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Urban Development

Sri Lanka at 70: Looking back and forward

Idah Z. Pswarayi-Riddihough's picture
A view from the Independence day parade.At 70, Sri Lanka has accomplished a lot in its seven decades as an independent nation.
A view from the 2018 Independence Day parade. At 70, Sri Lanka has accomplished a lot in its seven decades as an independent nation. Credit: World Bank

Like many Sri Lankans across the country, I joined Sri Lanka’s 70th Independence Day festivities earlier this month. This was undoubtedly a joyful moment, and proof of the country’s dynamism and stability. At 70, Sri Lanka has accomplished a lot in its seven decades as an independent nation.
 
The country’s social indicators, a measure of the well-being of individuals and communities, rank among the highest in South Asia and compare favorably with those in middle-income countries. In the last half-century, better healthcare for mothers and their children has reduced maternal and infant mortality to very low levels.
 
Sri Lanka’s achievements in education have also been impressive. Close to 95 percent of children now complete primary school with an equal proportion of girls and boys enrolled in primary education and a slightly higher number of girls than boys in secondary education.
 
The World Bank has been supporting Sri Lanka’s development for more than six decades. In 1954, our first project, Aberdeen-Laxapana Power Project, which financed the construction of a dam, a power station, and transmissions lines, was instrumental in helping the young nation meet its growing energy demands, boost its trade and develop light industries in Colombo, and provide much-needed power to tea factories and rubber plantations. In post-colonial Sri Lanka, this extensive electrical transmission and distribution project aimed to serve new and existing markets and improve a still fragile national economy.
 
Fast forward a few decades and Sri Lanka in 2018 is a far more prosperous and sophisticated country than it was in 1954 and, in many ways, has been a development success story. Yet, the island nation still faces some critical challenges as it strives to transition to another stage of its development and become a competitive upper middle-income country.
 
Notably, the current overreliance on the public-sector as the main engine for growth and investment, from infrastructure to healthcare, is reaching its limits.  With one of the world’s lowest tax to gross domestic product (GDP) ratios -- 12% in 2016, down from 24% in 1978 —Sri Lanka’s public sector is now facing serious budget constraints and the country needs to look for additional sources of finance to boost and sustain its growth.
 
As outlined in its Vision 2025, the current government has kickstarted an ambitious reform agenda to help the country move from a public investment to a more private investment growth model to enhance competitiveness and lift all Sri Lankans’ standards of living.
 
Now is the time to steer this vision into action. This is urgent as Sri Lanka is one of the world’s most protectionist countries and one of the hardest to start and run a business. As it happens, private foreign investment is much lower than in comparable economies and trade as a proportion of GDP has decreased from 88% in 2000 to 50% in 2016. Reversing this downward trend is critical for Sri Lanka to meet its development aspirations and overcome the risk of falling into a permanent “middle-income trap.”

Colombo: Beyond concrete and asphalt

Darshani De Silva's picture
To ensure their city remains sustainable, Colombo’s citizens need to co-exist and build harmonious relationships with natural ecosystems and the biodiversity that thrives in them
To ensure their city remains sustainable, Colombo’s citizens need to co-exist and build harmonious relationships with natural ecosystems and the biodiversity that thrives in them

Protecting nature in Sri Lanka’s capital for resilience and sustainability

The world is urbanizing at a very fast pace – but it seems like Sri Lanka is an exception.

In 2014, the island was listed as one of the least urbanized countries in the World Urbanization Prospects (WUP),  with less than 20 percent of the population in urban areas. By 2050, WUP projected that number would rise to only 30 percent.
 
Does this mean we still have to worry about the country’s urbanization? The short answer is yes.

This is, after all, an island nation with one of the highest population densities, complex and evolving social systems and intricate ecosystems.

Meanwhile, urbanization, even at relatively slower pace, is still changing migration patterns, altering the way urban populations consume resources, and impacting the affordability of land and other assets.

These, in turn, are increasing the demand for resources. Growing inequality can be seen as a result of the displacement of less affluent communities, while the loss of important ecosystems has negatively affected resilience and sustainability.

Protecting wetlands: Lessons from Sri Lanka and Maldives

Mokshana Wijeyeratne's picture
Sri Lanka and Maldives are home to rich wetlands that are habitats for a variety of fauna and flora but also benefit the ecosystem
Sri Lanka and Maldives are home to rich wetlands with a variety of fauna and flora that benefit the ecosystem.


Sri Lanka and Maldives share much more than the tag of tourism hot spots, beautiful beaches, and similar cultural traits. Both island nations have a range of unique environments that are rich in biodiversity and serve a myriad of ecosystems functions.

Both countries are home to rich wetlands with a variety of fauna and flora that benefit the ecosystem, including flood protection, water purification, and natural air conditioning and provide food and support to local communities.

Sri Lanka has actively been working to ensure these essential ecosystems are protected. The Maldives has too commenced such great work. This work has produced a wealth of knowledge and innovations on how to manage and conserve wetlands. 

Managing wetlands in Sri Lanka and Maldives

The wetland management and land use planning effort undertaken in Colombo under the World Bank-financed Metro Colombo Urban Development (MCUDP) project showcases resilience in urban land use planning and highlights how a city can become more livable by intermingling green spaces to its urban fabric. All this, while protecting wetlands and reaping the benefits of their natural ecosystem functions.

The MCUDP used robust strategies and sustainable economic models, such as wetland parks, to help save urban wetlands from threats such as encroachment and clearing. Through the Climate Change Adaptation Project (CCAP), funded by the European Union and the Government of Australia, Maldives has also taken steps to manage threats to its largest wetlands.

While the approaches to wetland management in both countries have been different there are many key lessons that can be shared.

Incentives for cleaner cities in Nepal

Charis Lypiridis's picture
The "orange city" of Dhankuta, Nepal. Photo: World Bank
The "orange city" of Dhankuta, Nepal. Photo: World Bank


Cities across Nepal—and in the developing world—produce more waste than ever before, due to a spike in population and a surge in new economic activity and urbanization. Properly disposing and managing solid waste has thus become urgent for city municipalities.

Although collecting, storing, and recycling solid waste can represent up to 50 percent of a municipality’s annual budget, many local governments don’t collect enough revenue from waste management services to cover these costs.

As a result, landscapes and public spaces in Nepal’s urban centers are deteriorating. Less than half of the 700,000 tons of waste generated in Nepal’s cities each year is collected. Most waste is dumped without any regulation or oversight and several municipalities do not have a designated disposal site, leading to haphazard disposal of waste—often next to a river—further aggrevating the problem.

With urbanization rising, the costs of inaction are piling up and compromising people’s health and the environment. In most cases, the poor suffer the most from the resulting negative economic, environmental, and human health impacts.

Building safer houses in Northern India

Hyunjee Oh's picture
The State of Uttarakhand is endowed with vast natural resources, and is one of the most frequented pilgrimage/ tourist destinations in India. However, the State also has a very fragile terrain that is also highly prone to earthquakes.
The State of Uttarakhand is endowed with vast natural resources, and is one of the most frequented pilgrimage and tourist destinations in India. However, the State also has a very fragile terrain that is also highly prone to earthquakes. Credit: GFDRR/ World Bank
This blog is part of a series exploring the housing reconstruction progress in Uttarakhand, India.
 
In June 2013, a heavy deluge caused devastating floods and landslides in the state of Uttarakhand located in the Himalayan foothills. The disaster – the worst in the country since the 2003 tsunami—hit more than 4,200 villages, damaged 2,500 houses, and killed 4,000 people.
 
Since 2013, the Government of Uttarakhand with support from the World Bank and the Global Facility for Disaster Reduction and Recovery (GFDRR) has helped the people of Uttarakhand restore their homes, build better roads, and better manage future disaster risks through the Uttarakhand Disaster Recovery Project (UDRP).
 
Central to the project is rebuilding 2,382 houses that are more resilient to disasters. The project has promoted an owner-driven housing reconstruction model, whereby beneficiaries rebuild their houses on their own with technical and social support from a local NGO, using guidelines issued by the project for disaster resilient housing.
 
Watch how we’ve helped build safer houses for the people in Uttarakhand:
 
Building Safer Houses in Northern India

 

Challenges and opportunities of urbanization in India

Divya Gupta's picture

India’s leading urban thinkers and practitioners gathered earlier this month, on November 1, 2017, in New Delhi to discuss “Challenges and Opportunities of Urbanization in India,” at a Roundtable Discussion organized by the World Bank Group. The event was chaired by Ede Ijjasz-Vasquez, Senior Director, Global Practice for Urban, Social, Rural and Resilience, World Bank.


 
“India's urban trajectory will be globally important,” said Vasquez in opening remarks, underscoring the strong link between the country’s economic trajectory and how it urbanizes, particularly over the next two decades. “It’s progress on poverty elimination, efficiency and growth of the economy, health of urban residents, climate emissions will all have a very important bearing, not just for India, but globally.”

Towards a clean India

Guangzhe CHEN's picture

When Prime Minister Narendra Modi launched the Swachh Bharat Mission in 2014, it marked the beginning of the world’s largest ever sanitation drive. Now, a 2017 survey by the Quality Council of India finds that access to toilets by rural households has increased to 62.45 per cent, and that 91 per cent of those who have a toilet, use it. Given India’s size and diversity, it is no surprise that implementation varies widely across states. Even so, the fact that almost every Indian now has sanitation on the mind is a victory by itself.

 Guy Stubbs

Achieving a task of this magnitude will not be easy. Bangladesh took 15 years to become open defecation free (ODF), while Thailand took 40 years to do so. Meeting sanitation targets is not a one-off event. Changing centuries-old habits of open defecation is a complex and long-term undertaking.

Six reasons why Sri Lanka needs to boost its ailing private sector

Tatiana Nenova's picture
 Joe Qian / World Bank
A view of the business district in Colombo. Credit: Joe Qian / World Bank

Sri Lanka experienced strong growth at the end of its 26-year conflict. This was to be expected as post-war reconstruction tends to bring new hope and energy to a country.
 
And Sri Lanka has done well—5 percent growth is nothing to scoff at.  
 
However, Sri Lanka needs to create an environment that fosters private-sector growth and creates more and better jobs. To that end, the country should address these 6 pressing challenges:

1. The easy economic wins are almost exhausted

For a long time, the public-sector has been pouring funds into everything from infrastructure to healthcare. Unfortunately, Sri Lanka’s public sector is facing serious budget constraints. The island’s tax to growth domestic product (GDP) ratio is one of the lowest in the world, falling from 24.2% in 1978 to 10.1% in 2014. Sri Lanka should look for more sustainable sources of growth. As in many other countries, the answer lies with the private sector.
 
2. Sri Lanka has isolated itself from global and regional value chains 

Over the past decades, Sri Lanka has lost its trade competitiveness. As illustrated in the graph below, Sri Lanka outperformed Vietnam in the early 1990s on how much of its trade contributed to its growth domestic product. Vietnam has now overtaken Sri Lanka where trade has been harmed by high tariffs and para-tariffs and trade interventions on agriculture.


Sri Lanka dropped down by 14 notches to the 85th position out of 137 in the recent  Global Competitiveness Index.
           
3. The system inhibits private sector growth

Sri Lanka’s private sector is ailing. Sri Lankan companies are entrepreneurial and the country’s young people are smart, inquisitive, and dynamic. Yet, this does not translate into a vibrant private sector. Instead, public enterprises are the ones carrying the whole weight of development in this country.
 
The question is, why is the private sector not shouldering its burden of growth?


From the chart above, you can see how difficult it is to set up and operate a business in Sri Lanka. From paying taxes to enforcing contracts to registering property, entrepreneurs have the deck stacked against them.
 
Trading across borders is particularly challenging for Sri Lankan businesses. Trade facilitation is inadequate to the point of stunting growth and linkages to regional value chains. The chart explains just why Sri Lanka is considered one of the hardest countries in the world to run a trading business. Compare it to Singapore–you could even import a live tiger there without a problem.

Reforms Sri Lanka needs to boost its economy

Idah Z. Pswarayi-Riddihough's picture
 Joe Qian/World Bank
The Colombo Stock Exchange. Credit: Joe Qian/World Bank

Many Sri Lankans understand the potential benefits of lowering trade costs and making their country more competitive in the global economy. The majority, however, fear increased competition, the unfair advantage of the private sector from abroad and limited skills and innovation to compete.

Yet, Sri Lanka’s aspirations cannot be realized in the current status quo.  

While changes in trade policies and regulations will undeniably improve the lives of most citizens, I’m mindful that some are likely to lose. However, many potential gainers of the reforms who are currently opposed to them are unaware of their benefits.

Implementing smart reforms means that government funds will be used more effectively for the people, improve access to better healthcare, education, basic infrastructure and provide Sri Lankans with opportunities to get more and better jobs. Let me focus on a few reforms that I believe are critical for the country.  First, Sri Lanka needs to seek growth opportunities and foreign investment beyond its borders.    

First, Sri Lanka needs to seek growth opportunities and foreign investment beyond its borders.

Experience shows that no country in the world today has been able to create opportunities for its population entirely within its own geographic boundaries. To succeed in this open environment, Sri Lanka will need to improve its skills base, better understand supply and demand chains as well as produce higher quality goods and services

Experience shows that no country in the world today has been able to create opportunities for its population entirely within its own geographic boundaries. To succeed in this open environment, Sri Lanka will need to improve its skills base, better understand supply and demand chains as well as produce higher quality goods and services.

Fresh thinking on economic cooperation in South Asia

Nikita Singla's picture
 Aamir Khan/ Pakistan, Sreerupa Sengupta/ India, Sanjay Kathuria/ World Bank, Mahfuz Kabir & Surendar Singh/ Bangladesh) Photo By: Marcio De La Cruz/ World Bank
Young Economists sharing the stage with Sanjay Kathuria, Lead Economist and Coordinator, Regional Integration (Left to Right: Aamir Khan/ Pakistan, Sreerupa Sengupta/ India, Sanjay Kathuria/ World Bank, Mahfuz Kabir/Bangladesh & Surendar Singh/ India). Photo by: Marcio De La Cruz/ World Bank


That regional cooperation in South Asia is lower than optimal levels is well accepted. It is usually ascribed to – the asymmetry in size between India and the rest, conflicts and historical political tensions, a trust deficit, limited transport connectivity, and onerous logistics, among many other factors.

Deepening regional integration requires sufficient policy-relevant analytical work on the costs and benefits of both intra-regional trade and investment. An effective cross-border network of young professionals can contribute to fresh thinking on emerging economic cooperation issues in South Asia.

Against this background, the World Bank Group sponsored a competitive request for proposals.  Awardees from Bangladesh, India, and Pakistan, after being actively mentored by seasoned World Bank staff over a period of two years, convened in Washington DC to present their new and exciting research. Research areas included regional value chains, production sharing and the impact assessment of alternative preferential trade agreements in the region.

Young Economists offer fresh thoughts on economic cooperation in South Asia

Mahfuz Kabir, Acting Research Director, Bangladesh Institute of International and Strategic Studies and Surendar Singh, Policy Analyst, Consumer Unity Trust Society (CUTS International) presented their research: Of Streams and Tides, India-Bangladesh Value Chains in Textiles and Clothing (T&C). They focus on how to tackle three main trade barriers for T&C: a) high tariffs for selected, but important goods for the industries of both countries; b) inefficient customs procedures and c) divergent criteria for rules of origin classification.

Sreerupa Sengupta, Ph.D. Scholar at Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi discussed Trade Cooperation and Production Sharing in South Asia – An Indian Perspective. Reviewing the pattern of Indian exports and imports in the last twenty years, her research focuses on comparing the Global Value Chain (GVC) participation rate of India with East Asian and ASEAN economies. Barriers to higher participation include a) lack of openness in the FDI sector; b) lack of adequate port infrastructure, and long port dwell times; and c) lack of Mutual Recognition Agreements (MRAs).

Aamir Khan, Assistant Professor, Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad presented his work on Economy Wide Impact of Regional Integration in South Asia - Options for Pakistan. His research analyzes the reasons for Pakistan not being able to take full advantage of its Free Trade Agreement (FTA) with China, and finds that the granting of ASEAN-type concessions to Pakistan in its FTA with China would be more beneficial than the current FTA arrangement. The work also draws lessons for FTAs that are currently being negotiated by South Asian countries.

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