Sri Lanka needs to adopt new technologies to drive economic growth, productivity – Central Bank Governor
Sun, Oct 15, 2017, 09:25 pm SL Time, ColomboPage News Desk, Sri Lanka.
Oct 15, Washington, DC: Sri Lanka, as a lower middle income country, need to both adapt and adopt new technologies to increase productivity to drive economic growth and stay competitive, the Governor of Central Bank , Dr. Indrajit Coomaraswamy says.
Speaking at the IMF and World Bank Annual Meeting G24 press briefing in Washington on Friday, First Vice Chair of G24 said it is a challenge on the technological front that Sri Lanka is a lower middle income country and no longer a low-income country since Sri Lanka can no longer compete on low wages against other countries in the region.
“From a Sri Lankan perspective, I think as a country we are, on the technological front there is a challenge that we are intent upon meeting in the sense that we are no longer a low-income country; we are a lower middle-income country, and in our region we can no longer compete on low wages against countries like Bangladesh, Myanmar, Laos, and Cambodia,” he said.
Dr. Coomaraswamy, responding to a query on how new technology is impacting Sri Lanka explained that from a productivity perspective, Sri Lanka is “probably a little bit behind” the Malaysias and the Thailands.
“We are probably in the middle. So there is a very high premium that we attach to now infusing new technology, increasing productivity, driving innovation, to make sure that we can compete, we are competitive with the Malaysias and Thailands, et cetera. So that is where we need to both adopt and adapt new technologies to achieve that objective.”
Speaking on how the shifting demographic changes affect Sri Lanka, the Governor of the Central Bank said Sri Lanka’s population is aging earlier than the other countries in the region and therefore posing a challenge that Sri Lanka can no longer drive economic growth through increasing labor force.
Dr. Coomaraswamy pointed out that on demographics, South Asia as a whole is an extremely young region with a young population which is a clear advantage. However, Sri Lanka is an outlier in the South Asian region because the island actually is on the cusp of aging, he noted.
“Sri Lanka is aging at a much earlier point of the whole development spectrum,” he said adding that an important causal factor has been the success Sri Lanka has had in educating the girl child.
“Female enrollment ratios in education are extremely high in Sri Lanka. This has meant that we have had an extremely successful voluntary family planning program which has meant that the population – we are having a demographic transition before we have had an economic transformation,” he explained.
The demographic transition poses challenges because Sri Lanka can no longer drive growth through labor augmentation and the country is in the process to meet that challenge.
“We have to drive it through productivity innovation. So that is a challenge we are very aware of and something that we are trying to formulate the appropriate enabling conditions to meet.”
Speaking of trade amid the potential increase in protectionism, the Governor said Sri Lanka is deepening and widening its existing free-trade agreement in goods with India. It is negotiating an economic partnership agreement with China and Singapore, and it has got GSP Plus with Europe. So the idea now is to open up markets through preferential trade agreements.
Responding to a question on what Sri Lanka can do to increase productivity levels and on education, Dr. Coomaraswamy said while Sri Lanka done very well in enrollment in education, learning outcomes, particularly in the science, technology, engineering and mathematics are not as good as its east and Southeast Asian neighbors.
“We have kind of followed the British and had a rather academic curriculum, and people were doing subjects which were not well-aligned to the labor market and the sectors which had a dynamic competitive advantage in the economy, so now we are trying to align those things better,” he explained.
He said therefore, the government is placing a very high emphasis on improving particularly technical education and also skills development and a big effort is being put in by the government.