{"id":102704,"date":"2020-05-22T15:28:34","date_gmt":"2020-05-22T22:28:34","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=102704"},"modified":"2020-05-22T15:28:34","modified_gmt":"2020-05-22T22:28:34","slug":"re-modeling-economic-policies-to-succeed-balanced-growth-in-the-country-part-2","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2020\/05\/22\/re-modeling-economic-policies-to-succeed-balanced-growth-in-the-country-part-2\/","title":{"rendered":"RE-MODELING ECONOMIC POLICIES TO SUCCEED BALANCED GROWTH IN THE COUNTRY (PART 2)"},"content":{"rendered":"

BY EDWARD THEOPHILUS<\/strong><\/em><\/span><\/h2>\n\n\n

Since\n1978 economic policies have been accomplished to satisfy the attitudes or\nthinking patterns of common people, however, the idea of enhancing the\nproduction, and the productivity went out of the minds of policymakers, because\nof the politics of the country reluctance to show or hear about the shortage of\ngoods and services in the market which reflected the success of a political\nparty that is in power. They did not concern the macroeconomic problems such as\nterms trade, budget gap, the balance of payment adjustment process, population,\nunemployment, and many others and they were not problems that understood by\nvoters.   In that environment, economic policymakers\u2019 antipathetic\non policy advice for macroeconomic problems, and microeconomic reforms in\npublic enterprises except privatizing handful of government corporations.  Economic policy advisers had a responsibility\nto push the political authority to promote production-oriented economic\npolicies. The economic environment developing with the COVID 19 pandemic has\npressed policymakers to turn for production-oriented economic policies. <\/p>\n\n\n\n

The\nproduction has a positive relationship with the imports and exports, which\ncontribute to the volume of foreign reserves thereby to the strengthening of\nSri Lanka\u2019s rupee. The production would answer to many macroeconomic problems\nand why policy advisors so reluctant to do the job is a question.<\/p>\n\n\n\n

There\nwere many issues in the country after 1978 such as social, cultural,\nconstitutional, religious, and ethnic issues in addition to economic concerns,\nand the grave issue of LTTE war was reasonably tackled before 2010, and the\nradical change of economic policy focusing on production-oriented economy\nignored scaring to modernization. I have an unanswerable question that what is\nmeant by modernization in Sri Lanka. \nWhen it looks at the history of Japan it clear that modernization had\nbeen a long process since the Tokugawa period and modernization was a\nmeaningful process to change attitudes towards the economic, social, cultural, and\nreligious development of Japan.<\/p>\n\n\n\n

Do\npeople of Sri Lanka understand the connotation of modernization? My feeling is\nthat modernization has been misunderstood and changing clothing styles and\nwearing half-naked dresses and singing songs, which based on the copied body.\nThe Meiji restoration in Japan gives a message to the world that modernization\nis an achievement in all sectors of the economy by great sacrifice and gaining\nstrength to change policies in all areas to generate dynamism.  <\/p>\n\n\n\n

Information\ntechnology-related products manured invented after the cold war changed the\nattitudes of people especially by personal computers, mobile phones, Facebook, YouTube,\nInstagram, the broadband Internet, and many others. However, innovations of\ntechnology have contributed nether to rapid structural change nor to reduce\neconomic inequalities but to accumulate wealth to a few owners of modern\ntechnology and speculators of the world. <\/p>\n\n\n\n

The\npandemic of COVID 19 caused by a micro virus that has changed the attitudes of\neconomic policy-makers around the world. The sources of economic strengths in\nthe world such as invisible exports, share market, share brokering and many\nother areas have been degraded by a micro virus, which forces economists as\nwell as politicians to rethink policy priories. \nHowever, the policy priority for increasing production has not been\ndismantled or being able to dismantle by the micro virus and the pandemic\nstrengthens the production-based economic policies.<\/p>\n\n\n\n

Billionaires\nemerged from paper profits, short-selling in the stock market, tactics of\nforward-exchange contracts in the off-balance-sheet process were given heavy\nlosses by the micro virus. Many countries in the world attempt to safeguard new\nbillionaires by helicopter money and creating artificial demand in the market\nrather than developing economic policies to give justice to the poor. Rich\ncountries and wealthy people are observing sudden changes in the economy with a\nshaking heart and expecting a surprise uplift disregarding a justice to poor.\nWhile the new situation is going on a new trade conflict between China and\nAustralia mixing international politics and domestic production.  China has imposed an 80% tariff on barley\nimports.  Australia aligned to Asia after\nthe UK joined with the European Union in 1972 under the Callahan government.\nThe Chinese policy may be expanded further to other exports such as meat and\nother products.  <\/p>\n\n\n\n

The\nhigh-income countries, as well as low-income nations, have poured a large sum\nof helicopter monies to economies and economic historian Robert Skidelsky has\nstated that the world could face a unique inflationary depression as it\nemerges from lockdown with government spending\u201d.  This idea is relevant to Sri Lanka too as the\ncountry distributed helicopter money, which included Rs. 10000 grants that have\nbeen funded by printing money, bank loans, foreign aids, and loans.<\/p>\n\n\n\n

Before\nelected to the office, Mr. Gotabaya Rajapaksa stated his willingness to change\nthe economic policies and he reiterated the idea during the past few months.  People of Sri Lanka need to understand that\nthe economic development process is gradual and there are fundamental issues\nthat work against the smooth development of the country.  <\/p>\n\n\n\n

The\nmonetary unit has dramatically depreciated influencing to increase inflation\nand the helicopter of money of the COVID 19 pandemic, further creates pressure\nto increase inflation.  This situation\ncould be managed only if the economic policy focuses on a strong\nproduction-based economy. Like other countries, Sri Lanka after the economic\nrecession in the early 1990s turned to service industries and to continue\ninvisible exports, and both areas have been hard hit by the COVID 19 pandemic.  Resurrecting both areas of the economy will\ntake time, sometimes, it will be a decade long job. The economic revival should\nbe based on strategic change in the rate of contribution to the entire economy\nfrom various sectors to the economy.<\/p>\n\n\n\n

After\nthe cold war, the nature of economic engagement seemed that people pursued\nquickly money-generating business and invisible exports such as tourism,\nforeign employment were attractive area and the weakness of the trend was that\nthe traditional contributing area such as production-related business as\nfarming, small business, production industries has been neglected and the\npriority of changing economic policies should be increased in the change of\ncontribution ratio from various sectors of the economy.  For example, the plantation and subsistence\nagriculture has been contributing to the aggregate economy by about 30% and the\nsituation changed by replacing service areas and neglected the plantation and\nsubsistence agriculture.  If the economic\npolicy focuses while maintaining the plantation and subsistence agriculture\nlevel and new service areas promoted, the economy would have stronger with an\nability to absorb sock from either internal or external sources. If\npolicy-makers critically exam the Japanese economic history it would be clear\nthat while safeguarding the contribution of traditional agriculture and\nindustries to the economy, the policy-process allowed modernization through\nhigh technology industries. Sri Lanka\u2019s situation has been new areas opened to\nthe contribution; the traditional area was ignored by policymakers.       <\/p>\n\n\n\n

Education\nneeds radically changing to skill-based education and training with quality and\npractical approaches.  Import\nsubstitution would not be successful if the product quality doesn\u2019t\nmaintain.  In this area, Sri Lanka needs\nstrong cooperation with China.<\/p>\n\n\n\n

Developing\nnew economic policies, the government needs to consider the following points.<\/p>\n\n\n\n

  • The government\u2019s budget\nburden should be reduced by attracting the private sector\u2019s contribution to\ninvestment. Since the beginning of the presidential election campaign, PODUJANA\nPERAMUNA stated that public assets will not be sold to foreigners. It is a good\npolicy, but there is no harm attracting capital of Sri Lankans to government\nenterprises.  The attracting capital of\nSri Lankan citizens is not selling assets to foreigners.<\/li>
  • The government budget\npolicy needs for a balanced budget without begging credits from foreign\ncountries.<\/li>
  • Import substitution\npolicy should be expanded to an export orientation by excess production.<\/li>
  • The government\npolicymakers have no clear inter-industrial plan or input-output plan, the\npresident should advise economic policymakers to prepare an inter-industrial\nplan for ten years and the plan should be monitored with remedial strategies to\ncorrect the policy process.<\/li>
  • The payments for\nemployees should be based on productivity and the payment for employees in\nvarious industries must be equal with foreign employees in developed countries,\nthere may be a 10% difference. <\/li>
  • The current per capital\nsaving should increase to 20% of earning including super savings.<\/li>
  • The president of Sri\nLanka needs to appoint a presidential task force to re-model economic policies\nand the taskforce should gain views from various sectors of the economy and\npotential issues of various policies need to understand carefully listening to\ndifferent people.<\/li>
  • There may be doctorate\nholders who obtained the degree withing a thesis and few papers, but remodeling\nthe economy cannot be done by such people. \nRe-modeling the economy needs broader experience and the ability to\naccurately forecast the results of policy actions. <\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"

    BY EDWARD THEOPHILUS Since 1978 economic policies have been accomplished to satisfy the attitudes or thinking patterns of common people, however, the idea of enhancing the production, and the productivity went out of the minds of policymakers, because of the politics of the country reluctance to show or hear about the shortage of goods and […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[124],"tags":[],"class_list":["post-102704","post","type-post","status-publish","format-standard","hentry","category-edward-theophilus"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/102704","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=102704"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/102704\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=102704"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=102704"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=102704"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}