THE SRI LANKAN ECONOMY - Asian Development Bank

THE SRI LANKAN ECONOMY

CHARTING A NEW COURSE

Edited by Prema-chandra Athukorala, Edimon Ginting, Hal Hill, and Utsav Kumar

ASIAN DEVELOPMENT BANK

The Sri Lankan Economy

Charting A New Course

Edited by Prema-chandra Athukorala, Edimon Ginting, Hal Hill, and Utsav Kumar

ASIAN DEVELOPMENT BANK

Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO)

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Some rights reserved. Published in 2017. Printed in the Philippines.

ISBN 978-92-9257-973-9 (Print), 978-92-9257-974-6 (e-ISBN) Publication Stock No. TCS178786-2 DOI:

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Contents

Boxes, Figures, and Tables......................................................................................... vii Foreword...................................................................................................................... xiii Foreword....................................................................................................................... xv Preface......................................................................................................................... xvii Abbreviations............................................................................................................... xx Author Profiles..........................................................................................................xxiii

The Sri Lankan Economy: Achievements, Prospects, and Policy Issues............ 1 1.1. Introduction....................................................................................................... 1 1.2. Sri Lankan Economic Development: Some Stylized Facts.......................2 1.3. Sri Lanka: A Brief Policy History...................................................................6 1.3.1. Trade Policy Regime.............................................................................. 9 1.3.2. Export Promotion and the Role of the Export Development Board.................................................... 13 1.3.3 Foreign Investment Policy.................................................................. 14 1.3.4. Labor Market ........................................................................................ 16 1.3.5. Macroeconomic Policy........................................................................ 19 1.4. The Sri Lankan Development Record ...................................................... 20 1.4.1. Economic Growth ................................................................................20 1.4.2. Structural Change ................................................................................22 1.4.3. Savings and Investment.......................................................................23 1.4.4. Inflation and Unemployment.............................................................24 1.4.5. Export Structure ..................................................................................27 1.4.6. Poverty and Inequality......................................................................... 33 1.4.7. Comparative Dimensions ...................................................................35 1.5. Major Themes and Issues.............................................................................38 1.6. Policy Inferences ........................................................................................... 44

Economic Performance and Macroeconomic Management............................... 51 2.1. Introduction..................................................................................................... 51 2.2. Fiscal Policy.....................................................................................................52 2.3. Monetary and Exchange Rate Policy..........................................................67 2.4. Concluding Remarks......................................................................................72

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