Colombo Telegraph

ICT And The Economy: Prospects For Sri Lanka

By S. Sivathasan


Global Perspective

When the growth of the global economy and of individual state economies over the last 110 years is examined, it is clear that the sectoral composition has changed drastically. Agriculture which was the dominant sector for centuries has ceased to be the principal component of GDP as of now. It employs a lesser workforce compared to Services. Yet it assures the world of sustained food availability. The same holds for Industry, which though increasing in importance as a producer of goods, is no longer the only pivot of the economy. In recent decades Services have become the predominant sector in global terms.


In course of time, Services have embraced a large spectrum. The compass has a range from education, health, banking, housing, trade, transport, shipping, aviation, tourism, ICT and many more. Globally they account for 64 percent of GDP as estimated in 2012, while agriculture accounts for 5.9%. A visible phenomenon in recent decades is that agriculture and industry support and sustain services and new wealth created by the latter reinforces and develops the former. In a sense it is true to say that more land and funding are needed in the services sector for healthy growth of agriculture.

Information and Communication Technology

A relatively recent development but with exponential growth in a brief span is ICT. Worldwide IT spending in 2013 is estimated to reach $ 3.7 trillion. Within its compass are: communications, computer services, computer software and computer hardware. Investment and earnings wise beginnings were modest for some of the leaders. A quarter century or less is common to many. A common thread running through success has been emphasis on education, particularly on science and math though other courses are not a bar for selection. Investment in education has come principally from the state through proactive policy and programme. Ireland and India and significantly Tamil Nadu are examples and there are very many more worldwide. Management of the industry however has been mainly a private sector preserve, supported by state initiatives in funding and through proactive fiscal policies.


With an export performance of $37.2 billion in Computer and Information Services, Ireland ranked first in the world in 2010. It was remarkable for a country about the size of SL having a population of less than a fourth. What explains? The intellectuality of the leading lights who got their perceptions and formulations accepted by those in governance. Two great changes taking place in Europe and US were capitalized on. First was the opportunity thrown open by the EU economy and the second was the prospect of investment offers from the US. With such a tie up, Ireland was able to leapfrog over industrialization. Ireland correctly identified IT as the best field for development. Education was chosen as the merited area of attention and resources were devoted more than adequately. In education, science claimed precedence and such training equipped the young for IT. The year of Ireland’s economic takeoff was 1987. It was somewhat coterminous with growth in IT development, exports and high end employment.

‘Smart Education = Smart Economy’, is the current credo of Ireland for ICT in Classroom Initiative. The watchword is RID – Research, Innovation and Development. The Innovative Task Force has estimated that High Tech and RID employment in Ireland will reach 177,000 by 2020. It is forecast that per capita income in 2050 at constant 2000 us $ is 61,363 for Ireland and 49,412 for UK.


Israel is another small nation that has astounded the world of Information Technology with her performance. The Jews reputed for their intellectual ascendancy capture every opportunity that comes their way to optimal advantage. It was so with reparations they received, funds that flowed from US and expertise from the intellectuals and intelligentsia of their own compatriots domiciled abroad. With all such assistance, pitching for the field promising much leverage was an easy choice. Success in ICT confirmed their correctness.

Securing the 7th place with an export performance of $ 7.7 billion in 2010, won her plaudits. Speedy development is spread over the last twenty years. Success is attributed to high caliber of scientists. Israel has 135 engineers per 10,000 citizens against 85 in US. When will Sri Lanka approximate such a level of production with a replication of Faculties or Engineering Colleges?

Sri Lanka

ICT Service exports in 2010 were $310 million. This denotes a 47% increase compared to two years previously. The UNCTAD Report for 2012 has this to say. “Soft Ware (SW) production in Sri Lanka has witnessed rapid growth during the past decade. Has one of the most export oriented industries in the world”. It also points out that “SL is among the developing countries with the lowest level of SW spending, related to GDP and overall spending on ICT”. Among the advantages SL has as with India, is some proficiency in English. But the numbers are limited.


When growth statistics of China are perused, it may be seen that whatever curve that China touches never dips. It only grows exponentially. This is true of ICT as well. In respect of Software, production to the value of $ 8.883 billion in 2001 multiplied 32 times in 10 years to $285.9 billion in 2011. Exports surged 42 times from $ 726 million to $ 30.400 billion. Hardware production was $ 820 billion in 2010 and transaction value of e-commerce in 2011 was $ 926 billion. UNCTAD reports an export volume of $ 9.2 billion in 2010.

What is conspicuous in China is the comprehensive manner in which the challenges are responded to. Hardware manufacture to produce software and both serving the domestic and foreign markets has been the feature. In addition are e-commerce and e-governance. To serve all the needs 7.7 million trained people are engaged. The spread of English to encompass IT personnel is relatively recent and perhaps the change explains the spurt in exports. Even for smaller nations this can be a model.


In computer and information services, NASSCOM the trade body of IT professionals with international representation, reports an estimated volume of $ 76 billion in  exports in 2012/13. Estimate of domestic sales was $ 32 billion. India stands out as one among the top leaders. The industry provides high end employment to three million people while adding 180,000 net jobs in 2012.

As is the case with many a leader in the field, education diligently directed to computers and IT succeeded in creating the academic leadership capable of winning the day in the echelons of  governance. Of great significance was also the economic reform of PM Narasimha Rao and FM Manmohan Singh in 1991 and in the years following. It is to their credit that they “ twisted their own arms”, though under economic compulsion and started dismantling the license-control regime without waiting for IMF behest. Their attribute of intellectuality prevailed over safeguarding long nourished vested interests or in yielding to populism or expediency. Successive governments followed the lead and private sector took initiatives thereafter.

[There is a wide disparity in the statistics of China & India, reported by the respective countries and those of UNCTAD. A variance in the definition of IT, ICT, Software production, Software services, Software exports etc. and their composition offer part of the explanation. The reporting years are also different.]

Prospects for Sri Lanka

If the first decade is considered productive for SL, the nineties may be treated as a period of gestation or hibernation or a run for takeoff. It need not imply that late entry makes for slow growth. With attention sharply focused, amends can be made for the defaults of the past.

The first and most crucial area demanding state assistance is that of finance. UNCTAD in its report for 2012 points to Sri Lanka being among the lowest spenders on software in developing countries.  It is good to be aware that the world will be spending $ 3.7 trillion on IT in 2013. The first charge on the peace dividend should have been for IT, realizing the leverage that costs have on benefits.

The second area connected to the first is Education. But cavalier treatment manifests in paltry allocation resulting in utter neglect particularly at tertiary level. More institutions with affiliation and accreditation particularly for science and engineering can promote the ICT industry.

Third is English instruction without which no headway is possible in ICT development. Present day literacy level is enough only to decipher name boards. A student well educated in English should engage in elegant speech and chaste writing which can come about with wide reading. How succinctly Sir Francis Bacon said “Reading maketh a full man, writing an exact man and conference a ready man”. This should be the template for language study foreign or indigenous. I have mentioned Sir Francis to avoid confusion. Fifty years back we had high levels. We can get it back in twenty years. Depriving the underprivileged of the benefit of English with the argument that primacy for English would marginalize the rural student is neither rational thinking nor logical reasoning.

Fourth is pulverizing Colombo centric obsession. It is essential to take good education, IT, English and broadband to the districts and the countryside. All of them going together will deflate the costly metropolis and vitalize the other areas.

Fifth will be satellite townships, industrial parks, private sector housing and other appurtenances. For an Industrial Park, Mahindra World City (MWC) outside Chennai, the first and the best of its kind in India is a model. MWC is 1500 acres in extent and is in the 11th year of development with over 75 % completed. It is host among several others, to Infosys – IT giant – which at full development in an year or two will reach an employment figure of 15,000 at a single location. The components mentioned above have to be part of the composite arrangement. The beginning of this dispersal over the last ten years in Tamil Nadu is displaying the benefits.


Full realization is necessary that premium value should be placed on education if the regeneration of the country is envisioned. As for the country so with ICT. Those in governance have to pick up men of intellect, competence and probity to manage it and to give it direction.

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