If you want to grow, you should be encircled by people who can challenge you; put it in other words, if you are the “smart”one in your own circle, it would be difficult for you to grow. This is a profound statement that can be applied to the progress of our children or our people [...]

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Allergic to “Foreign Talents”


If you want to grow, you should be encircled by people who can challenge you; put it in other words, if you are the “smart”one in your own circle, it would be difficult for you to grow. This is a profound statement that can be applied to the progress of our children or our people or even our nation.

My purpose today is to focus on the Sri Lankan nation. Nevertheless, you can also think of it in relation to your own circle of people or your child’s circle of friends or any other environments as such.

We have been often talking, at least in our policy documents, about the importance of setting parameters to develop Sri Lanka as a “knowledge economy”. But I am not quite sure, if we did anything in this particular area other than keeping it as a slogan in our policy documents.

In spite of rhetoric, I believe that Sri Lanka’s economic progress is increasingly getting constrained by the lack of competencies in the area of human resources – the knowledge, the skills and, the attitudes.

Literacy means a little

We can boast about our historical achievement of higher literacy rates close to 95 per cent now. Nevertheless, the higher literacy rates mean very little in a knowledge economy or even in a competitive working environment.

The ability to read and write, which is the criteria to determine literacy, does not mean that the person is equipped with the right kind of knowledge, skills and, attitudes to work competitively and perform better. Compared to an illiterate person, someone who has the ability to read and write is capable of acquiring and developing these qualities.

What kind of knowledge, skills and, attitudes that he projects at the end of the day depends on the environment that he chooses to get himself exposed to or what kind of stuff he reads and writes. Therefore, even “literacy” does not necessarily mean that you are on the right track; you can even be on the wrong track.

Cheap-labour era

Immediately after the opening of the Sri Lankan economy in 1977, the types of industries that emerged were those which required “cheap-labour”. It was because in an open market environment investments responded to the type of advantages the country had – the so-called “comparative advantage.”

Prior to the opening of the economy, Sri Lanka had the highest unemployment rate that the country ever had, which was well above 20 per cent. Youth unemployment was overwhelming running at over 50 per cent.

Some people who didn’t like the types of emerging industries wanted investors to come and produce motor cars and airplanes in Sri Lanka. But the types of investment that took place were producing apparels, leather goods, sports goods and shoes. Well, economic progress is a process of achievements and deliberate preparation for such achievements.

Although we made some achievements over the past 40 years, whether the progress we achieved was satisfactory or not is a different issue that has to be addressed separately.

End of a development era

Sri Lanka has now exhausted its “cheap-labour” stage of growth. A few research studies in this area, undertaken by one of my friends – Sunil Chandrasiri, a former Professor in Economics at the Colombo University, revealed that Sri Lankan industrialisation based on the availability of “cheap labour” was already over more than 20 years ago, that is in the 1990s.

If an investor is now seeking a location with cheap labour, they should look for some other countries in the region instead of Sri Lanka; in fact they do now.

The next stage of economic progress of Sri Lanka has to be based on higher levels of human resources with right kind of knowledge, skills and, attitudes – the basis for a “knowledge economy”. But for some reasons, we haven’t made adequate public or private investment in these areas of human resource development.

It means that we were not prepared for continuity in progress. Besides, even part of our skilled labour is seeking exit routes to migrate looking for jobs in other countries.

Cheap-labour stage is over, but high-skilled labour is not yet available. This vacuum implies that Sri Lanka is neither attracting investment that seeks cheap-labour nor prepared itself for investment based on skilled-labour; some people might call it a symptom of “middle-income trap.” For me it has been the outcome of our own choices as a nation.

File picture of tea workers. From the time of colonial Ceylon, this country has attracted foreign workers, mostly in unskilled work, like these tea workers. The writer argues that in a 'knowledge economy' there is a need to attract skilled workers and professionals to fill gaps here.

“Foreign talents”

Some countries have opened the door to welcome professionals from around the world not only for filling the human resource gaps but also for creating a competitive working environment. This is because such countries that accommodate professionals from around the world can get the world’s best knowledge and skills even without spending for that.

The world’s best knowledge and skills would challenge the existing fields of professions; they would make the domestic working environment more competitive and productive; finally such countries will continue to grow as “knowledge economies” without being subject to human resource constraints.

I can list out many countries in the world which have opened for attracting foreign professionals. Let me cite a country that is quite familiar to us – Singapore. Out of the 5.5 million population in Singapore, 43 per cent is foreign-born while another 23 per cent of Singapore’s resident population is foreign-born.

Singapore is a highly populated country which has not even physical space for accommodating more people; population density is 7796 people per square km, compared to 327 in Sri Lanka. Nevertheless, since the beginning Singapore has recognized the importance of attracting and accommodating what is termed as “foreign talents” – world’s best knowledge and skills.

In the early days most skilled professionals have come to Singapore from the west and Asia such as the US, UK, France, Australia, Japan and South Korea. During the past two decades, the source of professionals to Singapore has shifted to East Asian and South Asian countries, including China and India.

Unusual growth at maturity

It is quite unusual for a rich economy to continue with higher growth rates, because usually growth slows down at maturity. But even after becoming the richest country in Asia with over US$50,000 per capita income, Singapore still sustains a healthy growth rate; over the past 10 years Singapore has maintained on average over 5 per cent annual rate of economic growth.

I believe that one of the underlying factors of sustained economic performance in Singapore is its progress in the “knowledge economy” formed by the blend of local and foreign “talents.”

In order to complement the knowledge economy, Singapore also invested in making its tertiary education sector internationally competitive under the motto “Global Schoolhouse”. Singapore not only recruits foreign students for its universities, but also make arrangements for the best of them to remain working in Singapore.

The flip side

“The one who has more will continue to have even more, while the one who has little will lose even the little he has”. This profound truth is valid in the case of a “knowledge economy” too.

Countries that are open for accommodating global knowledge and skills have established their knowledge economies accumulating more knowledge and skills. Singapore, Australia, New Zealand, the US, Canada, and some countries in the EU and West Asia are examples.

Countries that are “allergic” to global knowledge and skills have laid down barriers for foreign professionals. Through “brain drain”, they continue to lose even the little knowledge and skills they have built up by spending. I do not need to provide a list of the countries in this category which are all around us in our own region, including Sri Lanka.

Out of the box

If Sri Lanka expects to make a breakthrough in accelerating its economic progress and establishing a knowledge economy, it has to open up for “foreign talents”. This might look bizarre to many of us who were traditionally brought up in a “box environment”. It requires even thinking out of the box.

However, I must stress the fact that repairing a small piece of a corroded engine does not make a difference; it might make things worse. Opening the economy to “foreign talents” should come as an integral part of an overall reform package.

(The writer is a professor of economics at the Colombo University. He can be reached at sirimal@econ.cmb.ac.lk)

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