How Technology can lead to Sustainable Economic Growth

We are aware that Sri Lanka currently facing bankruptcy. Therefore, we have to regain our economy step by step. The objective of this short note is to discuss how technology can help to regain our economy. In economics, technology plays a major role in the economic growth of the country. Technological progress tolerates the effective production of goods and services. Technological advances have significantly improved operations and lowered the cost of business. “The technological economy and its industries are strategic sectors that if nurtured can boost competitiveness, productivity, sustainable growth, employment and export potential," UNCTAD’s international trade and commodities director, Pamela Coke-Hamilton, said.

The Government of Sri Lanka needs to understand that the IT industry is beneficial to society. Hence, it can develop programs to improve services in health, agriculture, education, and government sectors. Several studies highlighted that the investments made into the IT industry have supported countries to increase their annual GDP growth by 0.7% - 1% on average, on an annual basis, up to 10%. In most developed countries’ economies, the IT industries strengthen economic growth rates, on average, 3.4% of GDP across the economies makes up 70% of global GDP. To compete in the global market, and to regain the economic crisis we need to look positively at the IT industry. In the coming decades mainly in IT (72%); telecommunications (66%); entertainment, media and publishing (65%); retail (48%); banking (47%) and life sciences (38%) these industries will take the global market.

Following are the areas that needed to focus on by the government of Sri Lanka.

1. Most of the Asian economies are in a lead with the digital economy. Countries like Singapore, Vietnam, China, Japan and South Korea are the leaders in digital economies. Digital government initiatives can also help to improve efficiency, transparency and inclusiveness of government. Government delivers a wide range of services that support businesses and the broader communities. Cloud computing services make it easier and more cost-effective for government institutes to upgrade old IT systems to make sure they have the right platforms to deliver simple and easy to use digital services. Emerging technologies, such as data and analytics, and artificial intelligence can play an important role to deliver better outcomes for the public. By making digitizing the government services, it needs to be responsive to the culture, language and beliefs of different communities. Effective policies and institutions, the rule of law, and political stability enhance economic growth. Transparent, adequate, and properly enforced laws, efficient fiscal management and resource allocation, appropriate regulatory systems, and sound public financial systems are all essential to stable economic growth.

2. E-commerce is the transmission of funds or data through the internet to facilitate the purchase and sales of goods and services. E-commerce and globalization become more intertwined, and buyers and sellers are increasing their connectivity and the speed with which they conduct sales transactions. As per the report released in September 2020, Technopak, India, the share of e-commerce in retail is growing at a CAGR of almost 19% in the financial year 2020. Online marketplaces in German B2B and B2C transactions level the online playing field between SMEs and their larger counterparts; while larger online companies sold around 20% online, the smallest companies sold almost 30% through webshops and apps. In 2019, 15% of revenue in the retail and wholesale sectors was generated through e-commerce. In Sri Lanka despite the recent financial turmoil with low IT infrastructure, financial markets and supply chain networks speeding up their sales transactions. Blockchain is a digital platform that records, verifies and stores transactions shared across a network of computers according to an agreed set of rules. Faster clearing and settlement times could reduce credit risk and capital requirements, lowering transaction costs across the board. This could have practical benefits for real estate transactions. Thereby allowing the government to reduce fraud, corruption, errors and the cost of paper-intensive processes. E-commerce affects the capital market as capital flows are exchanged between surplus units, “savings” and “deficit” units “the investors”, through the issuance of long-term stocks and bonds, which plays a major role in stimulating investment and economic growth.

3. Agriculture is one of the oldest industries, farmers are the best leaders in the uptake of new technologies. Self-steering, GPS-guided tractors and other high-tech farming equipment can make quality crops and, help farmers be more efficient and save on chemicals and other high-cost inputs. In the future, the combination of satellite technologies, drones and better use of data will deliver even more support for farmers making decisions on planting, fertilising and watering crops. Blockchain also holds the potential to transform supply chain management and biosecurity outcomes. Smart farming involves the implementation of contemporary ICT into agriculture, resulting in what is referred to as the Third Green Revolution. The revolution is slowly taking over the agricultural sector through the joint application of ICT solutions such as IoT GPS, robotics, sensors and actuators, Big Data, precision equipment, and much more.

By: Dr Pulasthi Gunawardhana

Senior Lecturer, Faculty of Technology, University of Sri Jayewardenepura