I am not sure if there is any Sri Lankan who has not read or heard of the novel written by Leonard Woolf- “Village in the Jungle”. Sinhala-speaking readers know its Sinhala translation by the title with the same meaning, “Baddegama”. Leonard Woolf was a British citizen, who served as an Assistant Government Agent in Hambantota district during British colonial times.
Baddegama was a fictionalized real story of a remote village in the middle of the jungle – a village in Southern Sri Lanka which was perhaps known to Leonard Woolf himself. Anyway, at that time there would have been many villages as such in Sri Lanka.
I can still feel the sense of sorrow that this great novel left in my heart though I had read it many years ago. The village in the jungle – Baddegama, did not have a happy ending. The number of inhabitants and of their families continued to shrink gradually, leaving at the end just the last person to die hopelessly and helplessly; then the village disappeared into the thick jungle that encroached it.
I did not bring this great story to evaluate its fictional value, but an economic concept which has been nowadays loaded with great patriotic values; “self-sufficiency”. My attempt might be risky too, because “economics” can be interpreted to convey a twisted message as well.
A self-sufficient economy does not have links with the rest of the world, or rather it does have very little to do with the rest of the world. It is just like Baddegama!
Villagers in Baddegama lived basically on chena cultivation and, had nothing much to do interacting with the outside world. Their economic activities only allowed them to survive and not to thrive; probably, the villagers did not even know the meaning of “progress” in their living standards. They were not at all concerned with thriving; all their efforts were for surviving.
The only thing that they had to worry about was their daily living. As their produce was insufficient for food for the whole year, they had to borrow; this made them constantly indebted. They also attempted sometimes to sell or exchange what they produce for a few things that they wanted to buy from outside. For that they walked through the jungle to the nearest town which was, in fact, far away from their village or waited for someone to come from outside.
With little power to stand on par with an outsider, the villagers were often subjected to the dominance from outside. As a result, they considered “outside” far superior to their own village. Anyone that came from outside also looked “big” to them, while “anything” from outside made them excited about it.
Baddegama is an ideal economic unit to provide features of a “self-sufficient” economy; we only need to scale it up from a village to a “country”. However, it is wrong to interpret self-sufficiency as the “state of producing all what we want” as many try to do, because all what we want cannot be produced even within a country.
Neither is it a “state of satisfying with what we can produce” because what we have will never satisfy us especially when we see what others are enjoying; if it is the case, we do not need to borrow. Rather a self-sufficient economy has to be interpreted as the “state of surviving with what we can have”.
Mind the remoteness
In an economic sense, self-sufficiency is a “romantic” concept which has little meaning. The danger is, however, that they are bound to perish – just like Baddegama! If we scale up the economic status of Baddegama, without much difficulty we can visualise a country with a “self-sufficient” economy.
How does a country become self-sufficient? By being isolated from the rest of the world! A country that values self-sufficiency should have attempted to be far away from the rest of the world, even if it was physically located in the middle of a dynamic prosperous region.
In fact, achieving self-sufficiency requires policies and regulations of isolation. During this globalisation age, isolation from the rest of the world is a choice not only to be self-sufficient, but also to be under-developed.
In the modern economic environment, countries that are trying to be self-sufficient should have trade barriers against imports of goods and services; beyond international trade, they should have regulations controlling private and foreign investment, access to resources such as lands, buildings, human resources and utilities. All these policies work together to make a country an isolated self-sufficient economy.
What would be the outcome of isolation? An economy just surviving, not thriving!
Policies of isolation
Is there any use of talking about export promotion, when we have established a “protective” economy with import barriers? We find it difficult and embarrassing to justify ourselves when we close our doors for others and ask them to open their doors for us.
When there are trade barriers on imports (such as high import duties and other forms of restrictions), we will have to pay higher prices. Higher prices exclude consumers, first the poor consumers and, then the less-poor consumers. Then the commodities are available only for the rich; anyway, the rich don’t have to pay higher prices either, as they often go abroad so that they can buy them at cheap prices outside the country. The final outcome of the policy is a small market which serves neither poor nor the rich.
Taxes and subsidies are common measures of protection to domestic producers. Taxes on imports give a higher price margin to domestic producers. The consumers who are deprived by higher import taxes have to pay higher prices to make the domestic producers survive.
Subsidies, on the other hand, make domestic products cheaper than imports. In this case too, people are deprived by the taxes they have to pay for providing subsidies. Both import taxes and domestic subsidies allow the domestic producers to survive, but not thrive.
Protecting domestic producers
There are strong sentiments about protecting domestic producers against imports. Evidently, the argument for protecting domestic production has two problems:
First, the protective policies are short-sighted as their proponents don’t have a long-term policy vision for economic prosperity of the people; protection is just a survival strategy. Second, protection is the scapegoat for hiding everything else under the carpet; all types of challenging reforms can be ignored when such needs are covered up with protective measures.
We may spend the time by trying to figure out which products to be subsidised and which products to be protected using taxes. World experience suggests that neither of them have done much for progress, but just for survival. The outcome of isolation is surviving and not thriving; just like Baddegama which tried to remain survived.
A thriving strategy for an economy is a set of policies and regulations that make the country integrated with the rest of the world; integration is the opposite of isolation! Policy choices as such open up the avenues for an economy to move away from self-sufficiency. The opposite of self-sufficiency is “dependency”. I use the term “dependency” knowing well that it is a discarded word.
What is dependency, anyway? When an economy is open to and integrated with the rest of the world with minimal barriers enforced, it will move away from the status of self-sufficient nature; it will not attempt to produce everything, but only the things which it can produce efficiently and competitively. This will enable the economy to make the best use of its resources and, allow foreign resources to flow in – investment, technology and, even human resources.
Apparently, the country will gradually give up some of the products that it needs to buy from other countries; it will sell what is produces to the rest of the world and, buy what it needs from the rest of the world – the inter-dependency. It is not a surviving or perishing economy like Beddegama, but a thriving economy reaching prosperity.
(The writer is a Professor of Economics at the University of Colombo. He can be reached at firstname.lastname@example.org).