9 December, 2021


Reimagining Dependency: An Ode To Unpopular Economics

By the Centre for Poverty Analysis

The relationship between migration and development has been a long-scrutinised topic of debate within developmental discourse. Understandings of this dynamic have “swung back and forth like a pendulum” (de Haas, 2010) since first emerging as an area of academic interest in the 1950s, oscillating from optimism to pessimism and back again. Early perspectives attached to modernisation theory highlighted the potential for migration to catalyse a ‘developmental takeoff’ for sending nations by way of remittance and skill transfers. Later, radical critiques (from neo-Marxist and dependency perspectives) re-framed migration-development in a profoundly sceptical light, emphasising migration’s propensity to siphon skills and labour in a way that stymies genuine economic development in sending countries. Since the ‘rediscovery’ of the migration-development nexus in the early millennium the tone of discussion has once again been overwhelmingly hopeful; a solidifying neoliberal status quo has drowned out the radical critiques of the 70s and 80s and shrunk the contours of development until a “golden straitjacket” (Friedman, 2000) woven of market signals is all that remains. Within this neoliberal development paradigm, the World Bank, IOM and fistfuls of Northern think tanks have promulgated the notion that temporary labour migration yields a ‘triple win’ scenario, in which sending countries, receiving countries and migrants all benefit from a reallocation of global labour ostensibly coordinated by forces of supply and demand. Meanwhile, alternative approaches to migration that emphasise the exploitative disparity of those ‘wins’ have been dismissed in parcel with the failed developmental projects with which they were ideologically aligned and are today something of a theoretical faux pas. Sri Lanka’s own experience with a closed-economy highlights many of the problems of such developmental models, though it remains difficult to disentangle the culpability of economic theory from the social and productive vulnerabilities inherited from colonial occupation (Kelegama, 2006).

In Sri Lanka huge swaths of the rural population have found themselves starved of local employment opportunities as a consequence of Jayewardene's neoliberal revolution

In Sri Lanka huge swaths of the rural population have found themselves starved of local employment opportunities as a consequence of Jayewardene’s neoliberal revolution

No matter how the past is construed, the South should remain wary of developmental fables concocted and disseminated by yesteryear’s imperialist powers and their institutional mouthpieces. Of those ‘winning’ from migration, it is far easier to recognise the benefits for receiving countries of the North – a cheap, exploitable and ever-replenishing reserve army of ready-made labour – than it is for remittance-dependent economies of the South or, less still, for individual migrants driven to foreign employment in vacuums of jurisdiction on account of survival. Recent attention to migration as it pertains to migrant agency and household income strategies (de Haas, 2010) thus obfuscates the overarching dynamic of labour migration: global patterns of capital accumulation. The global division of labour underpinning capital accumulation in the North is predicated not only on the outsourcing of production, but also the importing of workers for exploitative labour in care, construction and service roles that cannot be offshored. Meanwhile, adherence to migration as a de facto developmental strategy has left Sri Lanka increasingly dependent on remittances as a means of shoring up its foreign reserves (a staggering 49% of export earnings) to counterbalance a historically impregnable trade deficit, keep the rupee afloat and subsequently finance the ongoing gentrification of urban Colombo. Where national development projects and attempts at export diversification have failed, migrants have picked up both the foreign exchange slack and the suffix of ‘hero’ (MFEPW, 2011). Worse again, with remittances failing to translate into sustainable long-term livelihoods for migrant families, some of the most vulnerable portions of Sri Lanka’s population are coaxed into an unsustainable cycle of repeat migration to attain a transient reprieve from poverty.

Two critical observations emerge from this picture. The first is that economic development should be conceptualised in relative, not absolute, terms; if sending countries gain from migration these modest ‘wins’ need to be juxtaposed with the more substantial gains enjoyed by receiving countries. In this context, portraying temporary labour migration from South to North as a pathway to ‘development’ is analogous to confining the poorest strata of a nation to the least-stable, worst-paying jobs and expecting them to converge upon the rich. Contrarily, deepening economic inequality between the ‘developed’ and ‘developing’ (Cornia, 2004) only corroborates dependency theorists’ concerns about the structural underdevelopment of a global periphery at the behest of a wealthy capitalist core and migration needs to be understood as a facet of this growing divide.  The second observation is that we need to start questioning the assumed causality of ‘migration-development’ altogether: rather than migration leading to development, it appears far more tenable that underdevelopment itself leads to migration (Wise and Covarrubias, 2009). In Sri Lanka huge swaths of the rural population have found themselves starved of local employment opportunities as a consequence of Jayewardene‘s neoliberal revolution and the resultant concentration of economic activity in Colombo and its nearby Export Processing Zones (EPZs). Without a plan for export diversification, industrial policy or otherwise providing widespread and decently remunerative employment for all Sri Lanka, chronic rural underdevelopment is fuelling forced economic migration as a means of survival. That remittances are channelled back into the rural economy means little when there are insufficient economic foundations for investment in value-added production.

What is remarkable about Sri Lanka’s current developmental predicament is its similarity with the woes of the post-independence economy: poor terms of trade, a precarious balance of payments and a failure to diversify away from inelastic agricultural and low value-added exports. The main difference today is that migration and garment production provide relief valves for unemployment and foreign exchange earnings, though neither are sustainable. The once-lucrative garments industry was dealt a substantial blow with the end of the Multi Fibre Agreement (MFA) and is now poised to become hollowed out by cheaper labour saturating the market, while temporary labour migration continues to violate the human and working rights of disprivileged Sri Lankans without providing viable livelihoods. Maybe, then, it is time to reimagine some old ideas in a new context. The foreign exchange earnings provided by migration and the tail-end of the garments boom offers Sri Lanka a pivotal window of opportunity to lay groundwork for a future economic direction that directly confronts its stubborn developmental hurdles. This solution will not come from ‘leapfrogging’ from agriculture to services. As remarkable as India’s IT boom has been, it has created employment for a mere 3 percent of the total population: those with enough skills and privilege to enter the bubbles of growth forming in Bangalore and elsewhere (D’Costa, 2011). The tertiarisation of Sri Lanka will not provide the decentralised, mass-employment needed to backbone the economy; it may hasten Colombo’s efforts to dress itself as Singapore in drag, but projecting the developmental blueprint of a country of 716.1 km2 onto a canvas of 65,610 km2 is optimistic at best.

Instead, the government should consider the unpopular economics of a selective industrial policy that navigates from import substitution industrialisation (ISI) to export-oriented industrialisation (EOI) through the active management of tariffs, taxes and subsidies. Flirting with free market fundamentalism has left Sri Lanka in largely the same quagmire it found itself in after colonialism: neoliberalism isn’t working. Taking industrialisation seriously, on the other hand, offers an opportunity to circumvent the declining terms of trade inherent to a ‘comparative advantage’ in tea and coconuts by fostering selective value-added industries with potential for widespread employment and significant export earnings. Granted, the path to export manufacturing is less lucrative and fraught with uncertainty in the wake of East Asia’s ascent, but the success of the ISI-EOI model in South Korea, Taiwan and more recently Malaysia speaks volumes of its transformative potential. If suitably decentralised, transitioning to industrial manufacturing could provide rural populations with an alternative to migration and thus a pathway out of Sri Lanka’s presently intractable dependence on the exploitation of indentured labour as a source of foreign exchange earnings. Only by severing ties with this process and offering genuine employment options for the entire nation can Sri Lanka begin to entertain the prospect of a holistic development process.

*The ‘Reimagining’ series by the Centre for Poverty Analysis (CEPA) is intended to be a forum to communicate diverse perspectives on development. CEPA is an independent, Sri Lankan think-tank promoting a better understanding of poverty related development issues. If you wish to follow the conversation on related topics please visit www.reimagining.cepa.lk


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Latest comments

  • 5

    JR is the best politician SL ever had.

    His visionary work in 1977, 1978, 1981 and 1983 were highly beneficial for SL in the long run.

    We need more leaders like him not Rajafucksas.

  • 3

    I appreciate the amount of research that cepa has done on various dimensions of Sri Lankas poverty? The staff of CEPA are a committed lot. Your valuable analysis of poverty and the strategies of handling it however excellent is lost to a cash trapped Government of EDA Wela .Dependency on the exploitation of indentured labor as a source of foreign exchange earnings was never so high as today. Think tanks like CEPA are never to the liking of a GOVT who will resort to CASINOS and accompanying prostitution in the same way as indentured labour.

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