Dhananath Fernando 00:18 Hello, hello everybody! Thank you for tuning in to Advocata Institute, and we are starting a new series of conversations with Dr. Sarath Rajapati Rana. If you haven't checked out our previous series of episodes on economics with Dr. Rajapatiranar, we highly recommend you to go back and check on our YouTube channel on that series. But this is particularly an interesting series because Dr. Rajapatiranath authored a new book, Policy Challenges of Globalisation in Sri Lanka. Of course, as you know, this is not a promotional type of material that we are trying to deliver here because the book has already been published and it's an academic book. It is supposed to reach the libraries and many universities for academic purposes, but for the Sri Lankan audience because particularly it's a book about Sri Lanka, and we are going to have 12 episode series about this book on the 12 chapters with the author himself to delve into the details and to ask questions, but we also highly recommend you to read it. It's not available in Sri Lanka. You can buy it online. But again, as we mentioned, we want to get the conversation going on globalisation, particularly in an era like this where this conversation is coming back and forth. Dr. Rajapatiranath, thank you very much for joining us as usual with this new series of conversation and very excited. Dr. Sarath Rajapatirana 01:46 Yeah, it is for me pleasure and a challenge to talk about this. I really enjoy doing the book, and when the first evaluations came, I thought somebody of pulling pulling a leg, pulling my leg, and doing a fast one, and then the the publishers asked for the evaluations. They were highly excited about it. Then I thought, well, yeah, this is good. Dhananath Fernando 02:18 Yeah. So one person endorsed the book was Dr. Aravin Panagaria. Dr. Sarath Rajapatirana 02:23 Aravin Panagaria Dhananath Fernando 02:24 from University of Chicago. Dr. Sarath Rajapatirana 02:26 Yeah, Chicago. Dhananath Fernando 02:27 Yes. So as Dr. Sarath Rajapatirana 02:29 no University of Columbia. Dhananath Fernando 02:30 Sorry, University of Avivaka upon University of Columbia, and then Dr. Sarath Rajapatirana 02:35 then from Oxford University. Dhananath Fernando 02:36 From Oxford University. Yes. So Dr. Sarath Rajapatirana 02:40 I have forgotten. Yes. Okay. It's a it's a Dhananath Fernando 02:43 main thing we we forget quite often. So please bear with us. But anyway, it's any it's a very interesting book, Dr. Ajay. First of all, what made you to author this book? Yeah. Of course, you have passed like you have seen multiple episodes of globalisation. What motivated you to author this book to begin with, Dr. Sarath Rajapatirana 03:00 actually, when we talk about globalisation, at the very beginning, I presented a paper about 30 years ago about with the title "Who is afraid of globalisation? People liked it because it pronged them to know that the world is much better to have a globalised world than one in which people countries are doing things by themselves. So it gives very good chances for for your trade and for your investment, and you know, in order to to do new things, innovate with this. What what globalisation has done, but like usual in economics, not everybody can agree to what we say, and I'll be very disappointed if everybody agrees. So I need to have a very good discussion. So therefore, agreement is not always not the good thing, right thing. Yeah. Dhananath Fernando 04:08 Yeah. So so that okay. So this is coming from like experiencing this for from presenting the paper 30 years ago. Dr. Sarath Rajapatirana 04:16 Yeah, it was no connection to this. The title was of this title. What the title I gave later when I wrote this book? Who's afraid of globalisation? Who's afraid of globalisation? The famous literary piece called "Who's Afraid of Virginia Woolf? Dhananath Fernando 04:34 Ah, okay. Yeah, I Dr. Sarath Rajapatirana 04:35 was proud to do that. Yeah, Dhananath Fernando 04:38 right. And before we go into a little more details on chapter one, so today we are going to discuss about chapter one. Yeah, just wanted to understand the methodology. Like, is there a particular methodology you have mentioned it in the in the book in the in the first chapter? Do you want to speak about briefly on like what was the process? Yeah. Have you have you are evaluating chapter wise very briefly to start the conversation, Doctor? Dr. Sarath Rajapatirana 05:06 Yeah, the methodology is first of all to start with to go beyond the standard way people looked at Dhananath Fernando 05:12 it. Dr. Sarath Rajapatirana 05:13 People looked at it as a single something that is happening with the global issues, Dhananath Fernando 05:22 yeah, Dr. Sarath Rajapatirana 05:23 but actually nobody looked at the connection between globalisation and country issues, Dhananath Fernando 05:29 right? Dr. Sarath Rajapatirana 05:29 So that is the most important thing about the book. Is as also accepted by Anne Krieger in her write-up about the book. It it it it really looks into a dimension that has not been taken by other other people who talked who who talked who wrote about globalisation. Dhananath Fernando 05:52 And quoting from your book, it says this methodology of using narrative provides a way to look at forces at work in a small open economy, without using single closely specified economic model. Yes. So this is Sri Lanka is a small economy, and you are basically taking it as an example. Dr. Sarath Rajapatirana 06:10 Yeah, and also other countries who are similar in size and shall you say in age to us can learn from it that this is worth something that we should know more about. So that's why I I went into looking at it from a country view, Dhananath Fernando 06:31 right? Dr. Sarath Rajapatirana 06:32 And the interaction between the country and the rest of the world, basically. I mean, we we know that opening your economy to other economies is a very important, useful thing for all countries. Dhananath Fernando 06:50 Yeah, Doctor Ayodhya. So we'll start with what what you have basically mentioned as globalisation. So because on on chapter one, which is the an economic analysis informed by history and ideology and politics. Yeah. So you basically start with what is globalisation. Yes. And you basically bring out. That's why I like about the book because you not only bring like the pro-globalization sentiment, like you also gets what other people have raised as concerns, especially on the income disparity matter, so on and so forth. So, what is globalisation? In in quoting from the book, it says it's it's linking goods, services, and factor markets. But also, you have taken like Stiglitz definition and Jagdish Bhagavathi's definition, and you have explored a bit. You want to comment on like how what is globalisation and what was going through in your mind when you evaluated these different definitions by different senior economists? Dr. Sarath Rajapatirana 07:50 Yeah, globalisation is very simple idea. That is when different parts of the world work together and do it for all the countries, so that is globalisation. Now, the economists, for example, were laughing at the thing. Said it is actually not globalisation; it's globalisation. Globalisation. Dhananath Fernando 08:14 You have mentioned it in that in your book. Dr. Sarath Rajapatirana 08:16 Yeah, and so I was very annoyed with that because it's not globalisation actually, and it was the first time we have ventured into looking into this relationship between our individual country, small country, and the rest of the world. And the rest of the world is so important to us, and so therefore we look at how how what how the connection made, and what is it is going to be beneficial to the country or not? So that is the first chapter says, and then because we also widen our horizon by going beyond beyond one country, we are looking at different country. We compare with, for example, in trade, and also we go into beyond economics to non-economics, if you like, into ideology. For example, people are very scared to deal with ideology because there is not a very good definition of ideology and things like that. Academics are very scared; they stay away from it. I said, let's try and see what is ideology, having a view that that is useful for people to look into the future ideological position. Some people who will say we have ideology that is more bent towards towards free markets. Yes, we have. I am not ashamed actually to say that it's a very good thing to have ideology. Ideology has to be sort of defined. Carefully, I do in other chapters, having a particular view that is a guide for you that you follow. Dhananath Fernando 10:10 So, Dr. Padilla, in in your in your definition on globalisation, you basically mention it's a process that brings world together, linking goods. There are three components: goods, services, and factor markets. So that's land, labour, capital. Could you elaborate on this? Okay, linking goods is very straight, I mean, straightforward in sense. People understand that. Okay, you export something, you import something, you don't have a lot of restrictions. But when it comes to services and factor markets like land, labour, and capital, how does it take place, and how do you want to integrate it in the conversation? Yeah, actually, Dr. Sarath Rajapatirana 10:52 it is not that difficult to think about it. Factor market, for example, buying somebody's land. Say foreigner comes to Sri Lanka and can buy one to get 30 purchases of land. That can be accommodated easily because we have the rules to do it. We couldn't have done it earlier, but nowadays we could have we could do it because there are processes by which the land can be identified, made into an asset that people that people will think that it would be very useful to have very strong property rights, and so you can buy and sell land easily. In fact, you know, example is United States. It took us all 20 minutes to buy a house. 20 minutes. 20 minutes. Yeah. Dhananath Fernando 11:48 So that's the power of like when you have yeah you know Dr. Sarath Rajapatirana 11:52 developed markets. Developed markets. Dhananath Fernando 11:53 Okay. Since you mentioned about developed markets, now the next version is like especially famous economists Stiglitz defines it as the close integration of the countries through increased flow of goods and services, capital and even labour. But he claimed that the problems of globalisation having been mostly on developing countries where 80% of the world's population lives. Dr. Sarath Rajapatirana 12:18 Yeah, Dhananath Fernando 12:18 what's your take on this? Dr. Sarath Rajapatirana 12:20 I am not very different from. I don't have very different views on this particular aspect. And since he's one of the first people to define it, I think it's a good definition. I have no problem with that. But in the later chapter, you see that he's not really pro globalisation. He thinks that it has bad effects. Actually, I can state at the very beginning, in the analysis that good people have done, that is not very clear. Even in this little book dealing with one country, there is no evidence that globalisation was harmful to Dhananath Fernando 13:03 us. There's no evidence. I didn't know any evidence. Yeah, Dr. Sarath Rajapatirana 13:05 and the evidence is to the contrary that because of we are globalised, we were able to develop better. Every time you open the economy, we did look at Sri Lanka, 1977, 77 period. You know, we were doing very well Dhananath Fernando 13:23 with that, doctor. I am coming to on the the models that you have basically mentioned. One is the please bear with me if I do not pronounce this right. One is the Heckscher Olin model, and then the second one is the Stopler Samuelson model? Yeah, they are Dr. Sarath Rajapatirana 13:42 Stop Plus Samuel. Stopless Dhananath Fernando 13:44 Samuelson model. Yeah, Dr. Sarath Rajapatirana 13:45 there are two very good economists. You know, the first one is Heckscher Heckscher-Ohlin. Heckscherlin. Heckscher is a name as Orlin is Swedish names. They they developed a way of looking at it and said that Hexa said that countries export goods for which it has a comparative advantage and import goods for which they don't have competitive. Famous thing, very important thing to realise, which Dhananath Fernando 14:20 we do all the time. Now Dr. Sarath Rajapatirana 14:21 it has become common sense. Common sense, but it wasn't there at the beginning. Right. This in the 1940s, 4050s, Yeah, actually, I have met these two gentlemen. Excellent. They are no longer like some time ago. You know, maybe 30 years ago, or 40 years ago. So that was Dhananath Fernando 14:42 mainly Heckscher Hexa model. Dr. Sarath Rajapatirana 14:45 Yeah, two people Hexham in. Yeah, right. Come to come to this. Dhananath Fernando 14:48 And then what is so that is like people export when they have a comparative advantage, and they import when they do not have a comparative advantage, which we do all the time. We don't have a. I don't have a comparative advantage of. Preparing bread, so I basically buy it, and yeah, and how about the Stalker Samuelson model? Dr. Sarath Rajapatirana 15:09 Yeah, the little bit more complicated. Complicated, okay. Samuelson is easily the most complicated economics. Not expected economics. Sorry, other 20th century. Okay, by easily by far, yeah, I mean Nobel Prizes, various prices, and he's a mathematician who came into economics, and and he's a respectable one, but he's not a free trader. That's the problem with him. Dhananath Fernando 15:35 Okay, so what his what was his model, Doctor Rajavadhiran? You want to quickly elaborate because you speak about with globalisation there are certain goods which became cheaper for on one side at the same time there are certain prices that went up particularly when it comes to labour because when you have more industries your labour prices go up but at the same time because of the comparative advantages certain I mean prices of goods are coming down Dr. Sarath Rajapatirana 16:00 yeah Dhananath Fernando 16:00 could you elaborate? If you Dr. Sarath Rajapatirana 16:01 have really put your finger in the frame, frame, good place, in which the relationship between prices and factors of production. Dhananath Fernando 16:10 Okay. Dr. Sarath Rajapatirana 16:11 He defined it in a very good way. Dhananath Fernando 16:13 Samuelson. Dr. Sarath Rajapatirana 16:14 Samuelson, and Stolper is was one of his friends. Dhananath Fernando 16:19 Right. Dr. Sarath Rajapatirana 16:19 And actually, he he he he did some study on Africa also with him, and so that's how we call Stolper-Semiton theorem. Yeah. Dhananath Fernando 16:30 Okay. So could you elaborate a bit more on like on the on the connectivity of factor markets and the prices? Yeah. Dhananath Fernando 16:39 In connection to the globalisation and also since it's about Sri Lanka in connectivity to Sri Lanka, Dr. Sarath Rajapatirana 16:45 shall we say for some like a simple model, the Sri Lanka gets something becomes very good at producing bicycles, and so if we the price of bicycles change, then self-sulfur Samuelson model says, then all things that are connected with creating the bicycle will also have an important impact. Dhananath Fernando 17:10 Right. Dr. Sarath Rajapatirana 17:11 Yeah. Through through the bicycle story. Dhananath Fernando 17:13 Right. Dr. Sarath Rajapatirana 17:14 And so, so it's looking at it, connecting these two, the factor market and and prices, and they are of course very closely related. But people didn't see it as much well. Cholper and Samuelson did. Dhananath Fernando 17:33 Got it. Then in in chapter one, you also speak. I mean, there's a particular graph that you have basically displayed. Probably we can insert in our on our video, which is the percentage of, I mean, trade as a percentage of GDP over a period of time. Dr. Sarath Rajapatirana 17:51 Yeah, Dhananath Fernando 17:51 and you have plotted it the global trade as a percentage of the global GDP as well as the Sri Lanka's trade as a percentage of Sri Lanka's GDP, what we can see is on the global front. If I read the chart right, from about 2000, it starts slowly declining. Dr. Sarath Rajapatirana 18:12 Yeah, Dhananath Fernando 18:13 even before the financial crisis takes place in 2008. Of course, Sri Lanka, we have been fairly increasing it up to about 2008, and there is a small dip. But afterwards, it's pretty much stagnant. This is total trade that is imports and exports both in goods. Would you mind telling us why there is a decline in from 2000 onwards on a global scale? I mean, global trade as a percentage of GDP, as this graph illustrates. Any reasoning? Any thoughts that you want to share? Yeah, actually, Dr. Sarath Rajapatirana 18:50 so it turns out that the this graph basically used to see how we are going to perform in relation to other countries, okay, that's number one. So that if you, if you, and the big line that associates with the rest of the world shows the possibility that we can get there. Dhananath Fernando 19:16 Right. Dr. Sarath Rajapatirana 19:16 It's a sort of the like a goal that we can have. Dhananath Fernando 19:23 Right. Dr. Sarath Rajapatirana 19:23 So if we were doing all things well, and I'll say what we are doing well, if we had open economies, if we didn't, if we have good regulatory system that that leads to better allocation resources, then we can go up to that line, no problem. Yeah, yeah. And of course, we see in history that is that has happened. Countries have done; they have they have been able to constantly increase in the ratio rather than reducing it, right? So, so that is that is a sort of a globe. It is a. Thing that indicates we can get there if we want to, and yeah, we can tell nice stories about how we can get to. Dhananath Fernando 20:07 Got it. So just to understand, so do you mean this declining starting from 2000? I understand that we can benchmark particularly if we are if our as Sri Lanka since this book is about Sri Lanka. Yeah. If we are at least not trading as a percentage of GDP to the global average, that means we are not doing things right. We Dr. Sarath Rajapatirana 20:27 are not fully exploiting our comparative advantage. Our comparative Dhananath Fernando 20:31 advantage. Just want to understand at the same time to to see that slow declining from 2000 in in in in a global context, is there a particular reasoning or like ideological stance change, or was it captured in this book at any point why the trade slowly started declining after 2000? Is there a particular reason? Dr. Sarath Rajapatirana 20:53 Yeah, actually, what happened is that you know we have our governments change, all and we remain a democracy, which is very important point. Our governments change, and then we went and we politicians have different views. The some some other party responds to control everything. Other parties are not so hot doing that. So you can see that there's an impact of domestic policies has on that curve. Dhananath Fernando 21:25 Okay, that's you. You call it the weak globalisation, or like you know, not weak. We basically we did not connect with the globe. Our connection was weak. Dr. Sarath Rajapatirana 21:36 Oh, I I have a nice way of putting it. I think I hear that is it is saying globalisation friendly. Globalisation friendly, okay. And globalisation unfriendly. Unfriendly. So we Dhananath Fernando 21:49 are very. I mean, we are globalisation. We became globalisation unfriendly at one point. At Dr. Sarath Rajapatirana 21:55 one point, and then became very unfriendly. No, in 1977. we became very friendly. Opening the economy really is global region friendly. Dhananath Fernando 22:08 Friendly, Dr. Sarath Rajapatirana 22:09 yeah. Dhananath Fernando 22:10 And on the global context, Dr. Ajay, when we look at when you look at the global trade as a percentage of GDP, that is also started declining from year 2000. On the global context. Is there a reason why? Dr. Sarath Rajapatirana 22:22 Yeah, as a group, if you as a group put them together, as a group, they will be doing bad things. Dhananath Fernando 22:29 Yeah. Okay. Dr. Sarath Rajapatirana 22:30 Yeah, and so then that is reflected in that curve. Dhananath Fernando 22:33 Okay, got it. Interesting. So you can. We highly recommend that we'll insert this graph 1.1 figure 1.1, so then you can see the trends because sometimes Sri Lankans believe that we are very well connected, we are we are globalised or we are very very globalised friendly in Dr. Rajapatiranal terms. But actually, when you look at the data, you will realise it is it is not it is not true. We are not very globalised friendly in policies after one point, and also we have to keep in mind the overall definition. Globalisation is not only about goods; it's also about services, it's also about people, and it's also about the factor markets overall. So, Dr. Alibata, then I would like to move to you have evaluate, I mean, analysed about six time periods from 1960 to 2019, 60 to 6919, 70 to 7980, to 8990, to 99, 2000 to so on and so forth, and you have basically plotted multiple variables: trade as a percentage of GDP in Sri Lanka, trade as a percentage of GDP in the world, and when we move forward in the book again, you have taken the net migration, FDI inflows. You have taken multiple, I mean, you know, factors to analyse. First of all, why only these six time periods? Like, isn't it better if you look at like on a government basis, or is there a reason why it's only six from 60 to 6970, to 79, likewise, or was there a rationale? Dr. Sarath Rajapatirana 24:09 Yeah, actually, there were some periods in which there were changes. So when I chose the period, I chose the period such a way that it is easy to show that between years say 73 and 76. There's a huge difference. If there's a difference, I think there's a difference. And where there is no such change, right? And you can ask why the change took place, and why there are no change. It it took place something that didn't take place. Right. Yeah. So more. information means you can more accurate with your diagnosis. That is the point. Yeah. Dhananath Fernando 24:48 Right. So also, does it? I don't know on a statistical or an econometrics point of view, whether it neutralises like the in a way like the government's approach because like because. On a certain nine-year period or 10-year period, there may be government change Dr. Sarath Rajapatirana 25:05 that is reflected. Yeah, yeah, of course. Okay, Dhananath Fernando 25:07 excellent. Then, Dr. Ajay, Patirana, I also wanted to understand. Like, while this was happening in Sri Lanka, you have plotted like basically indicating that we have slowly, in your terms, we became friendly, globalised friendly in 1977. Then it became like fairly unfriendly or like stagnant, or we really did not became very very friendly with globalisation, or we reversed. Do you want to speak about what was happening during the same time period in a global context? How I mean, since it's a book about Sri Lanka, where we stand when it comes to the other countries globalised in the region or in in the world? Where do we stand? Yeah, Dr. Sarath Rajapatirana 25:54 actually, there's a very simple way to think about it. That is that country that I developed fast have been open period. If anybody denys that, I'll say where have you been? Dhananath Fernando 26:05 Right. Which Dr. Sarath Rajapatirana 26:06 planet are you from? So if you see, if you say period in which countries are growing, look at this East Asian country. My God, 70% 7% in Vietnam at that time going to 2010, 20% Now India is going to be growing at 7% For a huge country to grow on that planet is a very good, very creditable achievement. Dhananath Fernando 26:37 Got it. Also, then in the book, also you speak about a little bit about the global context. For an example, when world pretty much became globalised friendly, about different multilateral arrangements, and even there was a conversation about Doha Development Round, which you have mentioned it could not implemented mainly because of there was no agreement among the principal countries, and there were multiple attempts in a way to a broader, globalised, friendly environment. Do you want to comment on that, which you also elaborates in chapter one? Dr. Sarath Rajapatirana 27:13 Yeah, yeah. Until Doha Agreement, you know, first of all, we have had these agreements in the past, and we were successful, so the trade increased. People were more became more rich and things. But then, after one this one period, things started looking badly. Mostly Western countries also behaved badly. They didn't take it as seriously as poor country had done, and so, so that is why you see the change, and there was no agreement among the main factors about using having a trade. another trade agreement that allows to goods and services to move freely. Dhananath Fernando 28:10 Understood. And also, you have basically described different, like also phases of globalisation on a world history point of view, even you have mentioned in 1890s to 1920s, which is the first wave of globalisation, where the capital markets were more closely intra. I mean, integrated somewhat afterwards, and also then the challenges with the with the financial crisis in 2008, and then there was this East Asian economic crisis, and there was this financial crisis in Mexico in 1997. How do you respond? I mean, do you want to share us your thoughts, which is elaborated in the book on those issues? How people should perceive? What are your thoughts on on those? No, actually, Dr. Sarath Rajapatirana 29:02 so I mean, very simply, you can bring it down to this idea that if you open economy, you are globalised and friendly, you get more benefit. If you work the other way, if you are globalised is unfriendly, and then you you have problems. For example, you can't export without importing. It's very clear. So if you have clean cleaned up your system in order to import goods, so that you can use the global system better than in the past, then you have good results. So then you will see if when governments change second. change, you know. So there's a ebb and flow, so to speak, of economic outcomes. Sometimes better, sometimes not so better. But I think. It is very important to say that we have benefited, although people deny these things. Even our universities, frankly, have not come up to those things yet. They very madness in saying it, but that is the truth. And we we international trade is a very badly taught subject matter in Sri Lanka. Now, when I started at Peradeni, I also I have great teachers. You know, H. J. D. Gunnar Sekar have great teachers, Ian Bandon recently. They are very good teachers, but then they move, they give up their job, they get old, and all these things happen. Dhananath Fernando 30:53 You mean afterwards, even in our university system, the the teaching was more skewed towards sort of globalisation, unfriendly sort of. Dr. Sarath Rajapatirana 31:03 Absolutely, today, Dhananath Fernando 31:05 even today. Let's Dr. Sarath Rajapatirana 31:07 let's see today. Yeah. Now there's a very interesting definition of using these waves to come and go, and somebody was asked to say, "What, what, what, what are you talking about the past? How do you how do you think the past situation? He said, famous man. He said, oh, that's very simple. One damn thing after another. Dhananath Fernando 31:32 One damn thing after the other. So there Dr. Sarath Rajapatirana 31:36 is one damn thing after the other, depending on who is in power, who is you know who learn from other countries? So, example, we all learn from East Asia. We all other other East Asian countries learn to open their economies and have a good regulatory system. Send people abroad to get you know get better understanding, you know, like the guy who brought the machine to the meeting that you talked about last time. We talked about it. Yes. Yeah. Dhananath Fernando 32:10 Yes. The the automobile manufacturers who had to bring the machine to the boardroom and show like how many parts. Yeah. Doctor Ajwatin, coming back on the so okay, you mentioned that the Sri Lanka anyway has sort of a skewedness towards globalisation, unfriendly economics teaching on one side, or Dr. Sarath Rajapatirana 32:31 can you can say have been have been have been Dhananath Fernando 32:34 globalisation unfriendly teaching, but at the same time in your book very interestingly also mentions some of the thought process or some comments by some people who have also critical views on globalisation, especially on income distribution parity or like income distribution, or whether it's favouring more towards developed countries versus developing countries. What is is there any you mentioned? It's in terms of when you look at the statistics and evidence, it's clear if you're connected, is the way out. I mean, it's the way to develop. You know, moving for prosperity and development. At the same time, is there any statistical evidence evaluating in this book on the income disparity? How do someone respond to that question on a Sri Lankan context as well as on a global context? Dr. Sarath Rajapatirana 33:26 Yeah, I'll deal with the Sri Lankan context. Okay, easy for me. There is no hard evidence that open economies will not do well compared to gross economies, all global friendly and global unfriendly. Not friendly. Yeah, there's no hard evidence. No hard evidence. Evidence that we have in the book is towards the idea of globally friendly works, and you know people we have high GDP growth. Economy is doing well. That is just general pattern. Now, not everybody will have the pattern because they have their own episodes of good governance and good people who use their knowledge better than in the past. That happens. So. the point is the simple point is that globalisation unfriendly does not really cut a good figure. Dhananath Fernando 34:32 Right, simple as that. Excellent. So I think we spoke about broadly on the main main content of the first chapter, we have a few more to discuss. But before that, I kindly invite our viewers to become an Advocata Insider. We have a special programme for Advocata Insiders, which we bring out unique content through our YouTube channel. So it's an exclusive programme. Where you can access for most of our information, data charts, which will help you to make solid business decisions on one front. At the same time, you can support the cause of helping Sri Lanka to evidence-based policy formation as a independent think tank, non-partisan think tank. We are always bringing the policy reforms to make a business-friendly, business-conducive environment or a market-friendly environment, so then we all can prosper together. So it's 12,000 rupees per year to become an Advocata insider. It's just like 1000 rupees per month, and you get a tonne of content which will help you to make your business decisions better. 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The the 10,000 rupees is our Advocata insider basic programme, and then there are multiple layers, so 36,000, which you will get more access for our roundtable discussion, so on and so forth. So as there is Advocata Pro version, so please consider all the options. You have to join, go to our website, check the support button, click the support button, then you will see all the details. Dr. Ajbin, now coming back from that from that short promotion on our Advocata insider programme, you also speak about the capital markets integration and the foreign direct investments, and also the other reforms that is required. You spoke you speak about which is coming on the Teva, the labour reforms that is required. Truly essential. Yes, and only Dr. Sarath Rajapatirana 37:21 bad. Yes, Dhananath Fernando 37:22 foreign direct investment. So, in that sense, on on Sri Lanka's context, let's go into detail in the coming chapters. But at the introductory level, which in terms of capital market and capital formation, where we could have improved, or why that 1977, why we became globalisation friendly, where it why it did not move forward for capital markets and people and the rest of it, why it like got stalled in the middle of Dr. Sarath Rajapatirana 37:56 it? Yeah, actually, it's very interesting story that is because system changed, the people who came to power after 1977 were different lot of people from before. For example, I can say 1970 to 77 was the worst period for Sri Lanka's economy, burst because mr. Vandaranaka was. assassinated. The wife took the at the end of another couple of other two changes. Wife became prime minister and was guided by the LSSP people. And she is a very fine lady, but she followed their ideas, stopping imports at the beginning, and you know, using very hard rules about what what to do with economy? So they were always for the old Marxist type of ideas, and those ideas don't work. That is by definition. They gave her a globalisation, unfriendly unfriendly situation to follow. Dhananath Fernando 39:19 Okay. Dr. Sarath Rajapatirana 39:19 Yeah. So Dhananath Fernando 39:21 that's what basically happened in that process. Dr. Sarath Rajapatirana 39:24 I'll give you an example. I explained this at the World Bank Board. That is the the Minister of Finance. Received letters from the people about how many cars so many had, so people have imported, other people have not imported this type of thing. Real detail that was totally not necessary. And so they they did not allow people to go out. There nobody would be allowed to go out. Even when I came on a visit to Sri Lanka from Washington, they were doubtful whether I should be allowed to go. I said, "What are you talking about? So it was very everything was controlled, and later some of the people who were doing it realised that it was not going to work, and I think that that realisation is very important because these were intelligent people, you know, emperors, and you know, they are very well-educated, intelligent people. Then they realise that the whole idea of fixing to a 1918 40s ideas were not going to work. Dhananath Fernando 40:58 Absolutely. So, in the first chapter, actually, you provide also sort of a brief history about the globalisation process and sort of the political environment, even on an international context that you mention about the the the invasion of Kuwait by Iraqi and when the troops moved out, and even it comes up to the COVID time, like what happened to the globalisation on COVID. So, if you are reading the book, you can capture all those seasons of globalisation. I mean, countries becoming slowly globalised friendly and globalisation unfriendly, and the each chapter that we go through. That's all encapsulated in in chapter one. But interestingly, also what what was there in the book was when it comes to the Sri Lankan context, you have mentioned that no no government actually was openly saying anything about becoming globalisation unfriendly, unless I think you mentioned in a particular time that that it comes to manifesto that on certain things about globalisation, unfriendly because everyone talks about becoming an export-oriented country, and if you want to be export-oriented, you have to become globalization-friendly because there is no other way that you cannot you can be you know export-oriented as well as globalisation unfriendly. Yeah, you can't. Do you want to you know elaborate a bit more on that, Dr. Rajapatiranana. On no political party after that 1970-77 period after we basically opened up, no party in a political standpoint was particularly globalisation unfriendly, except after after one point that we were basically mentioning more inward-oriented policies. Dr. Sarath Rajapatirana 42:40 Actually, inward-oriented policies are global based on on friendly. Yeah, that's another way of putting it. All yeah, outward oriented are globally friendly. You know, it's just different terms describing the same phenomena. So yeah. Dhananath Fernando 42:58 Okay, but also no. In the why, I mean, political parties were not particularly globalisation unfriendly on an open basis. Is there any reasoning, any observation? Some of Dr. Sarath Rajapatirana 43:09 them, the smart people, some of them saw that there this something happened in '77 that they that normal knowledge that they had could not explain. So then they said no. We freed the economy; it worked. So it works. Dhananath Fernando 43:25 Right Dr. Sarath Rajapatirana 43:25 now, why did he sustain the lawyers? I I said this to a very important issue. I said the the lawyers didn't want did not like globalisation Unfriendly, right? Didn't like globalisation. Globalisation, Dr. Sarath Rajapatirana 43:44 they didn't like globalisation. Dhananath Fernando 43:46 They didn't like. They didn't Dr. Sarath Rajapatirana 43:48 like it. And I asked a very famous man, "Is it correct to say that? No, no, that's not correct. He said, "I said I insist that happen. Dhananath Fernando 44:01 Okay, Dr. Sarath Rajapatirana 44:02 and so. so yeah, we can use those terms. I thought globalisation friendly, unfriendly people are not used it before. I thought because it's new, and we can make it people think about it that way, and not you know make very strong terms about export driveway and all that sort of things to be very simple. Coverage is friendly and unfriendly. No problem. Got it. Dhananath Fernando 44:34 And also, could you also elaborate a bit more because you speak about the British time, the Ceylon under the British rule, and also in the first chapter itself, and also the Dutch period. So as Portuguese, now what is the difference between someone can ask like even during British time, while they, in a way, colonised the region, Dr. Sarath Rajapatirana 44:57 is Dhananath Fernando 44:58 it also. Part of globalisation or not? Like, what is the difference of that chapter to globalisation based on trade interest? How do you define your? Dr. Sarath Rajapatirana 45:10 You know, they were they were very they only served their own interest. They didn't come here to develop this country. They came to make some money out of it, so right there, that's a problem. Dhananath Fernando 45:23 Right, that's not globalisation. That's Dr. Sarath Rajapatirana 45:25 not globalisation. Certainly not running into country, taking them over, and just throwing out the king and queen and that type of thing. That's not nice. Dhananath Fernando 45:35 Yeah, Dr. Sarath Rajapatirana 45:36 that is very unfriendly. Whatever globalisation, any any any contact, any contact, yeah. Dhananath Fernando 45:42 So it's important. But on the other Dr. Sarath Rajapatirana 45:44 end, I want to say this. My friend Deepa Glas, my very highly lamented friend, wrote a famous book called "In Favour of. Very anti-anti-globalization people very very much against that idea. Dhananath Fernando 46:11 Right, Dr. Sarath Rajapatirana 46:12 he said in praise of empires. Dhananath Fernando 46:15 Right. Yeah, people get very in praise of empires. In praise of empires. Yeah. What was the logic? Yeah, the logic there. Dr. Sarath Rajapatirana 46:22 We take Sri Lanka for example, because the Britisher came here as imperial under the imperial system. They introduced to us to new law. Dhananath Fernando 46:36 Okay. Dr. Sarath Rajapatirana 46:37 They introduced us to forget about caste system. They introduced so many things, laws that were very helpful for later development of business. So, so having people conquer you as they did then, I'm not saying that's a good thing to do. I'm saying the Britishers were good imperialists, as against the others, the worst was Europeans, some Europeans. The the French, for example, want to get friendly with the women. Don't quote me aside. Excellent. Dhananath Fernando 47:17 So I think we covered pretty much the content on chapter one, and also in chapter two, we are going to discuss about the providing the details of the different periods and movements towards and away from globalisation. And chapter three provides the historical background to the development that was to come later, based on the ideas and some of the leading economists of the world who were invited to visit Sri Lanka, and also in Chapter Four, we are discussing the changing ideology, which plays a significant part in determining the policies in Sri Lanka. So, likewise, we are going to have this conversation for 12 chapters. Yeah. Today, what we covered was the introduction and the chapter one, and in chapter two, we are looking forward to discuss about the movements towards and away from globalisation. In chapter two, so Dr. Ajibadirana, any final thoughts on the introductory part? Anything that I missed out that you should have commented? Dr. Sarath Rajapatirana 48:15 Yeah, yeah, no, yeah, yeah. I want to say this: you have done a great job because in many time, many times I am really stuck because of the you ask a question. For example, Samuelson question is a killer. You can ask a very graduate student and Samuelson question. This what? What I told him? No, it's very difficult. But on the other hand, we can explain, no? Absolutely, Dhananath Fernando 48:42 absolutely. So I'm also enjoying reading that book. I'm also going chapter-wise in preparation for this conversation. So looking very much forward for the chapter two, and I invite our audience to subscribe, so then you can see that when we upload a new episode, and looking forward for the next conversation on chapter two, Dr. Rajapatiranath. And thank you very much as usual for joining this conversation. And we'll see you on our next conversation to speak about the movements and movements towards and away from globalisation. Dr. Sarath Rajapatirana 49:17 Well, thank you very much for having me again, again, again, again, again and again, we will have you to discuss all. And also, the very interesting way you raise the questions and interesting way you you are conducting. Dhananath Fernando 49:31 And thank you very much for all the all the thought process. As you know, when you are thinking through the process, it's a book that he has authored. I mean, some time ago. So, so we are trying to get. And if you have any questions, please comment. So then I can take those questions in the next episode, and we can get answer. If something is not clear, please bring that up. I can also question back and get the answers that is required. And again, don't forget to subscribe. Consider the become an Advocata insider and help to create a more globalised, friendly environment, and also bring policy reforms based on evidence, but not on on gut feeling. So see you with another episode next week. Transcribed by https://otter.ai