Mixed economy way forward for economic development
by Gamini Warushamana
Prominent economist and Director General of the Institute of Policy
Studies Dr. Saman Kelegama said that the mixed economy is the way forward
for economic development since extreme neo-liberal policies have failed in
many countries.
"Today most countries follow mixed economic policies where the private
sector as well as the government sector have major roles to play in the
economy. After extreme neo liberal policies caused an economic crisis in
some countries the important role that the government has to play in
economic development was realised.
This is the basis of the present economic policies followed by many
countries including India", Dr. Kelegama said.
Today neo liberal economic policies are criticised even in the USA. For
example, a former chief economist of the World Bank and former economic
consultant of the White House Josephe E. Stiglitz now says these policies
could not achieve the anticipated economic growth. The mixed economic policy
which aims to increase supply is the best for a small country such as Sri
Lanka, he said.
In the recent past Sri Lankan and Indian experience proved that the
corporate sector is performing well under the mixed economic policies. Share
markets in India and Sri Lanka grew in the last two years and are still
growing.
Commenting on privatisation Dr. Kelegama said that the government's
intervention in water supply, electricity and railways is essential. Railway
privatisation failed even in Britain.
Dr. Kelegama said that the East Asian financial and economic crisis
proved that total control of the economy should not be given to the private
sector. In the East Asian crisis the IMF advised Indonesia to open its
capital account as a measure to solve her balance of payment crisis. But
Prime Minister Mahathir Mohammed rejected it.
Leftist parties in coalition governments can check governments from
moving to these extreme policy decisions and maintain the balance in the
economy, because they are more sensitive to the grievances of the people.
But left parties should also realise that closed inward oriented policies
are also not the solution. In India the "Common Minimum Program", the
economic policy followed by the coalition government is balanced by leftist
parties. They checked some liberal reforms proposed by Prime Minister
Manmohan Singh, Dr. Kelegama said.
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