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Friday Sep 20, 2024
Friday, 26 September 2014 11:21 - - {{hitsCtrl.values.hits}}
Economic performance
They set out in great detail the very impressive economic achievements. All the key indicators were good. GDP growth was impressive, debt to GDP was moving in the right direction, inflation was under control, reserves were improving, and per capita GDP is jogging along well and will get to $ 4,000 before 2016. This should leave one feeling good, but it did not!
There was something important missing and that reminded me of the egg without salt scenario. Surely, the objective of growth is to improve the wellbeing of all the people? The lacuna in the story was quantified social objectives to improve the wellbeing of all our people. If there is commitment to inclusive development, it must have quantified objectives.
Per capita GDP
Inclusive development is becoming a popular expression. Inclusive can mean inclusive of anything. For example, we had a good economic performance inclusive of bribery and corruption! If we did not have that piece of inclusiveness, our performance would have been better. Inclusive as used by the economists means growth that encompasses all sectors of the economy by region, race, religion, etc.
The Apostles of the ‘Chinthana’ were chuffed (and rightly so) about getting to a per capita income of $ 4,000 and oozing with confidence of getting to $ 7,000 in 2020, which would elevate Sri Lanka to a middle income country.
Inclusive growth
Per capita income is an arithmetical average. It does not say anything about who is doing well and where and who is economically badly off and where.
To understand whether the good GDP growth will be inclusive, one must know the likely distribution of the $ 4,000 per capita income by 2016. This can be seen if the numbers are set out by region of those with a per capita income above $ 4,000, between $ 3,000 and $ 4,000, between $ 2,000 and $ 3,000, and those below $ 2,000. This will then provide a profile of the extent of inclusiveness.
A further profiling by race and religion will improve the picture of inclusiveness. The facts that emerge should be the starting point for the economic and political planners and they should declare what they will aspire to achieve in the journey to $ 7,000 by 2020.
I have seen in the literature some economists arguing eloquently that at times there is merit to target a lower GDP growth if that will lead to more inclusive growth in the country
Other issues that impact well being
The wellbeing of a country cannot be measured solely by per capita income numbers. There are a number of other aspects that will mitigate a feeling of well being. Some can be measured and plans can be made to improve the numbers. Others cannot, but are equally important and plans should be put in place to address them.
To illustrate the point being canvassed, here are two examples. Whatever the per capita income, the youth of this country will be depressed by the fact that a very high percentage of those who do A/Ls to get into university are unable to get to do so. The progress on improving the numbers getting into university can be measured. One that impacts on wellbeing in a big way that cannot be measured precisely is bribery and corruption, and the poor law and order scenario. But that does not mean that such issues should be ignored.
Plans to improve the wellbeing of a society must go beyond inclusive per capita growth and must include plans to eradicate/improve issues that are of concern to the people of our country.
[The writer, M.A (Cambridge University) AMP (Harvard), is a former main Board Director of Reckitt Benckiser Plc UK and CDC Plc UK, former Chairman of Sri Lanka Telecom Plc and the Board of Investment and Senior Adviser, Ministry of Finance. He is also a Chairman and Director of many companies both in Sri Lanka and abroad.]
