lankan economy has grown at well over 6 % during each of the past 3 years and in 2008 too, a growth of 7 % or close to 7 % is projected. pakistan too has recorded an average growth rate above 7 % during the last 4 years. mr. chairman, until the last decade, there was a clear relationship between global economic growth and the growth in advanced economies. as a matter of fact, when major economies, particularly, the usa, recorded a slow down, it retarded world output significantly. so much so, it was said that when the usa got a cold, the others got pneumonia! however, recent trends show that the world economy is no longer overwhelmingly reliant on the advanced economies only. in fact, the weights seems to be gradually shifting with the emerging global economy recording strong growth performances during recent years, while the advanced economies are basically recording moderate growth. it may therefore be useful to “ flag ” this important aspect when we are discussing the issues relating to harnessing sustainable growth in emerging markets. let us consider as to what extent the current expansion in emerging markets and developing countries is due to the implementation of good policies, or as to whether it was just good luck that made this happen. what is the secret behind this remarkable performance of emerging economies? a simple assessment may probably tell us that the main driver of the recent expansion has been the fast integration of these developing nations with the global economy, and the rapid opening out of their economic activity. all three major emerging economies, china, india and russia, were basically “ closed ” economies a couple of decades ago. emergence of these three giants, who collectively account for 20 % of land area on the earth and serve as home for 40 % of world population, has dramatically changed the shape of world trade, direction of capital flows and the growth sources of the global economy. in fact, during the last decade, the share of advanced economies in global trade reduced gradually from around 75 % to around 60 %, while the direction of investment also reversed, as evidenced by the fast accumulation of foreign reserves by the emerging nations. in the meantime, we would also observe that these and other developing countries have benefited immensely by the prudent policies that they have implemented for the rapid economic development of their emerging economies. these improvements include more disciplined monetary and fiscal policies, more focused institutions, and more responsible financial sector developments. in essence, the recent success of emerging economies could be explained, to a significant extent, by conventional growth

, in sri lanka also recorded our highest rate in 18 years while we know pakistan too is struggling with its inflation, amidst high food prices. in this volatile scenario, the challenge before the emerging countries is how to maintain price stability, without hampering the growth momentum. unfortunately, in the backdrop of high international oil and commodity prices, there does not appear to be an easy escape route or a quick fix. worse still, many experts are now proffering the view that the current increases in oil and commodity prices may be a “ structural adjustment ” rather than just another “ supply shock ”. if that is the case, the present sky - high prices may not return to their previous low levels. if so, policymakers will have to factor that situation into their future projections. then the billion dollar question will crop up : what do we do? if we allow domestic prices to adjust in line with the high international prices, we will immediately face high inflation. on the other hand, if we subsidize these commodities using inflationary financing, the result is again, even more high inflation in the future. not very attractive options! but, countries have to make choices now, particularly because it is highly unlikely that this problem will go away. mr. chairman, we have so far discussed at length, the current trends in economic growth, and the challenges that we have to face in our attempts to harness sustainable growth. now, let us get to an even more critical part of this discussion. how do we continue to harness sustainable growth in our own economies? how do we protect our growth momentum? before we really get down to discussing the factors surrounding this issue, let us see as to what usually happens in the world when nations are faced with serious threats to their economic well being. in the early 1970s, when oil prices increased sharply, many countries quickly started their own oil exploration and development. when doing so, several oil reserves, which were, up to that time, believed to be uneconomical for development, were suddenly qualifying as being “ economical ”. in other words, many countries re - positioned themselves to become “ net commodity exporters ” from being “ net commodity importers ”, in the face of rising prices. they were quick to understand that such a shift was vital for their future economic development and well being. as in the 1970 ’ s, today too, there is a clear trend where countries are quickly attempting to boost their capacity to produce oil and agricultural commodities.