SLEA’s Sri Lanka Economic Journal, Vol. 13, No. 2

The Sri Lanka Economic Association (SLEA) released the latest issue of its flagship publication Sri Lanka Economic Journal (SLEJ) at a public forum held at the Economics Department of the University of Colombo on June 21. The SLEJ has evolved over the years as a leading scholarly journal dedicated to economics and allied fields. 

The current issue of the Journal, which is edited by Sarath Vidanagama, contains six articles covering a wide spectrum of issues cutting across different disciplines – economic transformation and growth, social welfare, urbanization, capital market and demography.

Role of informal sector
The article by Rev. W. Wimalaratana, S.M.P. Senanayake and S.P. Premaratne takes us to a territory which is not much explored – the role of the informal sector in the Sri Lankan economy. The analysis is based on secondary data. The authors highlight the fact that underworld activities are thriving in this sector. They point out that factors such as tax burden, bureaucratic regulations and bribes have restrained the growth of the formal sector, and therefore, many entrepreneurs prefer to remain in the informal sector. 

It not only adversely affects gross domestic product (GDP) growth, but also hinders government revenue mobilization. Vulnerable low-income groups are employed in this sector without having adequate economic safeguards. The authors also point to the adverse implications of the exclusion of the informal sector in macroeconomic policies and data. It is high time that these be taken into account with high priority by the policymakers.

Managing urbanizationin South Asia 
The paper by Locana Gunaratna covers a timely issue of managing urbanization in South Asia. In the background of the government’s major development project - Megapolis - which will have far-reaching implications of urbanization across the country, this article provides many insights to decision-makers. As noted by the author, the ongoing urbanization in the world is unprecedented. In 2011 Sri Lanka had the lowest urbanization rate of 1.36 percent in the South Asian Region whereas Bangladesh had the highest rate of 2.96 percent. 

The author draws on the origins of urbanization in 19th century in Western countries during industrialization. In the Third World countries urbanization took place during the colonial period. The author notes that it benefitted a few leaving the majority impoverished. The author emphasizes that the Western utopian models evolved in the 19th and 20th centuries are irrelevant in dealing with the present-day urbanization issues in South Asia. Spatial economics takes a prominent place in urban planning today. This author emphasizes the need to promote direct investment in rural development including the use of science and technology in agriculture

What makes growth sustained?
Priyanga Dunusinghe deals with a rather difficult question that most emerging countries including Sri Lanka are grappling with for many decades. That is – what makes growth sustained? He mentions that Sri Lanka has failed to sustain high economic growth since the cessation of the war. His central argument is that the lack of and or deterioration of pro-growth institutions is a major factor that constrained growth in Sri Lanka. Statistically, he has used several structural break tests in the study. 
These tests show that the mean GDP growth has not shifted to a higher growth path in the post-war period. Drawing from the literature, the author points out that there is strong evidence that institutions matter in the growth process. Sri Lanka has low rankings in institutional indicators such as the rule of law, market organisation, price stability and economic performance. The author emphasizes the need to give high priority to improve the quality of institutions in policymaking. 

Predictability of stock returns 
The next article by D.A.I. Dayaratne and D.G. Dharmarathne deals with another important economic issue – predictability of stock returns during pre- and post-war periods in Sri Lanka. The authors have used different econometric models to check whether past data of the Colombo Stock Exchange (CSE) could be used to predict the stock returns. They find that it is feasible. Investors can use past stock price data to predict future trends. 

The authors conclude that all statistical models suggest the CSE is a weak form efficient market. Weak form efficiency, also known as the random walk theory, states that future securities’ prices are random and not influenced by past events. Investors who have accessibility to information can make abnormal returns, conclude the authors.

Empowerment of physically disabled
The article by Amila Badungodage and K. Amirtalingam is on socioeconomic empowerment of the physically disabled through barrier-free design in built-environment. The study attempts to fill a major research gap on this hardly-investigated issue. The analysis is based on a qualitative survey supported by questionnaires and interviews. Currently, barrier-free access is not properly adopted in the country. The authors, therefore, emphasize the need to prioritize barrier-free accessibility in development agendas and planning. 

Emerging pattern of living alone
The final article in the journal is by Indralal de Silva on the emerging pattern of living alone and their socioeconomic vulnerability. The author notes that there is world-wide trend towards living alone and Sri Lanka is no exception. In Sri Lanka, 6 percent of households belong to this category. The study is based on the Household Income and Expenditure Survey (HIES) of the Census and Statistics Department. According to the author, the main contributory factors attributable to living alone are migration, longer life expectancy and divorce or separation. The living alone trend poses major challenges to socioeconomic security of the concerned individuals. 

The majority of living alone persons, particularly the elderly and divorced individuals, do not have a permanent income. The existing social security systems are limited and inadequate, according to the author. The living alone persons face risks of social isolation and loneliness. The author stresses the urgent need to address these problems.  The untiring efforts taken by the Council of the SLEA led by President Prof. A.D.V. de S. Indraratna to continue this journal when there is severe dearth of scholarly research at present on socioeconomic issues are commendable. As usual, the Editor Sarath Vidadanagama has contributed immensely to maintain the high standards of the journal. I wish to extend my congratulations to the authors who have provided valuable insights into emerging socioeconomic problems based on their in-depth research. 

The journal is a valuable source of reference to scholars, researchers, students and policymakers.