The three-decades-long war against the LTTE has unfolded dramatically and the people in the North and East of Sri Lanka are looking forward to a new life. Since the early 1980s, people in the North and East have experienced severe economic hardships and heir living standards have deteriorated substantially. At present, the economy of the [...]

The Sundaytimes Sri Lanka

Prospects and impediments in the North and East

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The three-decades-long war against the LTTE has unfolded dramatically and the people in the North and East of Sri Lanka are looking forward to a new life. Since the early 1980s, people in the North and East have experienced severe economic hardships and heir living standards have deteriorated substantially.

At present, the economy of the liberalised areas is characterised by low levels of production and productivity, high unemployment, and other social issues. With the end of the war, a fresh series of prospects and impediments have arisen. The greatest prospect is the release of human capital and physical resources, especially land. These resources have been underutilised and labour in particular has been immobilised, resulting in a burden to the economy. After decades of war, a window of opportunity to utilise these resources productively and to contribute toward economic growth has opened. A classic model of using land effectively is the development of holiday resorts that have encouraged a tourism boom in Passikudah. Furthermore, businesses can now enjoy access to entirely new markets and channels that were before blocked. Cargills opening its 150th supermarket in the Northern Province (Jaffna) is a good example.

Post-war development and the creation of a sustainable socio-economic balance are overwhelming tasks. The lessons learnt from similar situations around the world make it clear that developing infrastructure and boosting economic and business confidence are critical for sustainable development. The development of the road network is only the first important step in this process. This would provide a good foundation for economic activity, allowing it to thrive in the regions affected.

The key challenges to progress revolve around two factors. The first is the need to improve the standard of living of the population affected by war. The second is the necessity of developing sustainable growth through infrastructure development. Though these may appear to be independent factors, in reality they function jointly. Indeed, the living standards of the majority of the people in the area of concern are very low compared to that of people in its southern/western counterparts. In the North and East, there is an enormous demand for basic needs and social services, such as food, water, power, healthcare, education, housing, and sanitation. Noticeably, widespread poverty is one of the grave problems that should be handled with the utmost care. Failure to do so may result in a second wave of civil uprising. After the war, there should be a drop in military and defence expenditure, so available funds should now be diverted to worthy development projects and causes. As in the case of post-war scenarios around the world (in Germany, Japan, and South Korea, for instance), if resources are mobilised effectively, it is reasonable to expect an exponential growth of the economy in the years to come, and as a result, an improved standard of living.

Though the war is over, one should not expect instant prosperity as if by magic. The economic prospects for Sri Lanka are certainly bright, but the question is how those prospects can be crystallised despite the impediments and in concurrence with contemporary politics.

(The writer is a
Sri Lankan professional based in the UK).

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