Thursday, 12 September 2013 00:00
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THE connection between entrepreneurship and development can hardly be overstated. When this link is severed or fails to be vibrant, the result is that economic growth stagnates, even when infrastructure improvement should spur economic revivals. This can be clearly seen in Sri Lanka.
Entrepreneurs act as catalytic agents in the process of industrialisation and economic growth. Most economists agree that the rate of economic progress of a nation depends upon its rate of innovation which in turn depends upon the distribution of entrepreneurial talent in the population. Technological progress alone cannot lead to economic development unless technological breakthroughs are put to economic use by entrepreneurs. It is the entrepreneur who organises and puts to use capital, labour and technology in the best possible manner for the setting up of his enterprise.
Theoretically the Government’s massive development projects should motivate growth in the provinces. But latest statistics by the Central Bank question whether this has been done adequately. Only four out of the nine provinces increased their contribution to GDP in 2012. Wayamba, which incidentally is facing an election later this month, failed to make any progress, raising questions as to what the Chief Minister and his provincial councillors achieved during their time in power.
The north, which has been improving its contributions to national GDP since the end of the war, has seen its growth easing from its impressive levels in 2010 and 2011 though still managing to fare better than its counterparts, while the east has emerged as the overall winner.
The south, where the giant chunk of Chinese funding has been funnelled, resulting in a US$ 360 million port, US$ 210 million airport and an investment zone, has failed to produce growth fireworks. Instead it continues its modest trend posting 21.3% increase, which is only the third highest in the list.
In simple terms, entrepreneurs create jobs, especially in rural communities, which results in development and better standards of life. Use of local resources, balanced regional development, economic independence, reducing social tensions and facilitating sustainable growth can be achieved if entrepreneurs are given the environment to flourish.
However, so far the Government has largely concentrated on infrastructure development and while programs such as Divi Neguma have attempted to establish backward linkages and provide incentive to entrepreneurs, there is still room for greater financial and institutional support is helping small and medium enterprises become export-oriented.
Entrepreneurship plays a major role in Sri Lanka’s economic development. But entrepreneurs in Sri Lanka are facing greater challenge in the modern businesses environment under tough competition, rapidly changing new technologies and globalisation of products and services. This is especially important for people living in the provinces who comprise as much as 75% of the country’s population.
Many of the highly visible projects rolled out by the Government have much flash but it is questionable whether they provide the much-needed sustenance for SMEs. Over 70% of Germany’s economy by contrast relies on SMEs, as do large parts of India and China.
Long-term capital access, technology infusion, institutional assistance and improved gains in marketability are what the provinces are crying out for. Help the entrepreneurs make economic growth happen.
