China and India racing for growth without Sri Lanka

By Dr. Faiz Marikar
[Sri Lanka Institute of Information Technology]

“We have got to live with the consequences of our actions and are responsible for our own people taking the right decisions for them. Look at the former Philippines, the old Ceylon, the old East Pakistan and several others. I have. When I went to Colombo for the first time in 1956 it was a better city than Singapore because Singapore for three and a half years was under Japanese occupation and Colombo was the centre or HQ of Mountbatten’s Southeast Asia command. And they had sterling reserves, two Universities. and rich educated talent which American and British liberals thought will boost the country’ image. But it didn’t. This is what Lee Kuan Yew mentioned in his recently published book ‘The Singapore Story: Memoirs of Lee Kuan Yew’.

First, the Sri Lankan economy began to take off before 1980s at what seemed like lightning speed and the country positioned itself as Asia’s economic power at that time.

Throughout India’s history, the vast majority of its people lived in desperate poverty. As recently as 1985, more than 90% of Indians lived on less than a dollar a day. Yet now India is poised to undergo a remarkable transformation. After the country began reforming in the early 1990s, economic growth jumped to about 7 percent. 54% of the population (103 million people) moved out of desperate poverty. In China, rising incomes have the potential to lift over a hundred million people out of poverty. In 1985, 99% of the urban Chinese population lived in households earning less than $3 per person per day; by 2005, the number had dropped to 57 percent (McKinsey Global Institute).

Controversy abounds on the economic growth rate achieved in recent years, particularly the 7% growth rate for 2006. There is some concern expressed about the country’s income distribution and a widely held view is that the rich have grown richer and the poor have grown poorer.

The growth stories of China and India have always been different – China is well known for being the world’s factory, while India’s new wealth has been built on Information Technology services.

We Sri Lankans are intelligent and efficient. We can with hard work make rapid progress. China and India have some inefficient industries heavily regulated and lacking competitive dynamism. But they also have successful industries that thrive unfettered by poor regulation. Sri Lanka is not developing mainly due to stringent regulations. We hope that one day the Sri Lankan economy too will grow very fast enriching its citizens.

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