How Sri Lanka Could Move Into A Complex Production System

By W.A. Wijewardena -September 25, 2012

Dr. W.A. Wijewardena

Sri Lanka’s problem: No entrepreneurs but traders

A reader of the previous week’s My View titled “SL’s future: Convert the simple economy into a high-tech based complex economy” has taken up an important issue with this writer via email. He has said that it is unlikely that Sri Lanka could have a complex production structure in the country because Sri Lanka lacks the type of innovative and visionary entrepreneurs to take the country toward that goal. Instead, according to him, Sri Lanka has traders who are good at buying goods from another country and selling the same in the local market. In the absence of the type of entrepreneurs of the required calibre, Sri Lanka may have to import entrepreneurs from abroad and such importation, he says, will not do any good to the country in the long run.

This reader who has taken such a trouble to reflect on the issues presented in the My View under reference should be commended for the debate he has generated and the learning experience which everyone will get out of his intervention.

But, he is both right and wrong.

Sri Lanka’s past policy has killed true private entrepreneurship

He is right because after independence, Sri Lanka has failed to create a truly entrepreneurial class in the country as its policies were anti-private sector and anti-profit making for most of the time. Whenever a local entrepreneur of worth emerged from the dusts at the ground level, Sri Lanka had killed him either by expropriating his business under the pretext of serving the common man or bringing him within a strict governmental regulatory regime to prevent him from, as the country’s leaders had argued, harming the people. Hence, in the whole of the post-independence period, leading industries were started and managed by the government by employing bureaucrats who had no knowledge of running businesses in a competitive environment or handing such industries to political supporters whose only interest in the industry was to serve their political masters. Even the trader type entrepreneurs who got nourished in the system could not work on their own and had to seek comfort of the country’s rulers to win numerous business favours from them. Thus, creativity and innovativeness, the two pillars on which a true entrepreneur would stand high in society, were alien to Sri Lanka’s entrepreneurial class. They were, for all practical purposes, shrewd businessmen who took advantage of the prevailing regulatory and protective regime of the country. Hence, in an environment where there is free competition in the market, they would find it difficult to survive unless the government comes to their rescue.

So far the story is not that encouraging.

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