Sri Lanka is badly at risk of being out of step with a briskly economically-integrating South Asia. What is required is not simply an open economy in the ‘island nation’ but one that is steadily integrating itself with not only the economies of this region but also with those outside it. Just being ‘open’ would not suffice. What is of crucial importance is integration and this process is at a farther qualitative remove from mere ‘openness’.
Why is all this important now, some 30 years or more since Sri Lanka opted for the ‘open’ economy? It is proving important because Sri Lanka, although seemingly ‘open’, is yet to decide on whether it should be on a steady course towards economic integration. Policy and decision-makers of this country are bound to be aghast on hearing these words but the fact is that Sri Lanka has been chronically dithering on the issue of integration. If this were not so, we would not be having so much acrimonious haggling on Sri Lanka’s free trade agreement with Singapore and the painful teething problems this country has been having with the corresponding agreement with India. ‘One step forward and two steps backwards’ is the progress so far on these issues.
The problem with Sri Lanka’s prominent politicians and decision-makers is that they are suffering from an ‘island mentality’. They are simply not prepared to open up to the world and are inept at facing up to the issues such a process entails. If not why are they shying away from free trade which usually brings benefits to a country?
To be sure, free trade does not carry with it a fool-proof guarantee of success. There are the down-sides to these agreements which have to be guarded against if free trade agreements are to be mutually-beneficial. But in the present international economy free trade is an essential condition for economic growth. In fact, trade among countries is integral to national development. Closed economies are a sure recipe for economic stagnation and retrogression.
So, the ‘baby should not be thrown out with the bathwater’. Be it Singapore, India or any other country, Sri Lanka ought not to dither in this process of bringing into being free trade agreements that would prove mutually-beneficial. It is up to us to ensure that these agreements work to our benefit. If it turns out to be otherwise we have only our lack of deliberating capability to blame. That is, we lack effective negotiating skills. Sri Lanka cannot turn against the world for these glaring limitations it suffers from.
However, to put it bluntly, those who matter in these connections in Sri Lanka, have a deep-seated fear of opening-up to the world and facing it confidently as well. This compounds the problem Sri Lanka has of integrating with the world’s economies. It is, at bottom, a mindset problem that needs to be fixed. Among other things, the relevant personnel have a fear of ‘the Other’ that needs to be remedied. For example, sections in Sri Lanka have an irrational fear of being swamped by foreign workers, blue collar and otherwise, if the mentioned free trade agreements are implemented. But it ought to be plain to see that some hard work at fine-tuning these agreements would ensure that this country would not be overrun by foreign workers.
To ensure that the process of economic integration is successful among countries, the latter ought to have economic complementarities that could be fulfilled by each other. For instance, country A which has a strong industrial base but wanting in agricultural goods, ought to be in a position to trade its industrial products with country B which may be strong in agricultural produce but weak in manufactured goods. A fruitful economic exchange could take place here with A trading its industrial goods for B’s agricultural produce and the latter importing its industrial needs from A in return.
The above account simplifies the basics of economic integration but the successes achieved by the foremost regional economic blocs, such as, ASEAN, NAFTA and EU, illustrate the long term viability of carefully and systematically worked out integration processes. Although not much is known about it, India and China have been working with each other very closely towards integrating India’s North-east with China’s South-west regions, based on economic complementarities. For instance, the possibility of reviving old trade routes between the countries relating to the above regions is being foresightedly explored. Through such processes both gain mutually.
Thus, it ought to be clear that regional integration is no easy work but not beyond those countries that work with each other unitedly and purposefully. Above all, they entertain no fears of each other and are not hemmed in by narrow nationalistic sentiments. These countries begin to conceive of each other as partners in progress and not as sworn enemies.
A prime reason for Sri Lanka not making much headway in regional economic integration is its inability to overcome parochial nationalistic attitudes. There is a crippling inability on the part of Sri Lanka to overcome its irrational fears of ‘the Other’; more precisely big regional powers. This applies in particular to Sri Lanka’s relations with India.
Currently, some countries which were dismissed as economic underdogs not so long ago, are forging ahead as number one economic powers. Some of these are Vietnam, Laos, Cambodia and Myanmar. The secret of their success is that they are not allowing their ideologies of the past to stymie their progress.
Sri Lanka ought to take them as models. It needs to jettison all encumbering nationalistic sentiments and approach the countries of Asia and beyond with an open mind to ensure vibrant economic integration processes. This mission requires the boldest of visions accompanied by hard work. We could begin these initiatives by launching confidence building measures between ourselves and the major economic powers of the region in the economic sphere. Economic cooperation ought to be the guiding ideal.