Incoming president must surpass industrial revolutions to secure prosperity: Former CB deputy governor

By Nuzla Rizkiya  

To fulfil Sri Lanka’s long-standing ambition of becoming a wealthy nation within a single generation (defined as 25-30 years), the incoming president should propel the nation forward by surpassing several industrial revolutions to achieve prosperity, according to a former Central Bank (CB) deputy governor.  

Speaking at a recent webinar, which discussed the public priorities for the next president, former Deputy Governor W.A. Wijewardena said that the recent economic recession in Sri Lanka, the worst since its independence, is projected to leave the nation’s economic growth hovering around a low 3 percent per annum, while it may take at least three years to return to the gross domestic product (GDP) level of 2018 and another five years to reach a US $ 100 billion economy.  

“Sri Lanka’s economic growth rate of around 3 percent per annum after 2030 means it will take another 50 years to reach a GDP level of US $ 425 billion and it will be reached only by the year 2080. If Sri Lanka grows at around 5 percent per annum, as mandated by the Economic Transformation Act, it will still take another 30 years to reach that level. What this means is that if Sri Lanka wants to become a rich country by 2048, it should grow at least at around 8.3 percent per annum, at a compound rate,” Wijewardena said.  

“So, the next president must ensure that Sri Lanka grows at least around 8 percent or more between 2030 and 2048, if the country is to achieve this goal,” he added.  

He attributed the slow growth rate to the country’s continued reliance on manufacturing products based on simple technologies, citing a recent Harvard University study that showed that Sri Lanka’s exports in 2021 were still largely dominated by low-tech goods.  

He stressed that the country is still entrenched in the Second Industrial Revolution, with its manufacturing relying primarily on electricity-generated power, while the rest of the world has already experienced six waves of industrial revolutions, the current one being the widespread adoption of artificial intelligence technology.  

Citing the theories of Australian economist Joseph Schumpeter, Wijewardena emphasised that Sri Lanka urgently needs to focus on innovation, diffusion and imitation in product inventions as key steps to compete with the global markets and achieve the status of a wealthy nation.  

“Sri Lanka cannot attain high economic growth by focusing only on the domestic economy as it has done in the past few decades. It must follow a mixed policy of developing the domestic economy while connecting to the rest of the world through international trade. This means producing what the other people want to buy from Sri Lanka, not just what Sri Lanka wants to sell. Therefore, the next president will have to adopt a strategy to bypass the Third Industrial Revolution and move directly to the Fourth Industrial Revolution (digital revolution) to produce products that the global community needs today,” he asserted.