Sri Lanka continues to lead region in human development

• But fails to significantly climb ranks, stays 73 out of 188 countries, does well on gender equality

By Himal Kotelawala

Sri Lanka has failed to significantly improve its international rankings in the Human Development Index compiled by the UN development agency despite doing well in areas of gender equality including health, education and command over economic resources

Though recognised as being a ‘high human development index (HDI)’ nation, the country is still at the same position it was at the end of 2013 with only a marginal increase in HDI value, the Global Human Development Index Report 2015 released yesterday by the UNDP revealed. 

According to the report, as at 2014, Sri Lanka is ranked 73 out of 188 countries and territories (countries ranked 50 to 105 are marked ‘high human development’), with an HDI value of 0.757 – an increase of just 0.007 from 2013’s 0.750. In contrast, Sri Lanka’s HDI value in 2012 was 0.745.

Sri Lanka has progressed, however, in life expectancy (74.3 in 2013 vs. 74.9 in 2014) and, though barely, in expected years of schooling (13.6 vs. 13.7). The mean years of schooling has remained the same at 10.8.

The Gross National Income (GNI) per capita as at 2014 is USD 9,779. It was at USD 9,250 in 2013.

Overall, Sri Lanka’s HDI value increased from 0.571 to 0.757, an increase of 32.5% or an annual average increase of about 0.83% between 1980 and 2014.

Sri Lanka’s 2014 HDI of 0.757 is above the average of 0.744 for countries in the high human development group and above the average of 0.607 for countries in South Asia. Pakistan and India have HDIs ranked 147 and 130 respectively.

The Gender Development Index (GDI), a newly introduced measure based on the sex-disaggregated HDI defined as a ratio of the female to the male HDI, measures gender inequalities in achievement in three basic dimensions of human development: health (measured by life expectancy), education (expected years of schooling for children and mean years for adults aged 25 or older) and command over economic resources (estimated GNI per capita). The 2014 female HDI value for Sri Lanka is 0.730 in contrast with 0.769 for males, resulting in a GDI value of 0.948. GDI values for Pakistan and India, in comparison, are 0.726 and 0.795 respectively.

Though Sri Lanka ranks relatively high in numerous global human and social development indices, economically the country has so far been unable to match it in terms of income and revenue, a leading Government official said.

Speaking at the launch of the report yesterday on behalf of President Maithripala Sirisena, Minister for Special Projects Sarath Amunugama said there is a need to expand the country’s economy to meet expectations raised by these indices.

“Somebody said Sri Lanka is a country with first world social indices and a third world income. That’s the reality. If we look at our life expectancy, it is comparable to that of Europe. If you look at our infant mortality, it is comparable to that of many developed countries. When it comes to many of those social indices – such as education, welfare – we are more or less on par with many of the developed countries in the world. But that is not matched by the income or revenue that can sustain this type of position. We are in that rather difficult situation when there will be a gap between strong expectation and the need to expand the economy to fulfil those requirements,” he said.

Among possible solutions to this problem, according to the Minister, is to “re-examine the role of women” in the country’s economic growth.

There are over 1.2 million Sri Lankans working abroad, most of whom are women, said the Minister.

“These workers remit something close to $ 4 to 5 billion. Today the mainstay of our foreign income is remittances. For a long time, economists never treated remittance as a serious aspect – particularly western economists. Only now, with the phenomenon in Asia, are they beginning to factor in the role of diasporas as a major factor in income generation for the country,” he said.

“ In Sri Lanka a large number of those are women, and the advantage be of it is that these remittances are going into the most deprived sectors of our economy – the poorest of the poor, because there is a certain self-selection in the people who go to the Middle East – from the most disadvantaged areas,” he added.

Sri Lanka must also look at the possibility of competing with wealthier countries where the country might have a competitive advantage, said Minister Amunugama.

“I think we’re going in the wrong path. We’re thinking of our exports in terms of our competitors being the same as us or poorer than us. If you look at garments, or tea and other basic commodities, we’re not competitive anymore, because our competitors are poorer than us. Their wages are lower; their policies are not as advanced; their social welfare measures are not as advanced. The phenomenon in Asian traditional export thinking is that they’re competing among themselves. When we compete among ourselves in those commodities, we’re at a disadvantage, because our cost of production is high. Our social welfare, which is highly desirable, is pulling us back in this competitive situation regarding manufacture and exports,” he explained.

Sri Lanka, said Minister Amunugama, ought to look to compete with products where the country would have a competitive edge.

“It’s very difficult to compete when you’re richer than your competitors. But when you look at the products of the West, or try to get into those chains, we will, as a poorer country, comparatively have that advantage,” he said.

One of way doing this, according to the Minister, would be to leapfrog into digital and technological sectors.

“This is, of course, subject to discussion. But I don’t think we can go on forever giving all these facilities and keeping ourselves at less of a comparative advantage, with our competitors constantly trying to beat us. This is a policy decision which is being impeached on us. These are factors affecting the job market,” he said.