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Sri Lanka: Improving the Rural and Urban Investment Climate
| Date: | January 2005 |
| Type: | Reports |
| ISBN: | 955-8908-12-6 (print) |
Description
Over the past 25 years Sri Lanka has seen steady economic growth accompanied by a profound transformation of its trade and industrial structure. Led by the garment sector, manufacturing exports took off in the late 1970s, growing by 32 percent a year between 1978-95. Spurring this remarkable transformation were the opening of trade and liberalization of some sectors in the late 1970s. Also contributing, thanks to an early commitment to human development, was the country’s skilled and literate labor force, a feature distinguishing Sri Lanka from other lower-middle-income countries.
While this progress is heartening, Sri Lanka has failed to keep pace with East Asian countries in economic growth and poverty reduction. In the 1960s Sri Lanka had a per capita income comparable to those of the Republic of Korea, Malaysia, and Thailand. Today its per capita income is less than half of Thailand’s and an even smaller share of Malaysia’s and Korea’s. Not surprisingly, Sri Lanka has made limited gains in poverty reduction. The share of the population in poverty remains comparatively high, at about 22.7 percent. Of most concern is the skewed distribution of growth. Economic activity has been strongly concentrated in Western Province while growth in rural areas has lagged far behind. As a result, poverty in Sri Lanka today is primarily a rural phenomenon.
Sri Lanka’s slower growth and poverty reduction can be attributed, in part, to its civil conflict of 1983-2001, but a host of other institutional, macroeconomic, and microeconomic factors have also held the country back. This investment climate assessment is aimed at understanding which factors have made it difficult for firms to do business in Sri Lanka and how these obstacles have affected their productivity.
Contents
- Executive Summary
- Investment Climate Matters
- The Different Profiles of Urban and Rural Enterprises
- The Investment Climate
- International Competitiveness: Challenges and Opportunities
- Conclusions and Policy Recommendations
- Appendixes
- References
