Resource information
This report is intended to inform the
discussions of the Sri Lanka Development Forum.
Specifically, section One reviews recent economic
performance, the status of macroeconomic management and the
strategic directions outlined in Mahinda Chintana. It notes
that the recent acceleration in Sri Lanka's growth can
be partly attributed to large aid flows for tsunami
reconstruction and to rapid growth in domestic demand. While
Sri Lanka can sustain higher growth given its level of human
development and integration with global markets, this will
require addressing structural constraints and managing the
downside risks associated with rising inflation and the
escalating conflict. Section Two of the report addresses the
regional disparities in growth and poverty reduction in Sri
Lanka. Noting that differences in education levels and
access to infrastructure cannot fully explain the sharp gaps
in regional growth, it suggests that the limited scope of
market reforms in key sectors, such as agriculture, has
played a more significant role. In particular, policy
reforms in agriculture have been elusive, partly due to
misperceptions that they will hurt the poor. Progress in
reducing regional disparities will require
politically-sensitive reforms that address these
misperceptions, through inter alia public consultations.
Finally, section Three takes up the question of how Sri
Lanka can accelerate growth further by taking advantage of
its high levels of educational attainment and tapping global
opportunities in the information technology (IT) and
knowledge sectors. The recent increase in foreign direct
investment in telecommunications, IT, and business process
off-shoring (BPO) in banking suggest that there is potential
for such growth. This potential can be enhanced by moving
further on the policy agenda that removes the obstacles
facing a knowledge economy
