Non-essential and non-urgent – Daily FT

Posted by on September 17, 2021  /  0 Comments

A guest column by LIRNEasia Chair Prof. Rohan Samarajiva on the Daily FT analyses the Central Bank of Sri Lanka’s moves towards limiting imports of 623 items considered either non-essential and non-urgent. He went on to note that “In October 2006, the Government then headed by President Mahinda Rajapaksa, who was also Finance Minister, mandated a 50% margin deposit on the invoiced value of 44 listed items.” However, in September 2021, “the margin deposit is 100% for a much larger list.

A 2011 scholarly article authored by Aileen Aguero, Harsha de Silva (yes, the MP), and Juhee Kang analyzes patterns of expenditure on mobile phone services at the bottom of the pyramid (BoP), following users in six Asian countries: Bangladesh, Pakistan, India, Sri Lanka, the Philippines, and Thailand with the aim of examining whether mobile phone services in the selected countries display characteristics of a luxury good or those of a necessity.

Based on the survey data conducted the research concluded that  “. . . mobile phone services have the characteristics of a necessity among the BoP [Bottom of the Pyramid] in Bangladesh, Pakistan, India, Sri Lanka, the Philippines, and Thailand. We demonstrate that the share of mobile expenditure decreases as personal income increases, which indicates that Engel’s law operates in the selected countries. In other words, the poorer the individual, the greater share of income that is devoted to mobile services, as holds true in the case of other subsistence goods like food, healthcare, and housing. We also confirm our findings by examining the income elasticity for mobile phone services, concluding that mobile services are highly inelastic, and thus function as a necessity among the poor in the six Asian countries we study.”

Read the full article published on the Daily FT.

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