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Thursday, 24 April 2014 00:00 - - {{hitsCtrl.values.hits}}
There is however an aspect in our Sri Lankan psyche that definitely needs some correction and that is with regard to saying ‘Yes! We can!’When a question is raised on coming out of our economic woes through manufacturing, especially in the process industry, the answer almost always is ‘we cannot and we should not even try!’ A thousand and one reasons are given why we should not even think of attempting such endeavours.
With national GDP growth rates at quite a respectable level and also being somewhat consistent over the past few years, one may be hard-pressed to talk about quite invisible economic woes – to most anyway.
Tea, textiles, tourism
Looking at the situation broadly we may see no reason to worry as the numbers are good, if not excellent. The specific components that make up the whole may be pushed into the background in this process and detailed analysis is absent.
If an economy is based on a few streams of revenue, that should be a real cause for concern from a stability perspective. It is a fact though in case of Sri Lanka these specific income lines have supported us over a long period of time and quite well too, be it tea, textiles or tourism.
We should not forget that Sri Lanka is benefitted from income from abroad through remittances. This in fact is the No. 1 income stream for the economy. However, this is a labour intensive income and not from any non-financial property income i.e. patents, royalties or copyrights, and should be viewed from a social perspective as well as from a susceptibility to vagaries of geopolitical situations.
"Poverty can be defeated through application of science and technology. Though much had been written and tomes exist on the subject, what is evident is that poverty still threatens us. Is it because we do have the ability to write volumes on a subject but lack the conviction to execute by ourselves?"
With textiles the sector has shown resilience as well as shown the ability to grow against predicted adversaries and in an ethical manner too. The textile sector today is embracing innovation too and such thinking is commendable. We may see that textiles account for about 70% of the industrial exports, which is worrying.
However, Sri Lanka still has no story to match that of Ambanis in India whose story of textiles expanded into building one of the world’s largest petroleum refineries in their quest for backward integration. We continue to trust the same sectors to grow and nurture us into the future.
Bubble economy
When an economy depends on a limited number of revenue streams yet demonstrates some good overall numbers, we may be experiencing a ‘bubble economy,’ especially when there is no significant manufacturing base.
A case that is emerging currently may be the story of Brazil which apparently is now facing some serious trouble after being a poster case for Latin America. The simple issue had been as the pundits point out today is a story of an economy that grew simply because there were significant demand for basic raw materials and commodities from another growing economy.
In the case of Brazil, the economy that has supported this growth had been China. China’s economic slowdown has meant an unexpected and critical derailing of the Brazilian economy. Brazil relied on commodities and benefited by the hungry feast of China on its resources.
It is interesting to note that it is Brazilian soy that accounted for about 40% exports – the secret sauce of Brazil-China trade. To Brazil, from a poster case to basket case, simply had been due to the over-dependency on commodity trading. Still Brazil has some strong manufacturing capabilities.
High-technology exports
It is in manufacturing that we find the situation wanting and indeed that is the sector that needs to be in place if one is to avoid ‘bubble economies’. Almost all our current manufacturing activities are labour related, including that of textiles, and it is quite difficult to identify any high-technology sectors. Our high tech exports amount to about 1.5% of the export income and lacking a national definition it is not quite clear even how this value is calculated.
Examining international definitions, the high-tech sectors usually consist of aerospace, office and computing equipment, pharmaceuticals (drugs and medicines), radio, TV and communications equipment. As design and developments in these sectors takes place quite rapidly, this implies that for high-tech enterprises to succeed there should be a strong R&D base.
As a first step there is an immediate need to address the need of a definition and a mechanism to capture the high-tech export sector. If none or literally none exist as examples of high-tech, the next step required is obvious. Growth in this sector is vital for economic stability and gain. There is literally not much hope only with commodities and primary goods unless of course we modify our aspirations and tone down our slogans.
We have seen Asian countries such as Malaysia, Singapore, Taiwan and South Korea having purposefully taken a direction to develop high-tech industries and succeeding. In most of these countries today high-tech exports are over 40% of their exports income.
Once you have a strong R&D base and a selected set of industries, the world can be your oyster. Of course you should have your technology management policies right. As more and more economies have embraced the high-tech growth strategy, for Sri Lanka the journey is not going to be easy. It has to be managed and led in a strategic way.
No matter how difficult the journey may be, it is not something that can be postponed any longer. We are planning human development strategies for the 21st century. These strategies must understand the need for relevant sectors to be present in the country so as not have any brain drain.
We appear to be efficient in many ways but must ensure that we should not miss the vital key points. Otherwise we may be providing case material to Drucker’s theories – We may be efficient in doing things that we should not be doing at all!
Yes we can
Keeping high-tech sectors in the classical OECD definitions aside, there are many opportunities for us in Sri Lanka through the utilisation of knowledge and existing resources. Sri Lanka has many resources which can be value added in significant ways. Most of these pathways are well known. Even having resources such as phosphate deposits and the technical knowledge to convert that to fertiliser, we keep on importing fertiliser at significant cost to the country.
The question asked is ‘can we ourselves do this?’ The answer is ‘yes!’ Yet the direction of our activities had been ‘no we cannot, someone from outside must be present to do this’. That is the mentality that needs change and resolutions are needed in this direction. Even when a huge drain in foreign exchanges take place in sourcing essentials, though the potential is present we have shied away from creating teams and organisational linkages to solve the issue.
This is the gap that exists in the policy framework – lack of science and technology integration and enabling innovation. Many of our current ills can be sorted out for good if we become determined and act straight on the simple aspect of policy being supported by sound scientific and technological analysis.
Consider agriculture. We do have issues with yield, fertilisation, over use of agrochemicals and the enormous subsidy burden on the Government. Think of the resources we have and the past heritage. Then think of small Israel.
Israel is a country with practically no resources, which is today a leader in agriculture and milk production. One of its firms Netafim last year was awarded the World Water Industry prize for its pioneering work on drip irrigation systems. The Simcha Blass of Netafim who founded the global leader in smart drip and micro irrigation did so from observing a tree growing in the desert without any obvious sign of water. His curiosity led him to inventing the concept of drip irrigation and that incidentally had additional beneficial effect on Israel too when the UN was demarcating the emerging nation’s boundaries. There is simply no excuse for us to be in this situation of post-harvest losses and subsidy cycles.
Defeating poverty
Poverty can be defeated through application of science and technology. Though much had been written and tomes exist on the subject, what is evident is that poverty still threatens us. Is it because we do have the ability to write volumes on a subject but lack the conviction to execute by ourselves?
Most of our minds are programmed to drag us back. It is time that we knock the ‘t’ off can’t. Surely we have shown the power of freedom by knocking the ‘t’ for once. For the economic war too there is a need to enact the same act again.
[The writer is Professor of Chemical and Process Engineering at the University of Moratuwa, Sri Lanka. With an initial BSc Chemical engineering Honours degree from Moratuwa, he proceeded to the University of Cambridge for his PhD. He is the Project Director of COSTI (Coordinating Secretariat for Science, Technology and Innovation), which is a newly established State entity with the mandate of coordinating and monitoring scientific affairs. He can be reached via email on [email protected].]
