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The Role of Universities in Bringing Continued Economic Prosperity To Sri Lanka

This document summarizes an address given at the Wayamba University of Sri Lanka discussing Sri Lanka's ambition to become a developed country within 30 years. It notes Sri Lanka's past economic growth has been disappointing at an average of 4.4% annually. It argues Sri Lanka needs to break the "vicious cycle" limiting its development by empowering its people and adopting policies that recognize its most abundant resource is its human capital and talent pool. Trade, innovation, and linking inventors to entrepreneurs who can commercialize inventions will be key to fueling sustained economic growth.

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0% found this document useful (0 votes)
84 views8 pages

The Role of Universities in Bringing Continued Economic Prosperity To Sri Lanka

This document summarizes an address given at the Wayamba University of Sri Lanka discussing Sri Lanka's ambition to become a developed country within 30 years. It notes Sri Lanka's past economic growth has been disappointing at an average of 4.4% annually. It argues Sri Lanka needs to break the "vicious cycle" limiting its development by empowering its people and adopting policies that recognize its most abundant resource is its human capital and talent pool. Trade, innovation, and linking inventors to entrepreneurs who can commercialize inventions will be key to fueling sustained economic growth.

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Thavam
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The role of universities in bringing continued

economic prosperity to Sri Lanka


This is an expanded version of the Convocation Address delivered at the 13th
General Convocation of the Wayamba University of Sri Lanka on 30 August.

W.A. Wijewardena delivering the Convocation Address


An ambition to become a rich country in 15 years

Monday, 4 September 2017


As pronounced by the Government in its economic policy statement, Sri Lanka
aspires to become a developed country within the next 30-year period. To attain
this goal, the statement says, Sri Lanka should have a minimum annual economic
growth of 7% over this period. Given an annual population growth of 1%, what it
means is that the average income of a Sri Lankan, known as per capita income,
will double in every 12-year period. Thus, in 36 years, the countrys per capita
income will increase eightfold from the current level of $ 4,000 to $ 32,000. Since
the developed country threshold, according the World Banks classifications, is
per capita income of about $ 12235, at 6 % annual per capita income growth, Sri
Lanka will be able to attain the status of rich country in 15 years or by 2031.

Sri Lankas past record is disappointing

This is indeed a laudable ambition. However, in the whole post


independence era, Sri Lankas average annual growth rate has been at a dismal
4.4%. During this period, Sri Lanka had made progress on many fronts, but they all
have been small gains when compared with its main target of creating sustained
prosperity for its people. Thus, despite the proclaimed ambition to elevate the
country to the status of a developed economy, Sri Lanka has remained a
developing economy throughout.
Adopt policies to break the vicious cycle of inadequate development

The countrys track record of creating prosperity shows that there is a vicious
cycle working against the country. It is therefore necessary to break this vicious
cycle if the country is to attain a significant economic growth. The challenge to
break the cycle is difficult but not impossible if proper policies are adopted.
Sri Lankas best resource is its people
The policies should recognise the countrys resource endowment and use the
most abundant resource to push the economy up on a sustained basis. Sri Lanka is
a natural resource poor country unlike some of the neighbouring countries such
as Myanmar, Malaysia or Vietnam. Hence, it cannot leverage its future growth on
natural resources. The only resource it has is its manpower which, according to
employers, is easily trainable and upgradable. And that is the resource which Sri
Lanka has to use for its future economic growth.
Empowering people is development

Economists for many years had believed that the availability of physical capital
such as buildings, roads, ports and airports, etc. would guarantee that a nation
can attain a high economic growth. The presumption made was that the human
resources available to a country could use such physical capital to produce more
goods and services to ameliorate the living conditions of people.

But development today is a wider concept than mere production of more goods
and services. It is more to do with improving the conditions of people, their ability
to sustain prosperity and the quality and nature of the freedoms they enjoy as
citizens. Thus, it actually refers to the improvement in the quality of life of people.
With better health, education and income, it will empower people to attain self-
perfection, the ultimate goal of living as human beings.
Democracy and development are interrelated

A simple question then to be asked is whether people will be happier if economic


wellbeing is delivered to them without freedom of choice. If the answer is yes,
then, an authoritative ruler can deliver a sufficiently large basket of goods and
services to people and keep them happy. But without human freedom, such
wellbeing is incomplete. Accordingly, ushering human freedom in a democracy is
the best ground condition for people to have a real quality of life. It is an essential
condition that facilitates them to attain the final goal of their living, namely, self-
perfection.

Hence, democracy and development cannot be separated though economic


growth can take place temporarily without democracy and freedom. This was
cogently presented by Nobel Laureate in economics, Amartya Sen, when he
equated development to freedom in a book published in 1999 under the title
Development as Freedom. To elevate growth to development, it should be
connected to human freedoms which in turn will depend on the maturity,
knowledge and wisdom of people.
Growth and development are also interrelated

Therefore, growth and development imperatives should go hand in hand. They


are two separate goals but interconnected. Development imperatives cannot be
introduced without growth. In the same way, growth without development
imperatives becomes meaningless. Sri Lankas present development thrust should
encompass both these requirements.
Trade has been Sri Lankas growth source

Sri Lanka had depended, for thousands of years, on international trade to bring
prosperity to its people. During the times of Sinhala kings, especially during the
reign of Parakramabahu, the Great in the 12th century CE, Sri Lanka was a leading
entrepot trading centre in the world.

In this trading model, Sri Lanka stockpiled goods imported from the rest of the
world and resold them to traders who visited the country from all other places.
This is the development strategy adopted by Singapore in the initial stage of its
economic advancement to a rich country. However, Sri Lanka cannot play the
same role today with other competitors like Dubai which has succeeded
Singapore when it switched over to an industrial powerhouse in mid 1990s.
Invent for prosperity

Yet, Sri Lanka could leverage its flexible and easily trainable human talent pool to
mark its place in the global economy today. The strategy to do so is the
acquisition of the new technology. But the acquisition of mere technology will not
help Sri Lanka unless its talent pool is capable of coming up with new inventions
the product of using human brain to come up with new ideas. This requirement
was cogently presented to Sri Lankan population in 1940s by Sinhala writer
Munidasa Kumaratunga when he emphasised that a nation that does not
continue to invent will not prosper in the world.
Ability to think is the essential quality of people

The same ideology has been presented by two modern economists, Paul Romer
and Robert Lucas in a new growth theory. According to them, human capital
should be blessed with an essential talent: ability to think and come up with new
ideas and innovations. The improvement in productivity which is essential for
sustaining a high economic growth comes from new ideas and innovations.
Innovations are simply doing old things by new methods which take fewer
resources but produce more outputs.
When inputs become scarce, improve their productivity

Paul Romer has used an example from the kitchen to explain this point. In a
kitchen, we mix inexpensive ingredients according to a recipe to cook a meal. The
cooking is constrained by the supply of ingredients and if we cook according to
the same recipe, sooner or later, we would run out of ingredients because more
meals mean more ingredients and the supply of ingredients is finite. But if we
come up with better recipes, we could still cook more meals with new ingredients
or in the case of old ingredients, with fewer ingredients.

Applying this analogy to an economy, Romer says that history teaches us that
economic growth springs from better recipes and not just from more cooking.
New recipes come from new ideas which are translated into innovations through
vigorous and rigorous research and development.
Apples iPod was a destructive invention

A good example is Apples iPod. Prior to iPod, music was available to music lovers
either through long playing or LP records or cassettes which were not portable
and limited in the number of songs that could be stored.

It is reported that the British entrepreneur Sir Richard Branson of Virgin Group
fame who himself had been involved in music business had once humorously
remarked that he would come up with a new system of music that would record
thousands of songs in a digital system and it would replace overnight the old LP
records or cassettes. This is in fact a new idea of doing old things in a new way.
This new idea led to innovation by Apple to produce iPod and make it available to
music lovers on a commercial basis.
Create and use knowledge productively

Thus, modern economic prosperity is based on the advancement of human


knowledge to think in a different way. Creation of knowledge is one thing but
using that knowledge for economic development is another. This was amplified by
Alison Wolf, a Professor of Education at the University of London in a book
published in 2002. In the book Does Education Matter? Myths about Education
and Economic Growth, she argued that education or knowledge mattered if it
was relevant knowledge and if there was enabling environment for using that
knowledge productively.
Joseph Schumpeter: innovations are different from inventions

This had been elaborated in economic terms long ago by Austrian-American


economist Joseph Schumpeter in his 1911 book The Theory of Economic
Development and in his subsequent publications. According to Schumpeter,
continuous economic growth comes from innovation which is different from
invention, the creation of an output of knowledge.
Inventors should be linked to entrepreneurs

Knowledge will enable researchers, engineers and scientists to create new things
which are known as inventions. There are thousands of such inventions made by
knowledgeable people every day. But not all these inventions lead to creating a
commercially viable new product or service. For instance, there are stories of
some Sri Lankan youth inventing remarkable new products such as a sea-water
driven motor car or a multi-tasked paddy-thresher.

While such inventions have their own merit, they may not be commercially viable
at the current stage of technology due to higher cost of production compared to
available alternatives. Hence, they just remain as prototype inventions incapable
of going through an assembly line of a factory that depends on commercial
viability for its survival. Schumpeter says that these inventions are used by
entrepreneurs by converting them into commercial production lines. That process
was named by Schumpeter as innovation
Universities as creators of knowledge
Universities are the creators of knowledge in societies today. They do so by
providing higher learning to students and engaging in research and development.
But there are several prerequisites for them to perform this duty by the society.
They should embark on creating new knowledge which had not been there
earlier.

In this respect, the instructions issued by the Singaporean Government to all


universities and technical colleges at the turn of the century is an eye-opener
everyone. Taking into account the changes in modern technology, it instructed
them to concentrate on four new fields in the new millennium. They were
nanotechnology, ICT, genetic research and engineering and entertainment. This
was because in the new millennium, the masters of the world would be those
nations which have mastered these four areas. However, after nearly two
decades, new areas have now been added to this list.

Universities should link their inventions to business

A salutary development today is that Sri Lankan universities have embarked on a


dynamic research program, supported by funding from the Government. While
this is a must at the initial stage, it will run into problems in the long run when the
Government is faced with constraints for continued funding.

In this respect, universities should explore other avenues of continued funding for
their research programs. They should perforce link themselves with the private
sector to undertake collaborative research projects funded by the latter. It will
also solve the problem of finding entrepreneurs to transform their inventions to
commercially viable products. Since universities just sit on a massive resource
base the talent pool represented by its staff and free-thinking students it
would not be difficult for them to go for this option.

Sri Lankas universities too should take notice of the modern developments in the
global technological field and amend their curricula to suit such developments. In
that manner, they can effectively contribute to the growth momentum that has
been started by the Government today.
(W.A. Wijewardena, a former Deputy Governor of the Central Bank of Sri Lanka,
can be reached at [email protected].)
Posted by Thavam

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