W. D. Lakshman
The beginnings of the modern economic history of Sri Lanka are conventionally traced to the commencement (in the 1840s) of organized cultivation of export crops and the related development of “modern” trading, transport, communication, and financial activities under British colonial rule. Based initially on capital from Britain, capitalist development in the colony gradually gave rise to a capitalist class of domestic origin.1 Workers brought from southern India to work in plantations as indentured labor formed the core of the working class, which gradually expanded in numbers as well as in terms of trade union organization, drawing in workers from other growing sectors.2
The overall result of these developments since the beginnings of plantation agriculture has been the emergence of such conditions in Sri Lanka as would make it an export economy par excellence. Around the time of Independence in 1948, export earnings formed an estimated 30 percent of national product according to the country’s initial national accounting statistics.3 Three primary commodities—tea, rubber and coconut—formed more than 95 percent of these exports, with tea alone contributing as much as 60 percent.The corollary to this production pattern, in which a substantial part of the country’s natural and human resources was devoted to export production, was an excessive dependence on imports, not only for manufactured, but also for agricultural goods. A dominant share of imports consisted of essential food items. Some described the economy at the time, therefore, as an “export– import economy.”
In the transformation of the system of colonial rule, there was an experimental stage of “partial self-government” (1931–48).4 The practice of taxing part of the “surplus” generated in the export economy and using it for social development expenditures of the government—particularly to expand educational and health facilities—was developed during this period.5 Among these social expenditure programs, the most far reaching— and virtually unique in the colonial world— were the free education and free medical facilities programs in relevant governmental institutions. To these social expenditures, a program of rationed distribution of certain essential food items, like rice at subsidized prices, was added during the Second World War. These social policy innovations were influenced by a widely prevailing political philosophy of social democracy, actively promoted by a group of Marxist intellectuals turned politicians, who initiated a vibrant socialist movement in the country.6 The resulting sociopolitical and economic state of affairs in the country at Independence was the Sri Lankan variety of a welfare state. For its sustenance, it depended on continued economic prosperity of the country and the ability of the state to tax the well-to-do classes without adverse effects on their earning capacity. It was not a welfare state system integrally bound to the system of production, employment and income generation.
Having become used to free services, subsidies, and handouts from the government, the electorate had learnt to expect all elected governments to continue the practice. The majority in the electorate probably had neither the knowledge nor the common sense to be concerned about who pays for these services. Political parties contesting elections have developed the practice of pledging more “welfare” services at election times, to learn— if and when the implementation time came— that the required sources of finance are not easy to find.This is the sociopolitical foundation for some of the problems widely discussed during the post-Independence period in relation to development policy, namely, short-term policy horizon, lack of long-term consistency in vision, the electoral policy cycle, sacrifice of logic and sense to populism in policymaking and so on.
Another implication was that the ruling class, to whom the British transferred the responsibility of managing Sri Lankan affairs after their departure and the members of which were elected to governmental power in the immediate aftermath of Independence, was enamored with the socioeconomic results of colonial policy experience, that is to say, reasonably successful economic growth based on export-oriented primary production together with impressive state-engineered human development. These governments did not consider it prudent to change track. Economic policy began to change only when post-war world market conditions began to change, producing forces inimical to the continued success of export-oriented primary production. The principal symptom of this change, seen after the mid-1950s, was the secular deterioration in the country’s commodity terms of trade, namely the ratio of export prices to import prices.The deterioration of a country’s terms of trade indicates a decline in the amount of imports it can purchase with a unit of its exports. The deterioration in these terms from 1950 = 520 to 1990 = 100 was indeed catastrophic.7 Sri Lanka moved in the direction of import substitution industrialization— so common in the rest of the third world after the Second World War—only about a decade after Independence.
I have examined the character of development Sri Lanka has achieved since political Independence in some detail in an earlier publication.8 I provide here only a brief sketch of the development processes during the more recent half of the 60-year period since Independence, namely the period since 1977 when Sri Lanka moved into a package of neoliberal economic policies. A violent separatist movement of ethno-political origin ran through the most part of this period. It was spearheaded by a group from the minority Tamil community – the Liberation Tigers of Tamil Elam (LTTE) – which gradually evolved into a fascistic-terrorist outfit* of significant domestic and international influence. This rebellion was eventually put down and the LTTE annihilated by the country’s armed forces through a military campaign ending on 18 May, 2009. This defeat of the LTTE is likely to become a critical watershed in post-Independence Sri Lankan history, opening up as it does great opportunities for accelerated national development.
Economic growth in Sri Lanka, in terms of real GDP or real GDP per capita, in the first three decades after Independence was consistent but slow. Because of sluggishness in its rate of expansion, a number of Asian countries, formerly at similar or lower standing, have surpassed Sri Lanka economically.9 Great concern has been expressed in many circles about this relative stagnation of the country. Moving into a regime of neoliberal policies in the late 1970s was motivated—aside from the ideological predilections of those in power— by a desire to accelerate economic growth.Yet Sri Lanka’s performance in terms of long-term economic growth even under neoliberal policies has been lackluster, significantly less than in what the World Bank calls “high performing economies” in Asia.10 Growth during this period, contrary to expectations, was never higher than 8.2 percent per annum—that too in one single year (1978), soon after liberalization of the economy, perhaps indicating an element of “beginner’s luck.”11 The period average of the growth rate was substantially lower at 5.0 percent during the entire period of 1978–2008. In the sub-periods 1978–87, 1988–97, and 1998–2008, the average growth rates were respectively 5.2, 4.8, and 5.0 percent. The average growth rate of the last-mentioned sub-period would have been higher if not for negative growth (–1.6) recorded in 2001. Growth rate remained above 6 percent after 2005.
This lackluster growth scenario reflects the working of a complex array of underlying economic, technological, social, and political factors.These constraints have been reflected in some important imbalances, leading often to serious short-term instability as well as imposing limits on long-term economic growth. Capital formation as a proportion of GDP, lower than in many fast growth countries in East and Southeast Asia, was nevertheless significantly higher than the domestic saving ratio. For example, in 2008 these two ratios were respectively 28 and 14 percent. In almost every year during this period, domestic savings fell short of investment, making the country heavily dependent on “foreign” savings (from foreign aid, foreign direct investments and remittances from migrant workers) to maintain the higher rate of investment. Two related imbalances in the system have been observed in the balance of payments and the government budget. The current account deficit in the balance of payments (as percent of GDP) averaged –5.5 percent during 1978–2008 and ranged between –0.4 percent in 2003 and –16.4 percent in 1980. The budget deficit averaged 10.9 percent of GDP during 1978–2008 and ranged between 7.5 percent in 1999 and 23.1 percent in 1980.These savings, current account, and budget deficits have figured prominently in the country’s macroeconomic management over almost the entirety of the last three decades, making the movement on to a higher growth trajectory problematic and difficult.
The modest economic growth of this period was coupled with considerable structural change.The share of primary (agricultural and related) activities in the economy has declined substantially to reach 13 percent of GDP in 2008.Their contribution to total employment in 2008 was 33 percent indicating, among other things, the relatively low productivity, on average, of those engaged in primary activities. These numbers for 2008, compared to a 30 percent GDP proportion for 1978 and a 53 percent employment proportion for 1978– 79,12 are indicative of substantial declines in relevant percentages. The peculiarity of the pattern of structural change in Sri Lanka, considering the fact that the country is still at a low level of economic attainment, is that the declining agriculture share was offset not so much by a rising industry/manufacturing share13 but by a substantial increase in the share of the services sector. In 2008, the share of services in GDP was 57 percent.These services included highly remunerative activities like banking, financial, and IT services, not so well paid but quite secure jobs in government administration, and rather poorly remunerated personal services.
Another important aspect of structural change is reflected in shifts in the composition of foreign trade. The significance of the trio of agricultural exports—tea, rubber, and coconut—has declined drastically, from 77 percent in 1978 to 19 percent in 2008. Their proportional drop was offset by a rise in industrial exports (76 percent in 2008) among which textiles and garments occupy the key position. The share of textiles and garments— 4 percent in 1978 and 43 percent in 2008—is only a few percentage points less than the 49 percent share of tea in 1978. In terms of the extent of commodity concentration of exports, Sri Lanka has been transformed from its “tea country” position to a “garments country” position.The increase in export values and the significant structural transformation of exports over time have not been sufficient to meet the growing import needs of people and production sectors. The entire period of three previous decades was characterized by large annual trade deficits. In 2008 this was as large as 14.4 percent of GDP. Commodity composition of imports too changed. The proportion of consumer goods in total imports declined. This decline was compensated almost fully by a corresponding increase in the share of intermediate goods. The proportion of investment goods in the total has remained virtually constant. The import proportion of intermediate goods, with petroleum and textiles occupying large individual shares, was as high as 62 percent in 2008.
The pattern of economic growth and structural change appears to have been “employment friendly,” perhaps because of pressures emanating from prevailing sociopolitical forces. The rate of unemployment had its ups and downs during the last three decades, but since around 1990 its trend has been downward—from around 15–16 percent in the early 1990s to 5.2 percent in 2008. As has been normal in Sri Lanka, the unemployment rate has been higher for women than for men, for the young (15–24 years of age) members of the labor force than for the older (above 25 years of age) members and for the more educated than for the less educated. The pattern of distribution of the unemployed, described by the International Labor Office (ILO) in 197114 as indicating a structural mismatch between aspirations and available opportunities, continues to prevail, although to a lesser extent than in the 1970s. Extensive unemployment, often of long duration, among the educated youth has proved to be extremely destabilizing socially and politically.
An unemployment rate of around 5 percent is historically the lowest recorded in Sri Lanka since the beginnings of the practice of collecting detailed employment-related data from the late 1960s when the labor force and socioeconomic survey of 1969–70 was conducted.15 Allowing for frictional unemployment,16 an unemployment rate of 5 percent may be interpreted as a condition very close to full employment. Whatever it may be, the production contribution of a large proportion of the employed can be expected to have been very small. Several points may be noted in this regard.
First, given the stage of development of the country, self-employment or own account work has always been a major source of employment for Sri Lankan workers. Own account workers as a percentage of total employment during 1990–2007 ranged between 25 and 31 percent. The relevant percentages for male workers were 30 and 35. Under neoliberal policies, both governmental and non-governmental organizations have actively promoted self-employment.The bulk of the self-employment opportunities opened up are likely to have been subsistence/survival-type activities of low productivity.
Second, since 2005—after a period of restrictions on recruitments to public service— tens of thousands of relatively more educated youth have been recruited to government service, already known for its overstaffing problems. The expansion of employment in public administration, and often also in state-owned enterprises, is likely to have added to “underemployed” full-time workers, implying that the service delivery could be maintained, both in quantity and quality terms, with substantially lower employment numbers.
Third, a very large proportion of total employment—this time too in the public sector—comes from the armed services.This is the legacy of the 30-year armed conflict with the LTTE, which ended on 18 May, 2009. The armed forces are likely to continue as a large employer for some more years to come as, for purposes of national security, those recruited at the time of armed conflict are retained in service together with a significant number of new recruits. The government continues to be concerned about the threats to security coming from remaining elements of the LTTE, from both within and outside Sri Lanka. The production contribution of armed forces, at the time of armed conflict, would have been at best dubious.17 At the present time with hard-earned peace, however, the armed forces personnel are increasingly being used in numerous developmental projects, inaddition to their normal national-security-related responsibilities, particularly in the formerly LTTE-controlled areas in the north and the east of the country .
To summarize, the average rate of economic growth has been around five percent per annum over the last three decades and the economy has moved gradually toward virtual full employment conditions.Yet, as the average productivity of a large proportion of workers in employment has remained low, total production in the country is most likely to have been less than potential. Given the political economy conditions as described earlier, the sharing of whatever was produced came to be determined partly in markets and partly in the political system. Market forces under neoliberal policies, as elsewhere in the world, have produced conditions that favor a heavy concentration of incomes and wealth in the hands of the rich classes—owners and managers of capital and large land holdings, holders of remunera-tive positions, and so on. The structural transformations observed in the last three decades have also produced a change in activity areas from which the country’s wealthy have accumulated their riches. Many of those who became rich through large land holdings and plantations in a different era continued to wield power, but the richest stratum in the country during the last three decades has come from activity areas like banking and finance, export-oriented manufacturing (e.g., garments), and trade.18 Investments in the private sector providers of social services like health and education are also seen as sources of wealth for the rich classes. Those who could exercise power over markets, due to large market shares controlled by them, have accumulated more. The political mechanism, as it operated in Sri Lanka, has added an additional dimension to this market-led process of income and wealth concentration. The politically powerful and their helpers and cronies, often in collaboration with the bureaucracy, used their political/ administrative clout to gain financially from income- and wealth-generating processes in the country. They gained in numerous ways. Undue personal gains have been made in the execution of tenders involving construction or purchase contracts in government-funded projects. Going by intelligent guesswork and “whistleblowers” in the system, the practice of commission-taking and bribery has been rampant among the politically and bureaucratically powerful elements. There have also been many cases of bribery investigated and proven against, normally, lower level officials in bribery commission investigations but only a very few against the powerful. The politically powerful have indeed become a very rich stratum in society alongside owners and managers of capital and land.
Coupled with relatively slow economic growth and the economy remaining at less than its production potential, there has been significant social change. Society, including communities in areas rather remote from the metropolis, has been subject to varying degrees of globalization influences. The spread of mass communication facilities, particularly television, and the extensive phenomenon of migration of domestic workers to foreign countries have been significant factors in this social transformation. The preponderance of women in household service jobs abroad constitutes a major element in this labor migration phenomenon. During the time of the armed conflict with the LTTE, people in the affected areas of the north and the east were, to a large extent, cut off from globalization influences. Yet large numbers of people have migrated abroad from these areas, not completely severing their links with kith and kin left behind.
The important point here is that people in Sri Lanka, including the relatively not so well-to-do, were aware of what they were missing in terms of basic necessities of life that are available in more affluent societies. The influence this awareness has had on people’s aspirations has obviously been strong. The prevailing high level of literacy and relatively high school participation rates at all primary, junior secondary and senior secondary levels have strengthened the process of social change, particularly those arising out of growing aspirations. There was, furthermore, the experience gained by many people at even low income levels from participation in various social movements—village-level voluntary associations, electoral processes, trade unions and political protests. The experience in the exercise of universal adult franchise at national and subnational level elections for as many as 75 years and that of changing governments through ballot on many occasions have perhaps given a sense of power to the electorate, although this would have been deceptive when taken out of the context of distribution of real power in the society.
The point to be highlighted is that all this has added another dimension to the process of contest for a share of the available resources and opportunities. Ordinary people do not have any organizational or other power to influence markets in their favor. But over the years, they have learnt to use the available political mechanisms to gain and retain economic and social benefits provided by government. Without this political mechanism, these social welfare benefits would have been denied to or withdrawn from them.
In spite of the plea from Washington institutions advising the government to reduce the scale of government activities, domestic political compulsions have been such that Sri Lanka has retained much of the social welfare network built up over the years, even at the cost of large budget deficits. Provision of certain services free of charge—e.g., water supply for domestic use—was abandoned, but free education and free health services (in relevant public sector institutions) have been retained, in spite of discussions at policymaking levels about the need for charging user fees.19 Va r i o u s populist measures have been introduced to satisfy the electorate—for example, “poverty alleviation programs”—although at the implementation level these have often failed to reach the stated goals. Subsidies on consumer essentials as well as for weaker production sectors like agriculture were also implemented. As noted, the combined operation of the market and political mechanisms has made the rich richer. According to data from the Consumer Finances Surveys of the Central Bank, the Gini coefficient for spending units has increased during the period of neoliberal policy reforms from 0.35 in 1973 to 0.46 in 2003–04.The ratio of the income share of the highest quintile to that of the lowest changed from nine times in 1973 to 14 times in 2003–04.20 Suspicion has often been expressed concerning whether the poor actually gained from programs maintained ostensibly for their benefit. But these programs were anyway offered mainly to satisfy these classes in order to win their support at elections and to gain their acquiescence to maintain relative social peace.
In the multiethnic Sri Lankan society, these policies worked fairly satisfactorily most of the time in regions dominated by the majority community, the Sinhalese.21 This was not so in regions—northern and eastern—dominated by the principal minority communities of the country. The armed separatist struggle in these regions, led by the LTTE had many causes. The failure of market and political mechanisms to provide a fair deal to the country’s north and east appears to have been a major causal factor. The strong bias of neoliberal policies toward regional inequality is widely known.The Western Province,22 with a population share of 29 percent, produces as much as half of the GDP. Of the nine provinces in the country, the market mechanism has left several underdeveloped but the political mechanism operated to lessen the disadvantages suffered by those provinces dominated by the Sinhalese community. Several special programs were implemented to ease the degree of regional underdevelopment there. The political mechanism, however, did not operate so favorably within the Northern and Eastern Provinces. The people in these provinces, particularly the Tamils, voted mostly for political groups which stood against the ruling party in the central administration on many key issues.The government has therefore taken very little action of positive discrimination in favor of people in these regions.
Sri Lanka gained political Independence in 1948 after four-and-a-half centuries of European colonialism: Portuguese, Dutch, and British. The Independence movement, not as intensively carried out as, for example, in India, reached its goals largely on the basis of negotiations between the British government and the politically prominent elites in Sri Lanka. In this process, at the last stages of British colonial rule, in 1931, the people in Sri Lanka were introduced to the principle of electing their “rulers” through universal adult franchise. This was perhaps an experiment on the part of the British government at the time as there was hardly any concerted agitation locally for universal adult franchise. At Independence, in any case, the adult population of Sri Lanka had already gained the experience of exercising their voting right for the election of legislators over a period of 15 years.
Independent rule commenced with a Westminster-type of parliamentary and cabinet government. Sri Lankan elites at the time opted for dominion status within the British Commonwealth, with the British monarch as the head of state represented by an appointed governor-general. The prime minister, commanding a majority in the lower house in the bicameral parliament, was the executive head of government. The constitutional changes of 1972 had introduced a republican constitution with an appointed president as head of state. The parliamentary/cabinet system of government was, however, retained. In a second far-reaching constitutional reform in 1978, a presidential system of government was introduced, with an elected president as both head of state and government. Under this constitution, the president enjoys enormous constitutional power.The electoral system too was changed from an electorate-based system of electing candidates on the first-past-the-post-principle to a district-based system of proportional representation.
Until 1987, Sri Lanka had a highly centralized form of government. Responding to Tamil demands for self-government and pressures exercised at the time by the Indian government, a system of provincial councils (PCs) was introduced in 1987 in a significant amendment to the constitution. The purpose was to introduce an element of devolution of power. Within the country’s highly centralized political culture, however, the system of PCs has so far failed to devolve powers significantly. The center has been hesitant to give up its powers to PCs and PCs also were not agitating strongly enough to win over what is their constitutional right. To make matters worse, the center has systematically encroached into even the areas of jurisdiction entrusted to PCs by the 1987 constitutional amendment.23
However, when compared to the failures of many postcolonial states to retain representative forms of government, the maintenance of a system of representative democracy for over half a century in Sri Lanka, under the trying conditions of overall sociopolitical and economic underdevelopment, extensive armed conflict, and increasing militarization of society, is remarkable.Yet, shortcomings in the exercise of electoral democracy have become quite prominent in more recent times such that discussions today would often highlight these negative elements, neglecting the positive achievements of Sri Lankan democracy. The practice of politics is a contest for power. The character of participants in this contest at the leadership level, the manner in which this contest is carried out, and the rules of the game guiding the contestants have undergone significant change over time. In early post-Independence times, persons who had already achieved elite status in society through birth, wealth, or education prevailed in the political contest for power. In more recent times, the practice of politics has become a path to achieve elite status in society. In contrast to the past, when many who came to practice politics were interested in social/national service, today many in politics appear to use political power to accumulate personal wealth. After a couple of violent anti-state movements, the society has achieved in May 2009 conditions of relative peace. Law and order situation and conditions of human security have improved tremendously. An element of the process of militarization of society that operated during the time of civil war 24 may prevail for some more time.As a result of conflict-laden conditions of the last three decades, electoral politics too has become characterized by extensive use of violence. With transparency and accountability becoming less highly valued in the use of political power, issues of poor governance have come to be highlighted by many domestic and international commentators on Sri Lankan politics. There is, unfortunately, no simple formula to strengthen practices of good governance, in the same way as there is no simple formula and short cut to sustainable and balanced development.
The operation of market and political mechanisms of allocation, discussed earlier, has brought about important socioeconomic transformations, producing distinct and notable changes in the quality of life of ordinary people. Absolute poverty for the whole country, measured by the familiar headcount ratio, was at or above 23 percent in the preceeding quarter century but had come down significantly to 15 percent by 2006/07 – the latest year of data availability. The inequality in the distribution of incomes and wealth, however, remains, with the poverty ratio also varying significantly as between different regions and social segments. Sociopolitical forces, which generated the Sri Lankan welfare state, were also referred to earlier. The superior human development record of Sri Lanka, in terms of such measures as the Physical Quality of Life Index (PQLI) and the Human Development Index (HDI) and various disaggregated social indicators, amidst relatively low per capita income conditions, has received attention in the development literature for about four decades.25 Life expectancy at birth at around 73 years, a population proportion of 93 percent with access to health services, an adult literacy rate of 96 percent, an infant mortality rate of 16 per 1,000 live births, primary school enrolment rate of 98 percent are some of these human development achievements at a per capita GNP of US $1,969. This is the foundation of the well-known Sri Lankan policy achievement in terms of social indicators, often described as the country’s “outlier status” in inter-country comparisons. At a relatively low level of economic attainment in terms of per capita income, Sri Lankans have come to enjoy a level of human development corresponding to substantially higher income levels. It may be also noted that Sri Lanka has either already achieved or on target to achieve the bulk of the Millennium Development Goals (MDG).26 Also noted in this literature is the lower relative inequality in distribution of income until about the end of the 1970s.The significant tendency toward income and wealth concentration during the three recent decades of neo liberal policies has already been noted.
“Social indicators,” being aggregative in nature, have their weaknesses and limitations as measures of living conditions of ordinary people. Averages do hide distributional inequalities. It was through different types of “public action,” sometimes complementary to market forces, and sometimes contradictory, that the country managed to achieve this outlier status in terms of human development achievements. A significant factor to be noted in this regard is the relative equality of the status of men and women in terms of these human development achievements.There has also been substantial upward mobility in society, a consequence of education, coupled with hard work and good fortune. All this is indicative of the social democratic directions in which the contest for resources and opportunities has been resolved in political and market processes.
As noted, Sri Lanka’s per capita income in 2008 was US $1,969. Over the last several years it has been grouped into the “lower middle income” category of countries in the World Bank country classification. It has been undergoing a process of economic liberalization over the last three decades. Although the main objective behind liberalization has been to accelerate economic progress, the rate of economic growth during this period averaged a moderate five percent. As has happened so often elsewhere, the neoliberal policy package has led to increased inequality in both income distribution and regional development. The poverty head count ratio, however, had come down to 15 percent in 2006/7. This is the lowest level to which the poverty headcount ratio has dropped since regular computation of poverty statistics began in the 1980s.
Yet Sri Lanka stands out among developing countries for its high average levels of human development, whether measured by the HDI or by social indicators taken separately. Sri Lanka is ranked among countries with “medium human development” in terms of HDI. Its HDI ranking has consistently been higher, that is to say, better than its GDP per capita ranking. It has been described as an outlier in intercountry comparisons of social indicators vis-à-vis per capita GDP levels. The argument in this chapter has been that Sri Lanka’s superior performance in terms of human development has been largely a consequence of public action intervening in market processes.
It was argued earlier that the unusual results of the development process in Sri Lanka have occurred through a combined operation of two mechanisms, which determined resource allocation and income distribution patterns, namely, the market mechanism and the political mechanism. Patterns of allocation and distribution result from a contest among different social groups and different economic activities for available opportunities, resources, and benefits. These contests are resolved through both markets and the political system. Distribution no doubt favored the rich but welfare-oriented public action has persisted because of the pressures of a politically conscious electorate. People seem to treat certain welfare services provided by the state free of charge as part of their fundamental rights.The best examples in this sense are educational and health services provided by the state free of charge for those who care to use them. The government too has come to view these social welfare expenditures as indispensable to secure and maintain social peace, an essential prerequisite for the achievement of accelerated economic growth.
* The editor does not agree with this designation for the Tamil Tigers.
1 Kumari Jayawardena, Nobodies to Somebodies: The Rise of the Colonial Bourgeoisie in Sri Lanka (Colombo: Social Scientists Association and Sanjiva Books, 2007); S. B. D. De Silva, The Political Economy of Underdevelopment (London: Routledge & Kegan Paul, 1982); Donald R. Snodgrass, Ceylon: An Export Economy in Transition (Homewood, IL: Richard D. Irwin, 1966).
2 Kumari Jayawardena, The Rise of the Labor Movement in Ceylon (Colombo: Sanjiva Books, 2004).
3 Since the economic product of many “traditional” sectors of the economy is likely to have been significantly underestimated, this export percentage would overestimate the contemporary contribution of exports to national product.
4 This was perhaps a unique experience in the entire British colonial history. People in Sri Lanka were given the right of universal adult suffrage and a system of government in which seven out of the ten members in the executive— the board of ministers—came from elected representatives in the state council. The other three ministers were British government officials.
5 Patricia Alailima, “The Human Development Perspective,” in W. D. Lakshman and C. A. Tisdell (eds), Sri Lanka’s Development Since Independence: Socio-economic Perspectives and Analyses (New York: Nova Science, 2000).
6 Y. Ranjith Amarasinghe, Revolutionary Idealism and Parliamentary Politics: A Study of Trotskyism in Sri Lanka (Colombo: Social Scientists Association, 1998).
7 By 1990, the trade pattern had undergone substantial change. Sri Lanka became a developing country exporting manufactured goods. Terms of trade movements after this year, more complex than before, are not taken up for comment here.
8 W. D. Laksham and C. A. Tisdell (eds), Sri Lanka’s Development since Independence: Socioeconomic Perspectives and Analyses (New York: Nova Science, 2000), pp. 1–10.
9 W. D. Laksham (ed.), Dilemmas of Development: Fifty Years of Economic Change in Sri Lanka (Colombo: Sri Lanka Association of Economists, 1997), pp. 13–16.
10 World Bank, The East Asian Miracle: Economic Growth and Public Police (Oxford: University Press, 1993), p. 21.
11 W. D. Lakshman,“State Policy in Sri Lanka and its Economic Impact 1970–85: Selected Themes with Special Reference to Distributive Implications of Policy,” Upanathi,Vol. 1, No. 1 (January 1986), p. 21.
12 Central Bank of Ceylon, Report on Consumer Finances and Socio Economic Survey 1981/82 Sri Lanka (Colombo: Central Bank of Sri Lanka, 1984),Table 4.18, p. 136.
13 Industry share in 2006 was 27 percent and that of manufacturing 16 percent.The relevant 1977 proportions were, respectively, 29 and 17 percent. The national accounting data for the two years, however, are of doubtful comparability.
14 International Labour Organisation (ILO), Matching Employment Opportunities and Expectations: A Programme of Action for Ceylon: Report (Geneva: ILO, 1971).
15 Sri Lanka Government, Department of Census and Statistics (DCS), Socio-economic Survey of Sri Lanka, 1969/70 (Colombo: DCS, 1971).
16 Due to normal institutional rigidities in an economy, a person laid off by one employer has to remain temporarily unemployed until he/ she finds a job with another employer. Such unemployment is called frictional unemployment.
17 The usual argument would be that armed forces do not contribute to production. I formulated my argument as in the text because when areas have been freed, even partially, from “terrorism” through the efforts of armed forces, there is an indirect contribution to production, as production workers would begin to use those regions for agricultural and other productive activities.
18 The website wiki.answers.com/Q/Who_is_the_richest_person_in_Sri_Lanka indicates names of richest individuals/families in different periods. Names like Maharajahs, Lalith Kotalawala, Sohli Captain, Anthony Page, and H. K. Dharmadasa are mentioned in this connection for the 1990s, and Harry Jayawardena, Dhammika Perera,Amaleans, and Selvanathans for the 2000s. These individuals and families have accumulated their wealth in the activity areas mentioned in the text.
19 The comment must be added that because of certain elements of the neoliberal package, shifts in budget allocations took place leading to significant modifications in the free supply of education and health services in the public sector. There is no space here for details.
20 To save space the data from the surveys for 1978–79, 1981–82, 1986–87, and 1996–97 have not been cited here.
21 Even with the majority community it did not work so well in the second half of the 1980s when there were increasingly violent protests from among its members against the regime in power.
22 The Western Province consists of three Districts—Colombo, Gampaha, and Kalutara. Commercial and adminnistrative capitals of the country, as well as most large industrial and service enterprises are located in these districts.
23 Asoka Gunawardena and Weligamage D. Lakshman, “Challenges of Moving into a Devolved Polity in Sri Lanka,” in Fumihiko Saito (ed.), Foundations for Local Governance: Decentralization in Comparative Perspective (Heidelberg: Physica-Verlag, 2008), pp. 113–36.
24 Neloufer De Mel, Militarizing Sri Lanka: Popular Culture, Memory and Narrative in the Armed Conflict (New Delhi: Sage, 2007).
25 Paul Isenman, “Basic Needs: The Case of Sri Lanka,” World Development, Vol. 8, No. 3 (March 1980), pp. 237–58; W. D. Lakshman, “Economic Growth and Re-distributive Justice as Policy Goals: A Study of the Recent Experience of Sri Lanka,” in Modern Ceylon Studies, Vol. 6, No. 1 (1975), pp. 64–87; Lal Jayawardena,“Sri Lanka,” in H. B. Chenery et al. (eds), Redistribution with Growth (London: Oxford University Press, 1970), pp. 273–79. Amartya K. Sen,“Public Action and Quality of Life in Developing Countries,” Oxford Bulletin of Economics and Statistics,Vol. 43, No. 4 (1981).
26 United Nations, ECOSOC, National Development Strategies and Commitments to Achieve the Internationally Agreed Development Goals, Including Millennium Development Goals: Sri Lanka National Report, Report No. E/2009/111. Available at the following website: www.un.org/ecosoc/newfunct/amrnational2009.shtml.