What's happening in Rambukkana, and anything else that follows, is catastrophic. We can't forget the criminal economic policies that led to this or allow those who advocated for those to be the good guys.
Even in 2018, Sri Lanka was facing a long term debt issue. It was tough, it was going to be damn difficult to get through. Realistically, the only option we had to pay our debt and keep our reserves, was more debt.
So we started that.
(2/21)
Why not hope for investment? In addition to the varied issues behind import substitution - a big factor is its difficult to convince huge investment in a country under debt distress. That means shady deals more often than not.
Following import substitution, self-sufficiency, and local production didn't work out for Sri Lanka in the last 2 years. My longest 🧵yet to explain - promise it's worth it!
Now, these ideas are often "common sense". It sounds good - if we have a forex problem, lets stop importing and make it ourself! Lets be self-sufficent, why depend on others?
But econ ISN'T common sense - so let's go through my view on why these don't work.
(2/30)
The main idea behind these is basically - produce goods locally, ideally goods we currently import, and sometimes, hope to export later.
So 3 broad benefits spoken of
1. Save/grow forex 2. Increase GDP 3. Have a backup if global trade fails