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Browsing Journal Articles by Author "Kelegama, Saman"
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Item A Need for a New Direction for SAARC: An Economic Perspective(2002) Kelegama, SamanItem Bangkok Agreement and BIMSTEC: Crawling Regional Economic Groupings in Asia(2001) Kelegama, SamanBoth the Bangkok Agreement (BA) and Bangladesh, India, Myanmar, Sri Lanka, Thailand Economic Cooperation (BIMSTEC) have offered opportunities for economic cooperation in the Asian region. Four countries that are (or were) associated with the former are members of the latter. The BA (formed in 1975) is a preferential trading arrangement (PTA) whereas BIMSTEC (formed in 1997) is a sectoral cooperation arrangement, but has announced its intention of moving to a PTA in the future. However, the results of both regional economic groupings have so far not been impressive. The BA did not produce the desired results due to inherent shortcomings in the Agreement and the ineffectiveness of the preferential system, inter alia: a) exclusion of nontariff barriers from the preferences; b) low product coverage by the preferential tariffs; and c) low preferential margins. Moreover, the PTA was not combined with direct measures for sectoral cooperation. Although the BIMSTEC emphasizes the latter, for these to be effective in the absence of a PTA, there has to be a high degree of commitment to the regional group by member countries, harmonization of standards, and an institutional framework. All these requirements are lacking in the BIMSTEC at present. BIMSTEC could have become a PTA if Thailand and Myanmar joined the BA but regional geo-politics and commitment to ASEAN have prevented this process. Surprisingly, BIMSTEC is considering a new PTA when a mechanism already exists under the BA. © 2001 Elsevier Science Inc. All rights reserved.Item Can Open Regionalism Work in the Indian Ocean Rim Association for Regional Co-operation?(1998) Kelegama, SamanWhether a regional economic co-operation under an "open regionalism" framework brings about expected economic gains cannot be judged from statistics alone. Attractive statistics for intra-regional trade and other trade-related indices such as intra-industry trade can be very deceptive. For the Indian Ocean Rim Association for Regional Co-operation (IOR ARC), the basic fundamentals that are essential for the functioning of open regionalism are not in place. Regional economic co-operation, after all is a dynamic process that requires a firm commitment from member countries. For IOR-ARC, it is argued that this component is also lacking and the sharing of the Indian Ocean waters alone is not adequate to provide a blueprint for effective regional economic co-operation.Item China–Sri Lanka Economic Relations: An Overview(2014) Kelegama, SamanThis article fills a gap in the literature by focusing on the growing economic links between China and Sri Lanka. Starting from the 1952 Rubber-Rice Pact, the economic relations between the two countries have grown over the years with an unprecedented growth since 2005. Chinese military assistance helped overcome three decades of conflict in North/East Sri Lanka and Chinese financial assistance to other areas of the Sri Lankan economy, in particular, infrastructure development have also strengthened. Although Sri Lanka’s trade and investment links with China are not very strong, the increased Chinese financial assistance has had some spill over effects in strengthening these in recent years. Sri Lanka will sign a Free Trade Agreement with China most probably in 2014 but growing economic relations with China present both opportunities and challenges to Sri Lanka.Item Development in Independent Sri Lanka: What Went Wrong?(Sameeksha, 2000) Kelegama, SamanIndependent Sri Lanka's failure to live up to its initial promise in the area of economic development could be attributed inter alia to: (a) a foreign-exchange crisis which persisted till 1977 because the exigencies of electoral politics bound the country to welfare-oriented, inward-looking policies; and (b) the eruption of conflict between the two main communities as of 1983.Item Does Leadership Matter in the Economic Reform Process? Liberalization and Governance in Sri Lanka, 1989-1993(Elsevier, 1997) Dunham, David; Kelegama, SamanGovernance assumptions of the East Asian miracle may not be a sufficient or a necessary condition for effective economic reform or for solid growth to emerge in other Asian economies. This paper argues that in Sri Lanka, where the state is not strong, where it is not well coordinated, and is neither cohesive nor disciplined in organizational terms, strong political leadership proved critical in the second wave of reform from 1989-93 - even if it was essentially illiberal in the process of implementation. Technical and political imperatives are seen to be interrelated and parts of a single reform package.Item Economic Cooperation: The Emerging Scenario(Institute of Policy Studies of Pakistan, 2012) Kelegama, SamanConsidering China continuously increasing importance for the global level, increased economic cooptation between China and SAARc member countries will be mutually beneficial, particularly for the South Asia . SAARC's own success in achieving desired level of regionalism has been limited, and China's involvement can become a catalyst in this regard. While trade between China and SAARC has been increasing in recent years, the potential of economic cooptation is much more beyond trade alone. China's engagement can address some of SAARC's fundamental shortfalls such as inability to generate funds for crucial projects and no progress towards knowledge and technology transfers. Regardless of China's full membership of SAARC, its active involvement in South Asia will continue to grow. - Eds.Item External Shocks and Domestic Policy Adjustment: The Case of Sri Lanka(The Indian Institute of the Economics, 1994) White, Howard; Kelegama, SamanA major methodological problem in the analysis of adjustment policies is the separation of the effects of the policies themselves from those changing external conditions. But such a separation can be clearly made by decomposing the sources of change in the current account. In this paper authors apply methodology, with a number of important modifications to the experience of Sri Lanka for the period 1971 to 1991. By extending the decomposition analysis to cover the capital account authors are able to address a further important issue in the adjustment debate: namely distinguishing the impact of external finance given to support domestic policy adjustment efforts from that of the efforts themselves.Item Impediments to Promoting Backward Linkages from the Garment Industry in Sri Lanka(1999) Kelegama, Saman; Foly, FritzThe slow growth of backward linkages from the garment industries (exportoriented) in developing countries and the policy merits of promoting these linkages have considerable contemporary relevance. Backward linkages are useful particularly for a garment industry to reduce the lead time and remain competitive in the international market. Local suppliers to the garment industry cannot function however unless conditions exist which allow them to be competitive. Furthermore, in a world where multinational garment-buying ®rms are dominant, a large import dependence in the garment industry does not necessarily imply that there are many opportunities to create local supplies and thereby create backward linkages. These factors are shown from the Sri Lankan attempts to promote backward linkages from the garment industry. It is argued that formation of backward linkages in the garment industry that operate in an open economy such as Sri Lanka is a natural outcome of industrial deepening and therefore will be time dependent. It is noted that even with less backward linkages, the garment industry in Sri Lanka has contributed signi®cantly to foreign exchange earnings and employment creation in the country. Ó 1999 Elsevier Science Ltd. All rights reserved.Item Indian Ocean Regionalism: Is There a Future?(Sameekha, 2002) Kelegama, SamanThe Indian Ocean Rim Association for Regional Cooperation was launched to affect a quicker process of liberalisation in countries disadvantaged in one way or other in the WTO regime, so that through open regional arrangements and agreements they could all gain quickly from the transforming trade and investment environment. An assessment of its five-year existence.Item Indo-Sri Lanka Trade and the Bilateral Free Trade Agreement: A Sri Lankan Perspective(1999) Kelegama, SamanIndia-Sri Lanka trade has been growing in recent years. In the mid-1990s, India became the main import supplier of Sri Lanka. Although Sri Lankan exports to India remain small, they have been growing faster than Indian imports to Sri Lanka in recent years. The Indo-Sri Lanka Bilateral Free Trade Agreement is a further step, by removing existing trade barriers, to stimulate trade between the two nations. While trade brings benefits to both there is an import competing sector in both countries that is still not in a position to face external competition from free trade. The Agreement allows for a “negative list” to accommodate this sector but preparation of the negative list has proved to be a time-consuming and intricate exercise. Once the Agreement comes into force, the Sri Lankan export sector is faced with a challenge to produce goods that are in demand in the Indian market. The challenge may be a “warm up” exercise to face future free trade under the South Asia Free Trade Agreement (SAFTA).Item Labour Absorption in Industries: Some Observations from the Sri Lankan Experience(1992) Kelegama, Saman; Wignaraja, GaneshanEleven years have passed since liberalization began in Sri Lanka, and yet the level of unemployment remains at about the same level as in mid-1977. Even if the export industries take time to respond to policy reforms, the fact that unemployment increased to pre-1977 levels by 1985 clearly shows that export-oriented industrialization has not been able to generate employment on a large scale. Why has this been the case? This paper attempts to answer this question by examining the labour-absorptive capacity of manufacturing and how it has changed after liberalization.Item Open Regionalism and APEC: Rhetoric and Reality(Sameeksha, 2000) Kelegama, SamanAPEC has now functioned for more than one decade but its record is not very impressive. This article argues that the operational aspects of APEC have clearly highlighted the limitations of APEC's governing framework, i e, open regionalism. The paper shows that APEC's trade liberalisation strategy is a frail initiative and argues that APEC might be better-off focusing on deep economic integration issues.Item Open Regionalism in the Indian Ocean: How Relevant is the APEC Model for IOR-ARC?(2000) Kelegama, SamanThe Indian Ocean Rim Association of Regional Cooperation (IORARC) came into being in 1997. It is experimenting with open regionalism for strengthening economic integration in the region. The paper examines the concept of open regionalism as practiced in APEC and its validity for IORARC given the initial conditions in the region and the level of development of the member nations. The paper argues that the APEC model has little relevance for IOR-ARC, and open regionalism could be put into practice only partially in the region. It argues that IOR-ARC should stick to the WTO timetable of trade liberalization and focus more on non-controversial areas of open regionalism, viz., trade and investment facilitation, economic and technical cooperation, and maintaining a trade and investment dialogue. A stronger institutional framework to overlook the implementation of the agreed proposals in these areas of open regionalism will be necessar y if IORARC is to strengthen economic integration and achieve some results. In the modern-day world, in contrast to the era of sailing vessels, sharing of Indian Ocean waters may have less relevance for effective economic integration.Item Privatization and the Public Exchequer: Some Observations from the Sri Lankan Experience(United Nations ESCAP, 1997) White, Howard; Kelegama, SamanThis paper examines the Sri Lankan experience with privatization from 1989 to 1996 and argues that its short-run fiscal benefits have not been significant even when the direct and indirect costs of privatization are ignored. Fiscal gains from privatization should be considered long-term benefits and greater importance should be given to designing a transparent privatization programme to promote competition and to stimulate the capital market. Such a strategy can address the problem of the fiscal burden of subsidizing State-owned enterprises more effectively than a privatization programme that is designed for speedy execution in a non-transparent manner or one whose objective is to achieve revenue targets according to short-term budgetary needs.Item Ready-made Garment Exports from Sri Lanka(Routledge, 2009) Kelegama, SamanWith the phasing out of the Multi-Fibre Arrangement (MFA), the Sri Lankan economy, highly dependent on ready-made garment exports, has become vulnerable to the changing global trading system affecting this industry. In such a global environment, strengthening the competitiveness of the industry has become imperative for Sri Lanka if it is to remain as one of the suppliers of choice in major markets. The paper highlights the strengths and weaknesses of the industry and shows the steps that have been taken to address the latter. Additional steps taken to select specific garment products according to past performance and global positioning for further improvement and promotion are also highlighted. The paper also suggests some strategies to cope up with the new global challenges.Item Ready-Made Garment Industry in Sri Lanka: Preparing to Face the Global Challenges(2005) Kelegama, SamanWith the phasing out of the Multi-Fibre Arrangement (MFA), the Sri Lankan economy, highly dependent on garment exports, has become vulnerable to the changing scenario affecting this industry in the global trading system. In such a global environment, strengthening the competitiveness of the garment industry has become a sine qua non for Sri Lanka to remain one of the suppliers of choice in her major markets. The industry therefore needs to articulate new response mechanisms to address the emerging challenges. A realistic course of action should involve addressing the major constraints in both the supply and demand sides of the industry. This paper highlights these issues and suggests some strategies for coping with the new global challenges.Item Reconstruction and Rehabilitation of the North and East of Sri Lanka: Programmes Constraints(People's Bank, 2009) Kelegama, SamanThis article is compiled based on a lecture delivered by the author at the Regional Centre for Stratergic Studies in Colombo 2009.Item Regionalism Debate: Repositioning SAFTA(2005) Kelegama, Saman; Adhikari, RatnakarCritics have pointed out that there is no rationale for a Regional Trade Agreement (RTA) in South Asia because there are limited complementarities in the region; major trading partners of the individual South Asian countries are located in the West etc. The latest World Bank report on the South Asia’s trade argues that an RTA in South Asia will lead to substantial trade diversion than trade creation and considers an RTA in the region as a stumbling bloc to multilateral trade liberalization. This argument needs re-examination and for this purpose it will be worthwhile first to revisit the theoretical debate on regionalism. This is done in the Section II followed by a discussion in Section III on the South Asian perspective of an RTA. Some concluding remarks are made in Section IV.Item Risks to the Sri Lankan Garment Industry from Trade Diversion Effects of NAFTA(1997) Kelegama, SamanThe analysis of trade diversion in the various studies has been carried out using different methodologies such as the partial equilibrium model, the international trade linkages system, indices of trade similarities between different pairs of countries, gravity models, etc. The results vary from study to study and are not comparable. Trade diversion can also be analysed by examining the price competitiveness of the main export of a non-member country to the regional bloc, using a comparative static framework. Such analysis can always be combined with an analysis of additional factors to assess the medium-term impact of the regional bloc on the non-member country. This approach will be used in the present study to examine the impact of NAFTA on the Sri Lankan economy, examining in particular the trade and investment diversion impact on the garment sector — Sri Lanka’s largest foreign-exchange earner and its main exporter to the NAFTA region. It concludes that all in all, NAFTA does not appear to pose a serious threat to Sri Lankan garment exporters. Moreover, there are indications that the US may not restrict its trade liberalisation with its regular trading partners in the medium term because of NAFTA. This allows at least four years for Sri Lankan garment exporters to adjust to the changing situation and rectify the existing shortcomings in the sector.