50 Most Powerful Women – Research

By Echelon.

Published on December 16, 2014 with No Comments

Research-07

#19 SUBHASHINI  ABEYSINGHE

SENIOR ECONOMIC ANALYST, VERITÉ RESEARCH

Peaceful does not always mean prosperous

Last year Subhashini Abeysinghe emerged as an astute and forthright contributor to the economic debate in Sri Lanka. Here she outlines some post war economic choices.

 

Subhashini_Verite research

 

Many people think that after a 30 year long conflict, Sri Lanka is digging in for peace and an extended period of prosperity. The problem with that equation is that peace isn’t an automatic guarantee of prosperity according to an economic analyst. Subhashini Abeysinghe explains that peace is essential but not sufficient, and there is no guarantee of prosperity, unless an evidence based, rigourous policy making process is adopted, there is policy consistency and Sri Lanka economically integrates with the rest of the world. Subhashini Abeysinghe is an economic analyst at independent research firm Verite. She outlined some of the challenges Sri Lanka must overcome to attain prosperity over a long term …

 

Politicisation of economic policy making

A persistent conflict can no longer be offered up as the scapegoat for economic under achieving. “So the government is more open to criticism,” points out Subhashini Abeysinghe. However peace does not seem to have altered the political culture and the flaws are now vividly visible.

“Government policy has a political and economic dimension,” Subhashini agrees. However in Sri Lanka the politics dominate the economic choices. “Now, the current government cannot justify when they fail to deliver in a peaceful environment, because they don’t have the conflict as scapegoat.” In an overly politicized system evidence based policy making is abandoned in favour of ideology, political friends are rewarded with skewed policies and markets are generally undermined. “The political culture has not changed,” observes Abeysinghe. “So peace has failed to bring sound economic policies.”

 

Policy Consistency

There is no ideally conducive business environment or perfect policy environment, and every investor is aware of the risks involved in whichever country they choose to invest. They will take these risks in to consideration in their business plan.

“Every economy and every policy will have its weaknesses, but what most developing economies don’t realise is that the risks and weaknesses have to be consistent,” she says. Consistency and predictability are the number one priority to an investor.

“If a certain policy has a risk, the investor will factor it into their business plan and make the investment, but if this risk changes every month because of changing policies, then no business would want to invest.” Even with bad policies investors can be attracted so long as the bad policies are consistent, she argues.

 

Integration with the world

Sri Lanka is a small economy; and does not have a market big enough that can sustain growth of the economy like India, China or Brazil can. “Therefore, what we need is commercial diplomacy and the know-how to integrate with the rest of the world,” Subhashini claims. She commends the country for being the first in South Asia to embark on liberalisation, to sign an FTA and to join the World Trade Organisation, but worries about the recent lack of enthusiasm to integrate with the rest of the world.

She admits that the country was delayed by the 30-year conflict when the rest of the world wasn’t so keen to integrate with it. But she says the country should now capitalise on the opportunity to integrate. She feels that it will be harder to sustain high growth without integration. However, she says FTAs in Asia are more diplomatic exercises than economic ones. For a big country like China, the Sri Lankan economy is small and unattractive. It has more of a political and strategic interest. She advises that the island’s economic attraction is instead its strategic location, and reforming the economy will further aid in integrating with countries like the US and the European region.

Sri Lanka’s exports however have been declining.“We do not have exportable products, because we have lost some of our global competitiveness,” she explains, adding that although Sri Lanka is moving into an upper middle-income economy with a educated workforce, it is still focusing on labour-intensive, lowincome industries such as plantations and apparel.“If we are to gain a comparative advantage again, we need to transition to have technologyintensive exports. To do this, foreign investments are critical.”

Subhashini started her career as an economist at the Ceylon Chamber of Commerce. She is now a significant contributor to the economic debate through Verite Research, a private think tank. “Now I can be blunt and give my frank opinion, and it’s nice to see that some people actually value it,” she says.

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