South Asia's 'growth story': questions persist


Changes in temperature and rainfall will impact almost half of South Asia in the coming decades, reducing economic growth in one of the world’s poorest regions, the World Bank said.

South Asia's 'growth story': fact or fiction? This is the Question but the complexity of the point at issue is such that no simple answers could be expected to it. Nor could the commentator or observer be faulted for being short of quick answers to the developmental confusion South Asia tends to present currently.

What contributes, to a degree, to such bafflement is the fact that South Asia admits of both 'good' and 'bad' news. The 'good' news is that South Asia is still 'up and coming' on the growth front, despite some hiccups. The 'bad' news is that despite such growth, it suffers from considerable vulnerabilities and weaknesses, such as, desperate poverty in some quarters and food insecurity, to name just two such blights. If the latter are tending to be spoiling factors in this otherwise bright regional situation it is principally because political elites and decision-makers of South Asia are yet to comprehend and accept the main implications of development; acceptably defined.

However, the guidelines are already there for the latter sections that are at the helm of governance and they cannot claim to be kept in the dark, so to speak. UN agencies, such as, the United Nations Economic and Social Commission for Asia and the Pacific (UN ESCAP), for instance, have, apparently, been hard at the task and the latest edition of its 'Economic and Social Survey of Asia and the Pacific', subtitled, 'Mobilizing finance for sustained, inclusive and sustainable economic growth', bears this out considerably. The chief merit of this timely report is that the positives and negatives of the numerous regions of the Asia-Pacific, as regards the current economic situation, are detailed along with the policy options at hand that could help in rectifying some of the deficiencies in the 'growth story'.

This report was at the heart of a discussion forum that was organized and conducted by the Lakshman Kadirgamar Institute of International Relations and Strategic Studies, Colombo, (LKI) on July 3, and the forum proved an adequate stimulant for thinking through the issues in development in the Asia-Pacific region. The discussion which featured a cross section of the quarters who matter in the development context in this country, including Sri Lanka's Finance Ministry, was moderated by Dr. Ganeshan Wignaraja, Chair of the Global Economy Programme at the LKI. Zhenqian Huang of UN ESCAP concisely presented the key findings of the report.

Very correctly, the report re-iterates the importance of the UN's Sustainable Development Goal 8, which encompasses the principal focuses in development and which is a chief parameter of a country's economic well being. This goal entails 'promoting sustained, inclusive and sustainable economic growth', and, needless to say, is the essential test of development. 'Development' which does not meet these requirements is no development at all.

However, growth is not synonymous with development and this crucial distinction the reader would need to bear in mind as she/he reads on. It would enable the reader to grasp some of the complexities at the heart of South Asia's 'growth trajectory'.

With regard to South and South West Asia, the report says, among other things: 'In 2017, economic growth decelerated to 6.4 per cent, from 6.6 per cent in 2016. Despite the slowdown, it remains the fastest-growing subregion in Asia and the Pacific. In fact, growth accelerated in all but two countries: India and Sri Lanka.'The goods and services tax along with other issues are described as accounting for India's slowdown, while weather havoc over the past two years is seen as accounting in the main for Sri Lanka's growth dent.

While weather issues have done their damage as far as Sri Lanka is concerned, its complexities are of a wide-ranging kind that require further in-depth inquiry. It could be said that Sri Lanka is fairly confused as to what its development priorities and strategy ought to be and these issues have dogged it from 1977. As for India, it could be said that it is its growth, despite some interruptions, that accounts in the main for South Asia's seeming economic dynamism.

Sri Lanka has been prone to depend on FDI for an acceleration of its growth over the years, but it is open to question whether the country has advanced very much in this direction. It is no secret that Sri Lanka is not the apple of the foreign investor's eye, scouring frontier markets. If the story is otherwise the 'ordinary people' would like to have proof of it from the authorities overseeing these matters.

If developments on the local stock market are anything to go by, quite a few foreign investors are in the process of selling their shares and quitting the local scene. Local blue chip companies have been at the helm of the stock market but we now learn that some foreign interests are selling their shares in even those seen as foremost among the blue chips. The local stock market, clearly, is yet to come out of a downturn.

There has been considerable wealth-creation in Sri Lanka over the last few years and a study of trends in the local real estate sector would reveal this. A sizeable number of condominium properties, for example, are bought by locals. But Sri Lanka lacks an entrepreneurial culture. Sri Lanka is low down in the Asian region on the question of launching Start-ups. Clearly, we lack the 'inventive genius', and this should cause grave concern.

Overall, South Asia bristles with glaring contradictions. On the one hand, we have notable growth, on the other, appalling poverty and food insecurity. True, some sections are growing very rich, but the majority of the people of the region are wilting in poverty and deprivation. So, as UN ESCAP points out, inclusive, sustainable growth is urgently needed. The challenge is to figure out how effectively to get to these goals. This issue too needs to be urgently debated by individual countries and regional and international organizations. The moment to launch this discussion is now.

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