Asian Economic Policy Review最新文献

Athukorala (2025) makes a convincing case that Sri Lanka's debt crisis of 2022 was not only due to recent, reckless economic policies—a massive tax cut, financing fiscal deficits by printing money, repaying foreign debt out of reserves—but the culmination of decades of an “anti-tradable” bias that left the economy unable to manage high levels of debt, especially in the wake of the COVID-19 crisis. The analysis is based on a sweeping tour of Sri Lankan economic history, starting before independence and ending with the current International Monetary Fund-supported program of 2023.

This longue durée helps resolve a puzzle about the country's policy direction. In the late 1970s, Sri Lanka was one of the first developing countries to liberalize trade. The economy boomed. Many people heralded Sri Lanka as a textbook case of successful trade reform (see, for example, Castro & Devarajan, 2006). Nevertheless, the country soon began adopting anti-tradable policies, which accelerated in the 2000s leading to the collapse of 2022. Athukorala observes that the trade liberalization was accompanied by laxist macroeconomic policies, such as an overvalued exchange rate, which made the reform difficult to sustain. The early 1980s also saw a massive increase in public investment, which contributed to the real exchange rate appreciation, and to the economic boom.

My comments on Athukorala (2025) are aimed at broadening the set of policies that contributed to the debt crisis, and exploring why Sri Lankan policymakers chose these policies.

In addition to anti-tradable policies, Sri Lanka has followed at least two other policies that have undermined the economy's growth. Introduced in 1958, the Paddy Lands Act requires farmers who lease land from the state (which are most farmers) to grow only paddy. Atukorala mentions the Paddy Lands Act as part of the move toward a closed economy in the 1950s. The Act is still in force—70 years later. Paddy is the least productive and least lucrative crop (World Bank, 2021). This policy has made agriculture the least productive sector in the economy and kept farmers poor.

Second, Sri Lanka has some of the most restrictive labor regulations in the world (Abidoye et al., 2009). Workers with 20 years of service receive an average of 30 months of severance pay. Not surprisingly, employment growth in the formal, private sector has been sluggish. The situation became serious in the 1980s when the youth bulge was entering the labor market. To quell violent protests, the government expanded employment in the public sector, another low-productivity sector. In addition, the public sector pays higher wages, provides better benefits, and is a job for life (Hausmann et al., 2020). This raises the reservation wage for working in the private sector, making it harder to compete in world markets.

In short, Athukorala'

Despite substantial socio-economic progress driven by the readymade garment (RMG) industry, Bangladesh faces a severe export concentration due to its heavy reliance on a single export sector. This present paper examines the policy barriers hindering export diversification in Bangladesh and suggests measures to tackle the problem. It highlights that excessive tariff protection has favored import-competing sectors creating an anti-export bias. To promote export diversification, Bangladesh must implement effective tariff rationalization measures to address the policy-induced disincentives for exports. Additionally, attracting foreign direct investment, improving the investment climate, and addressing infrastructural and logistical challenges are crucial for enhancing the non-RMG export response.

Van der Eng (2025) provides a balanced overview of problems faced by Pakistan's economy today. First, as a development economist watching Pakistan since the mid-1980s, I agree with the structural reforms that are needed for Pakistan to sustain growth and reduce poverty in the coming decades. It is disappointing to find similar remarks repeatedly on the need for structural reforms but that elite capture is the underlying source of the difficulties for these reforms. In 2002 and 2003, I was involved in a project to prepare a long-term country strategy paper for the Japanese government with respect to official development assistance to Pakistan. Our final report pointed out the root cause of the less than expected performance of Pakistan as the weak and fragile monitoring capacity of citizens against the rent-seeking ruling elites (JICA, 2003). Pakistani economists cited by van der Eng (2025) vividly indicate that the problem still remains after more than two decades.

Second, I would like to attempt to enrichen the analysis by van der Eng (2025) with a longer term horizon covering the pre-independence period. It is highly appropriate for van der Eng (2025) to pay attention to long-term perspectives, with an excellent summary on the industrialization during the 1960s under the military government of Ayub Khan. The industrialization during the 1960s contributed to the higher gross domestic product (GDP) per capita in Pakistan than in India in the 1980s. I once estimated GDP separately for areas currently in India, Pakistan, and Bangladesh, for the period c.1900–1947 (Kurosaki, 2017) and have recently revised those estimates (Kurosaki, 2024). Figure 1 shows that the high growth period during the 1960s was preceded by positive economic growth in Pakistan during the 1950s and the pre-independence period. Kurosaki (2017) shows that agricultural growth driven by institutional reforms just after independence and the canal irrigation development during the colonial period were the main factors of this early catching up. Areas currently in Pakistan indeed started from a much more unfavorable level than indicated by van der Eng (2025).

This has two policy implications. First, the achievement of Pakistan's economy has been more substantial than indicated by analyses focusing on more recent periods. In other words, the recent economic distress was indeed more damaging to the welfare of Pakistanis with a longer time horizon. Second, the agricultural sector has been important, and considering its current productivity level below the global frontier, the sector still has potential to contribute to economic growth and poverty reduction in Pakistan in the coming years.

South Asia has long been a region of untapped potential, lagging behind East Asia in economic progress, despite some remarkable successes. “China plus one” presents another opportunity for the region to capitalize on its demographic dividend. Focusing on Bangladesh, India, Pakistan, and Sri Lanka, this article highlights major hurdles to their sustained progress, including protectionist trade policies, inadequate human capital, and a small labor force relative to population. For Sri Lanka and Pakistan, there are the additional challenges of coping with ongoing economic crises. The analysis suggests options to regaining/sustaining macroeconomic stability, while factoring in the fiscal dimension of climate change; acting urgently to deepen global and regional trade, to seize the moment; addressing the near crisis in human capital in many countries; accelerating digital solutions to improve governance and service delivery; and using regional cooperation to help build climate resilience. The role of business elites in influencing economic policies is also discussed.

This present paper discusses the main issues gripping Pakistan's economy. It takes a long-term perspective to indicate that several economic issues are structural, going back at least 60 years. The present paper substantiates that Pakistan's current issues were aggravated during 2022, particularly by the damage caused by large scale floods. Government relief efforts increased budget deficits, public debt, and inflation. Crop failures dampened export earnings, increased the current account deficit and added urgency to the need to mobilize foreign exchange for foreign debt servicing during 2023. In 2024, resolving foreign debt servicing obligations is the touchstone for achieving macroeconomic stability and initiating reforms to change structural factors inhibiting Pakistan's economic growth.