek out new opportunities when pushed, we will have the capacity to better utilize our resources and skills.

The bottom-line is, we will soon need to learn how to get greater value from fewer products through our innovativeness. Throughout all economic conditions, the role of the Government is to provide direct and indirect linkages to further development opportunities within specific sectors that have the greatest potential for return. Successful economies have exploited value-added activities and spin-offs (downstream development), pursued the development infrastructure, capital goods and producer services (upstream development). They have also ensured that growth of employment and diversification remains via local consumption, traditional services and reinvestment of profits in human resource development and improvement to infrastructure.

Core principles of economic development

There are four core elements in economic development that Sri Lanka ought to take notice:

* An integrated approach: Interconnecting infrastructure in support of business; an educated population that will undertake planning and implementation; a diversified economy not depended on only one resource to sustain a nation; business, social and development are interrelated and cannot be pursued in isolation. In the end, the people's quality of life will determine how well those elements have been developed and integrated.

* Strategic Planning: A strategic plan based on community vision and strengths becomes that first step in the development and sustainability. A country must ask itself "do we want economic development or status-quo?" We must put forward strategies that depend on private equity and government funds for creating partnerships, identify markets, and creating a development atmosphere that encourages rather than competes with private funds.

* Organizational development: People need avenues for expressing aspirations, overseeing development work, undertaking implementation, and facilitating a holistic approach to development. That helps maximize their potential and skills for economic development, identify professional assistance to benefit and organizations and interests should not compete at each other's expense.

* Education and training: Educators must recognize that students need exposure to economic development principles and practises from secondary level. The curricula should incorporate economic development leading to educating the necessary skills that represents regional strengths, opportunities and strategies. For example, students in the Central Province must be taught about their own regional economic opportunities while students in the North must have knowledge about their own opportunities rather than studying about the Central province.

* Champions: The idea of championing specific causes is closely related to that of leadership in development. A true champion believes even when others become discouraged.

* Employment: Today, many government programs that target employment as a major objective are really designed to bridge gaps created by the lack of opportunities in the private sector.

Often, it is the antithesis of economic success driven by less labour-dependent and technology based activities forcing projects leaders to overlook development opportunities that would provide employment to many. Technology is an essential element in the development process. A balance must be struck between employment and technology without jeopardizing the fundamentals of economic development.