A comment on "Growth and equity in developing countries : a reinterpretation of the Sri Lankan experience"

THE W O R L D B A N K E C O N OM I C REVIEW, VOL. 1, NO. 3: 5 1 5 -5 2 0 tvh2y I (~7 A COMMENT ON ''GROWTH AND EQUITY IN DEVELOPING COUNTRIES: A REINTERPRETATION OF THE SRI LANKAN EXPERIENCE,'' BY BHALLA AND GLEWWE Graham Pyatt fK w The inaugural issue of this journal contained an article by Bhalla and Glewwe which addresses some problems that arise in attempting to assess "the relative success or failure of policies in different countries or policy regimes" (Bhalla and Glewwe, 1986, p. 36). Their conceptual framework contrasts two approaches to raising economic welfare: "the direct or basic needs approach and the indirect or economic growth approach" (p. 61). From 1960 to 1977 Sri Lanka is seen as approximating the first regime, while the subsequent period, following the change of government in 1977, is cast as having a closer correspondence to the second. The general conclusion invited by the paper is that the change in policy orientation has been for the better: "the evidence .. . suggests that the post-1977 policies have not been detrimental to equity objectives and may offer more promise than those which they replaced" (p. 62). In what follows I will suggest that Bhalla and Glewwe have exceeded the interpretations which their data will support. Accordingly, their case cannot be sustained, much as one would like to have answers to the questions they raise. For my own part, I share the majority view that Sri Lanka's system of food subsidies was (and to some extent remains) inefficient. But it is surprising to find that Bhalla and Glewwe also question performance in the social field between 1960 and 1977, and that they totally ignore Sri Lanka's current state of disruption in their optimistic prognosis. I. SRI LANKA's ACHIEVEMENTS IN THE SOCIAL FIELD It is well known that, in relation to countries at similar levels of per capita income, Sri Lanka has been exceptionally successful in such social fields as health and education. As a result, studies like those of Isenman (1980) and Sen (1981), Graham Pyatt is at the University of Warwick, England. He formerly was at the World Bank and in that capacity initiated the joint project between the World Bank and the Central Bank of Ceylon which has supported the research now reported in Bhalla and Glewwe (1986). The author would like to thank Sudir Anand, Surjit Bhalla, Dennis de Tray, Paul Isenman, S. Narapalasingham, and Amartya Sen for their comments on an earlier draft. Copyright