Razeen Sally, a professor of international political economy at the London School of Economics has a piece on Sri Lanka in today’s Wall Street Journal on Sri Lanka. Sally claims that without market-oriented reforms and liberalization, Sri Lanka can’t achieve it’s potential with or without the war.
Read the whole thing . A choice excerpt:
A widely shared sentiment in Sri Lanka is that military victory will translate into peace and fast development. This is wishful thinking. Without a policy overhaul, Sri Lanka faces either slow material decline or something worse, especially with a bleak global economic outlook. The short-term imperative is to allow the exchange rate to devalue to a market-determined level, cut public subsidies and make fiscal and monetary policy more transparent.
Beyond that, trade tariff hikes should be reversed, with accompanying simplification of trade and foreign-investment measures. There needs to be deep public-sector reform; a move to market pricing for oil and electricity; and, not least, big cuts in the defense budget. Drastic domestic deregulation is also imperative to cut the high cost of doing business. In the longer-term, Sri Lanka needs to revamp its rotten political culture and public institutions. [WSJ]