The root cause of Sri Lanka’s economic woes lies in its inability to produce enough to pay for its imports. We pay the bill for our consumption with the remittances of people working, essentially as domestic labour, in the Middle East and elsewhere, as well as by borrowing.
The country’s economic structure has, over the past 40 years since the adoption of the ‘open economy’, come to be dominated by the services sector, with the agricultural and industrial sectors remaining stagnant or declining. Up to now, governments have tried to stimulate production by very necessary heavy infrastructure spending.
However, this by itself has proved insufficient. The way in which our economy is shaped makes it difficult to make money by producing things. There are multiple causes for this, but one aspect, innovation, warrants more focus.
Sri Lanka no longer has the questionable benefit of a low-paid workforce, so a massive increase in productivity is necessary in all parts of the economy.
For this, meaningfully higher mechanisation of agriculture and automation of industry must take place. Such technological modernisation requires high levels of technical skill and scientific know-how.
This needs to be supplemented by managerial and administrative skills geared towards innovation – the use of new ideas, products or methods where they have not been used before.
Unfortunately, in Sri Lanka we use a rather broader meaning for ‘innovation’. Often we mean importing and selling new equipment, most frequently consumer white or brown goods; or using methods or ideas foreign to our culture (in the broadest sense) and practices, without adaptation to suit the local environment.
In its Global Competitiveness Index for 2018, the World Economic Forum (WEF) ranks Sri Lanka 80th out of 140. One should be wary of such indices, which come loaded with preconceptions and inaccuracies. However, the Global Competitiveness Index does give some indications of the factors that influence our performance as a producer-nation.
Significantly, Sri Lanka’s ranking for innovation capability,one of what the WEF terms ‘pillars’ of competitiveness, is the same as its overall ranking. However, one of the factors determining its innovation capability index, research and development (R & D) expenditure, ranks only 110th in the world.
R & D refers to systematic creative work undertaken to increase the stock of knowledge, and the use of this knowledge to devise new machinery, processes or techniques.
R & D
Sri Lanka spends only 0.16% of its gross domestic product (GDP) on R & D, lagging behind India (0.8%) and Pakistan (0.3%). Importantly, the number of researchers 99 per one million inhabitants, compared with 166 per million in Pakistan and 156 in India. This suggests that the level of research is far more capital-intensive in these two South Asian nations.
It also suggests that Sri Lanka should be employing more researchers. Where are they to come from? Research requires high levels of scientific knowledge and analytical skills.
Significantly, one of the bright spots on the gloomy picture of Sri Lanka’s balance of payments is the performance of information and communication technology (ICT) and business process outsourcing (BPO).
The IT/BPO sector is the fourth largest export revenue earner – annual exports growing from USD 311 million in 2008 to USD 968 million in 2017 – accounting for 6.44 per cent of merchandise exports last year, growing from just 1.65 per cent ten years ago.
The sector comprises more than 300 companies, with 85,000 technology-savvy employees. The Government aims to increase ICT/BPO exports to USD 5 billion by 2022, providing 200,000 direct jobs through an additional 1,000 companies.
Again, where are the employees to come from? One of the worst factors under the GEF’s ‘skills’ pillar turns out to be digital skills, where we rank 85th in the World. Digital skills, essential for ICT/BPO, mean mathematics. In 2015, 45 per cent of children taking the General Certificate of Education (Ordinary Level) examination failed because of a lack of mathematics learning.
The examples of R & D and the ICT/BPO sector make it clear that one of the problems we face in creating an innovation-friendly economy, and which is likely to become more important in the future, is the manner in which people entering the labour market are educated.
Skills
The WEF ranks Sri Lanka as 70th in the World in terms of skills. Interestingly, it ranks skill sets of graduates at 44th. If this rank is indeed authentic, then it suggests that university education in Sri Lanka is not what its detractors make it out to be. If we churn out a sufficient number of graduates, we should be on our way. Unfortunately, we do not have enough graduates, or university students for that matter.
The World Bank’s Sri Lanka Development Update for 2018 recommends that the country
“Improve quality and access to education to reduce the skills mismatch: improve Technical and Vocational Education and Training (TVET) and make sure that graduate training prepares students better for private sector jobs.”
TVET should provide an additional pool of skills. According to the GEF, the quality of vocational education in this country is not too bad, ranking 60th in the World.
However, a study published by the Institute of Policy Studies (IPS) last year, found TVET programmes fragmented among more than 30 statutory boards and 15 ministries and bedevilled by a shortage of qualified teachers.
The IPS study, which used 2016 school census data, found that, while Sri Lanka is a regional leader in primary and secondary education, it falls back in terms of tertiary education. Of the 450,000 children who do the GCE (O/L), only 20 per cent make it to a higher educational institution. Just 33 per cent attend TVET programmes.
Nearly half the GEC (O/L) cohort drop out. According to the GEF, the average number of years schooling is 9.8, so it appears that most students drop out and enter the labour market without important educational or vocational skills.
Another issue highlighted in the IPS study was the low number of students enrolled in science-related programmes. The former State Minister of Finance, Eran Wickramaratne, told OSL - The Investment Magazine that most students come from the humanities rather than from the pure sciences. He found that only two schools out of 29 in one electorate taught science subjects – all the others taught arts and commerce.
Teachers
Even worse is the lack of qualified teachers to educate the children. The WEF ranks Sri Lanka 87th in teacher-to-student ration in primary education. There is anyway a shortage of teachers, for which the fault lies, partially, with the lack of tertiary-level teacher training. Of the 17 state universities, only two have Faculties of Education and, only three have their own Departments of Education. The IPS found that the number of teachers in privileged schools exceeded the number recommended, while underprivileged and low-achieving schools did not have enough teachers. This inequitable teacher distribution was exacerbated by better teachers being allocated to privileged schools.
The outcome of this situation is obvious: a stratum of well-educated professionals and technicians, and a much less educated majority of unskilled workers and unemployed. Hardly what is required for a 21st century technological society, although well suited for providing domestic servants for work overseas.
Another, very important issue for innovation highlighted by the WEF is the lack of critical thinking in teaching, in which it ranks Sri Lanka 73rd. Our education system is based, essentially, on rote learning (‘learning by heart’), whereas innovation requires independent and analytical thinking. The importance of this cannot be gainsaid. China, for example, is getting its students to read science fiction, in an attempt to stimulate their imaginations.
The lack of critical thinking among students is contributed to in no small way by the proliferation of private tutories. What were initially intended as cram shops for less advanced students have now become a standard part of the educational menu, cram shops for the entire student population, from Montessori up to GCE (Advanced Level). This has to stop.
Private tuition began to proliferate when teachers began to be paid relatively less than other professionals. Up to the 1970s, teachers were high-status individuals, many able to maintain a car (even if a very old one). Today they are paid less than a driver. This lack of remuneration is also partly responsible for the shortage of capable teachers.
The first step in making children into educated and productive citizens of a technological ‘knowledge-based’ society is to pay teachers adequately and to train them sufficiently. This implies far greater spending on education than occurs now. Other reforms and more hardware (paperless smart classrooms and so on) can follow, but that is the essential, indispensable foundation.
- The writer is editor of OSL -
The Investment Magazine