-Sri Lanka’s spatial imbalance, and regional comparison
At a recently held event, the World Bank launched a specialized development report for Sri Lanka based its 2009 World Development Report: “Sri Lanka: Reshaping Economic Geography: Connecting People to Prosperity.”
The report was made at the request of minister Sarath Amunugama and Mr. Ajith Cabraal of the central bank proposed three specific steps to address spatially inclusive growth in Sri Lanka.
Sti Lanka’s growth though robust is strongly focussed on the Colombo area with almost 50% of its GDP reported to have been contributed by the city During the presentation held at the Cinnamon Grand the leader of th research team Dr. Somik V. Lal said that ‘geographically imbalanced growth is a sign of any economy’ and that corret policy measures can gradually balance this out.
He said that the government’s recent strategy of relocating entire industries however, was tantamount to overkill and what is required is a more subtle type of tactic. The report recommended three basic policy stances in this measure. Mr. Lal also added that the current government was making progressive steps in the right direction.
Spatially blind policies of institutions
Spatially connective policies improvement of transport infrastructure to connect rural areas to the city and hence, prosperity.
Spatially targeted policies to stimulate economic growth in lagging areas. These measures include investment subsidies, tax rebates, local regulation etc.
The suggestions were met with some skepticism by the leading panelists present. They inlcluded Dr. Anura Ekanayake of the BOI, Prof Nalini Hemanayake of thePeradeniya University and others.
Among the main criticisms raised was that Sri Lanka does not have the fiscal space to accomodate the additional spending required to fund the proposed policy tools. Another criticism of the report accused the researchers of not taking into account political factors such as the lack of transparency, good governance and the problem of corruption. A useful suggestion put forward by Dr. Ekanayake was to try and find ways to enable the private sector to carry out the necessary policy modifications.
The full report can be read/downloaded here