Sri Lanka in bottom six of low productivity ranking in Asia
Tuesday, 16 September 2014 00:01
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Lack of access to finance, shortage of skilled labour and the country’s generous leave policy are some of the factors that had led an Asian Development Bank report to rank Sri Lanka in the bottom six of 22 Asian economies.
Sri Lanka is ranked 19th out of 24 economies in terms of its creative productivity in the Creative Productivity Index (CPI) built by The Economist Intelligence Unit (EIU) of the Asian Development Bank (ADB). The United States and Finland are included in the report for comparison purposes.
The report provides a benchmarking of a number of economies in Asia on creative productivity, an important attribute for strengthening knowledge-based economic development. The index gives policy makers a unique tool to assess how to foster creativity and innovation in Asia.
The CPI measures the innovative and creative capacity of economies by relating creative inputs to outputs.
On the input side, creative productivity is measured on three dimensions: the capacity to innovate, incentives to innovate and how conducive the environment is to innovation.
The output side measures innovations by considering both conventional indicators, such as the number of patents filed, as well as a broader set of measures of knowledge creation.
In the report released Friday (12 September), the ADB says Sri Lanka performs averagely in the provision of the knowledge-skill base and appropriate institutions, but challenges remain in its sluggish creative destruction, driven by the rigid labour market and the poor quality of its financial institutions.
On the output side, Sri Lanka’s pressing areas are scientific output and creative-industry goods.
Although Sri Lanka has fairly well-developed competition laws, enforcement is lax, as reflected in the country’s middling score for competition in the CPI. Its human capital score is average, with a ranking of 12th out of 24.
The report however, points out that the country’s low score for technical and vocational enrolment in secondary school highlights the problem of labour shortages in a number of sectors that require specific c skills, typically IT and English-language skills, which is exacerbated by outward migration.
There is scope for improvement in tertiary education, however, as the government is moving to open the sector to private foreign investment, the ADB says.
Sri Lanka’s low overall ranking is also characterised by its poor firm dynamics, which means that innovation is not encouraged.
On the labour side, productivity is hampered by the country’s large number of holidays and generous leave entitlements.
Productivity remains relatively low in areas such as agriculture; the country has an average score for overall agricultural productivity, but agricultural value added per worker is still poor. Sri Lanka’s low rankings for both measures of scientific c output show that more investment is needed to encourage scientific innovation as the country’s score for public spending on R&D is only 7.6.
It is also ranked at the bottom of the index for films produced per 1,000 population, which shows that Sri Lanka’s creative industry remains nascent, the report concludes.
Among the other economies, Japan leads the CPI, followed by Finland and the Republic of Korea while Cambodia and Pakistan, with much room for improvement, are ranked lowest in the CPI.
While Singapore leads the CPI for innovation inputs, Finland and Hong Kong, China are best in the CPI for innovation outputs.
The report highlights that low- and middle-income economies will benefit most from policies to increase creative inputs.
