Knowledge driven economy vital for Sri Lanka

Research and Development Minister Patali Champika Ranawaka :

By Dhaneshi Yatawara

Sri Lanka as a country is struggling to achieve a stably developed economy that would provide better living standards to people as well as financial security. In the present context this is not just a job for the economists. Present trends and demands in the world push for an integrated approach from all sectors. In this the research and development field plays a pivotal role. Where are we standing in this road to success? It was the discussion Sunday Observer had with Research and Development Minister Patali Champika Ranawaka - on the new concepts and theories the ministry was trying to bring forward as policies and programs.

Minister Ranawaka was highlighting on implementing a knowledge based economy. The question is what the new concept is in this approach. And how is it going to bring a solution?

“As far as the ministry and the scientific community is concerned there is an ongoing debate on this matter. The scientific community simply argues that the government fund allocations are not sufficient for research and innovations,” Minister Ranawaka said. Yet as he continued, there need to be at least one percent contribution of the GDP to the research and development purposes. “Unfortunately it is 0.12 percent at the moment. This is meant mainly for the recurrent expenditures of the research organisations,” he said.

In Sri Lanka there are over 15 research organisations under various government institutes, said the Minister. And under the Research and Development Ministry there are around five institutes for research. Out of the total, 55 percent of the expenditure are from the Government side while 40 percent are from private industries and another five percent from foreign organisations that are functioning here in the country.

Results

But in actual context this expenditure on research and development includes the recurrent expenditure and other expenditures as well. “Direct investment on research and development is around 300 million rupees per annum. This is the expenditure for research and development for 4,000 scientists.

But on the other hand the economists argue that what were the social economic benefits from these so called inventions - What are the tangible results?

“On one side that is also true. Because our research basically was based on pure research and also the themes for researches are picked by the researchers not from the industry or from the general population. So there is no need for analysis. They simply pick a theme and continue. So the commercialisation process and innovation process has not been properly tuned up. Most of the researches are in the libraries. So we wanted to break this tradition somehow and have a practical research culture,” Minister Ranawaka said.

The SLINTEC - Sri Lanka's nanotechnology research centre - is a success story in this attempt to change. It completes the loop.

“It always links with the industry. They take problems, lapse and technological impediments from the industry and find solutions. That way the loop gets completed. The innovations get commercialised straight away. Actually we need that kind of attitude,” he said.

Ten matrix

We have also to prioritise our development needs. And various institutes have to implement research and they can raise research themes as well. “For example we found that at present the main national development focus should be water. Be it conservation of water, supplying water to the people etc and in that sense the Sri Lanka Water Board should do their own research. And our scientists should help them. But the main arm or the implementing authority should be the water board and the relevant line ministry along with some private parties. That is why we are trying to implement this kind of investment plan,” he said. Sri Lanka needs a proper plan - all the stakeholders should be convened.

“And actually we have got serious inputs from all these stakeholders from various sectors. Thus we have identified 10 sectors and 10 interventions - that we call it 10 X 10 matrix. The government has already planned a five year investment plan. All these investments are for applied research. But the implementing bodies will differ and it will be not only the Ministry of Research and Development,” he said.

According to the Minister the focus is on macro level economic plans as well. “We as a country liberalised our economy in the late 1970s. When we liberalised our economy we had comparative and competitive advantages. We were the first to liberalise the economy in the South Asian region. Almost all the investments were coming to our country. By then we had a serious youth bulk and cheap labour. As far as the power sector is concerned we had cheap electricity power supply those days. Environmental laws were loose and Sri Lanka did not have a Central Environment Authority. Investors did not obtain certifications against environment concerns. On the other hand the political support from the J.R. Jayewardene regime was more lenient towards the western world. North American markets were open. But now the factors have changed. Our labour is not cheap. Environmental laws are strict,” said the Minister comparing the past with present trends.

In fact, surveys have found out that from using this online tourist visa facility many South Indians, Bengalis and Maldivians are coming to Sri Lanka for work.

Over 200,000 workers are in the country, he said. “And 23 percent of our labour market is now working outside the country. One third of this migrated portion is skilled professional labour.

Thus currently we are facing a serious labour scarcity - skilled and nonskilled. Recently the Investment Promotion Ministry declared that over 16,000 vacancies are available at Biyagama and Katunayake export market zones. No one is willing to go there and work,” he said.

Electricity is not cheap. The tariff is very high in the region. And in addition there is no preferential treatment from the western markets. Instead they are trying to contain us. Overall there is a diminishing advantage for our economy. That is why we need to step in to the knowledge based economy, he said.

Three pillars

“The innovation plan is based on three pillars - economic growth, environmental sustainability, social justice. All these factors necessary to successfully implement the innovation driven economic plan,” he said.

According to Michael Portale, one of the great Economists of the world, there are three identified strategies for competitive market. One is factor driven economy. Factors are production factors such as cheap labour, cheap resources - those that we had previously. That strategy we followed and succeeded to an extend and in few areas like the apparel industry but not as a whole economy. That factor driven era has gone now.

“According to Portale the second is the efficiency driven economy. In this countries need to invest heavily and strongly focus on improving the efficiency of the work force and using resources etc. Japan and Germany are two good examples as countries which succeeded in this efficiency driven economy. In Sri Lanka we see a limited success in the apparel sector but not in other sectors,” he said.

The third strategy according to Protale is the invention driven economy or the innovation economy or if we broadly say it the knowledge based economy. That is what we have to start, said the Minister. “Today Sri Lanka has a very good human resource, well educated. Infrastructure is improved and at a good standard. Electrification level is nearly one hundred percent. Telephone, telecommunication availability is over 100 percent. So we can simply build upon these, the new revolutionary knowledge based economy in Sri Lanka. We can achieve comparative and competitive advantages in the world market. So our aim is that,” he said.

“Based on general indices our economy is predicted to be at a better position - our unemployment has reduced, poverty levels reduced, our infrastructure is geared to some level to cater to industry demands” said the Minister.

Sustainability

And we are in the middle income trap since 1998. “It has been reported that out of 103 countries only 11 tunneled in through the middle income trap and move forward. Out of this 11, six countries are not abundant with natural resources such as oil or minerals.

These countries simply used this innovation track to succeed in economic development tunnelling through the middle income trap. That is why we are suggesting the same path for Sri Lanka. We are trying to expand our service sector but what we really need to do is to focus on developing the Small and Medium scale industries, export oriented industries,” he said.

The other factor is development with environment sustainability. This can be achieved through innovation driven economy. We should not achieve economic prosperity at any cost. Because if we damage the environment irreversible processes may happen and that may damage the entire future of our next generation. Good examples are there in China. Even in our country we are experiencing water stress - one part of the country is faced with a drought and the other with floods. What is the meaning of achieving economic development with irreversible damages to our environment and people are suffering from those. Protecting our water resources and arable land is more important at present.

“Thus the innovation or knowledge driven economy is what we see as a solution to Sri Lanka,” Minister Ranawaka said.

There is another problem in achieving this. Its social inequality.“We eradicated poverty and that is a major success. But social inequality which is still prevailing to an extend put serious tension on economic development. It can be between individuals or regions.

And there is poverty in the energy sector - 70 percent of our population is using less than 60Kw per month. Then decision making poverty is there. Which means there is a lack of participation of professionals at the decision making level. This is important in deciding our future trajectory,” he said.