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Challenges of a Global Economy

Saman Kelegama

Edited by A.D.V. de S. Indraratna
Sri Lanka Economic Association, 2004, pp. 263, price not stated.


The book is the outcome of the proceedings of the Annual Sessions of the SLEA in mid-2004 and includes 10 Chapters, which are divided into six Parts. Each Part links Human Development to a specific area of economic progress, viz., poverty, growth, services (financial), education and health, technology and productivity, and competitiveness. In the first chapter on Human Development and Poverty the editor presents a critique of the Human Development Index (HDI) (used by UN Human Development Reports), using Sri Lankan data on HDI and poverty to show that high HDI does not necessarily mean that poverty has reduced. He goes on to show that combating poverty needs specific policies such as rural development centred around agriculture, promotion of small and medium enterprises (SMEs), and that this is the most effective way to enhance human development, which in turn, will lead to greater employability and productivity. Rehman Sobhan in his essay shows that addressing poverty needs a totally different new approach from the conventional wisdom. He bases his argument on the failures of the Bretton Woods Institutions led structural adjustment packages (and later Poverty Reduction Strategy Papers [PRSPs]) to effectively alleviate poverty. He argues that structural injustice in distributing productive assets, marketing, human development programmes, and governance remains the major source of poverty and exclusion. It is not by programmes that target the poor that poverty could be eradicated, says the author, but by democratizing development by directly integrating the poor to the growth process. After providing a comprehensive critique of PRSPs, Sobhan presents a new programme to eradicate poverty and calls for a new-generation of pro-poor structural reforms. Nimal Sanderatne examines the Growth-Human Development debate in chapter three and argues that both are needed for enhancement of each other. High growth alone cannot enhance Human Development as shown in some Middle East Countries and during the early years of economic liberalization in Sri Lanka. Growth is only a means to achieving an end, i.e., human development. The author argues that in Sri Lanka, it was not high achievements in human development but wrong policies and external shocks that contributed to low growth. In any case, the author argues that growth has to be sustainable if it is to make a contribution to enhance human development and the quality of growth matters, as the 1996 UN Human Development Report has cogently articulated. Sri Lanka’s recent pattern of growth with increasing ...

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