India's Jawaharlal Nehru University Professor Amit Bhaduri, delivering Dr. N.M. Perera Birth Centenary Oration on `the Dilemma of Development: The State or the Market?' on June 23 at the BMICH, Colombo said that Sri Lanka could take advantage of a national monopoly in areas such as tourism, fisheries, tropical fruits and vegetable based food processing.
The main idea was to keep as much of the value added as possible in the country by reducing the import content of the final product and by getting a better deal in the international distribution network for these products, he said.
Prof. Bhaduri said if Sri Lanka had some advantage of national monopoly would help bargaining. He pointed out the need for trying some high-tech areas. This would help the country not to rely on producing only traditional products. He said that Sri Lanka had an edge over most developing countries due to a wide spread level of minimum education. The Government had to undertake the upgrading of infrastructure with little dependence on foreign finance or investment.
He emphasised the need for increased and continuous accountability of the government on how the budgetary provisions were spent, and this could be achieved by providing people free access to information.
Bhaduri said that if the Government succeeded in improving infrastructure, it would have the advantage of creating employment and expanding the size of the internal market in the short run to help achieving the synergy between the market economy and the state.
The creation of an updated infrastructure would genuinely increase the competitive strength of the economy and improve the climate for domestic and foreign investment. "This policy has a fair chance of success only with tighter control of the capital account of the payments than Sri Lanka has at the moment, without going for a liberal regime of trade in goods and services. Developing the internal market requires both expansionary as well as regulatory policies by a more transparent and accountable government", he said.
Prof. Bhaduri said that politicians and their advisors should face the problems of market mechanism honestly, instead of taking a convenient ideological short-cut, almost invariably encouraged by IMF and the World Bank, he said.