Institutions & Newly Elected Government

By N. S. Cooray –AUGUST 26, 2020

Prof. N. S. Cooray

President Gotabaya Rajapaksa explained the government’s priorities in his address to the inaugural session of the new Parliament. He encouraged 225 members to go out-of-the-box thinking policies to revitalise the economy and bring progress. He also emphasised the need to have a new Constitution and to illuminate fraud and corruption. This article aims to bring institutional and governance perspectives to go out of the box thinking and bring wellbeing for the Sri Lankans.

Governance and the progress are interrelated

Recently many newspapers and media have also reported grave concerns about institutions and governance issues in the country. A statement by Justice Minister Ali Sabry said that “four state institutions–the Police, Prisons, Government Analyst’s Department and the Registrars of Courts–were so corrupt that the country faced a daunting challenge to rectify the situation.” Referring to explosive reportage of the Police Narcotics Bureau (PNB), Minister Sabry briefly discussed how law enforcement authorities, Prisons, the Government Analyst’s Department, and the Registrar of Courts contributed to an unprecedented deterioration of law and order. The minister also mentioned that the Registrars of Courts were among the most corrupt in the country. Recently, a group of lawyers engaged in a silent protest outside the Colombo Chief Magistrate’s claiming that the directive given by the Attorney General to the Colombo Crimes Division to obtain an arrest warrant against an interdicted High Court Judge was unlawful. Additionally, a former member of parliament was arrested with four mobile phones and hard disks containing call recordings exceeding 150,000. Some of which calls were connected with the members of the country’s judicial system. These problematic incidences are linked to the country’s legal system, one of three power centres under political institutions, namely the legislature, the executive, and the judiciary.

These institutions are supposed to strengthen the democratic system of governance. The Judiciary has the responsibility to investigate whether the legislature and the executive discharge the duties and responsibilities allocated them are following the constitution. Some other recent incidences, including the bond scam of the Central Bank and Easter Sunday attracts, provide ample evidence to prove where our institutions have utterly failed to implement the rule of law and maintain the peace and security of the country. Because of these reasons, it is quite difficult for citizens to fully trust the behavioural patterns of institutions that are supported by tax payer’s money.

We also read in media that the President had to instruct the acting Inspector General of Police to enforce and carry out their duties equally to all citizens of the country without fear or favour? Why does the President have to instruct like that? It is because the law enforcement institutions have failed to carry out their duties in line with established rules, damaging the economy and citizens’ liberty.  Sri Lanka has achieved many things for her credits since independence, while some areas need to be corrected. The institutional mechanism is one such area that needs to be reformed. The COVID-19 has created a disastrous economic impact on the country, but it has also created tremendous opportunities to undertake necessary institutional reform of the country. Moreover, the recently elected government has received a 2/3 majority in parliament. This is a golden opportunity to either destroy the country or bring it to the next level by establishing inclusive institutional mechanisms.

What are extractive institutions and inclusive institutions?

An institution is a structure in which people cooperate and influence how people behave, make decisions, and interact with each other. There are economic, political, and value institutions with their values and purpose. The political institutions are responsible for political stability, political competitiveness, and constraints on politicians, professional, and politically independent bureaucracy. The economic institutions are responsible for maintaining market perfection, rule of law, and corruption control. The value institutions enhance trust and openness of the society, self-initiatives, and individualism and post materialism values. The three types of institutions mentioned above can also be divided as extractive and inclusive institutions. In extractive institutions, a small group of individuals use their effort to exploit the resources. In the inclusive institutions, more individuals are involved in the governing process, and therefore, the exploitation is minimal. The following figure illustrates the characteristics of inclusive and extractives political and economic institutions.

Nexus of Institutions, economic growth, and the wellbeing of citizens

One of the ten economic principles says that the standard of living (or wellbeing) depends on the country’s production. Politicians and policymakers of any country are interested in improving the welfare of citizens by increasing production or growth. Therefore, nothing matters more in the long-term prosperity of citizens than its economic growth. Many have argued that economic policies, geography, culture, or value systems affect growth. Forget grand theories that try to explain the variations in prosperity between countries. The truth is far simpler. What really matters are economic and political institutions. This is what Acemoglu and Robinson, in their book “Why Nations Fail: The Origins of Power, Property, and Poverty” (2013), explain beautifully.

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