Abstract:
Introduction
There is a long ± held belief that foreign direct investment (FDI) plays a vital role in the
development process of recipient economies through spreading foreign capital, technology
knowledge and managerial skills into the host economies and creating positive impacts on
growth in trade, gross domestic product and social welfare of the host states. Hence, the
need for developing countries to attract FDI is not in question and currently there is a
mounting competition among the developing countries to attract FDIs.
After introducing open economic policies in 1977, Sri Lanka also adopts a more targeted
approach towards FDIs for the purpose of pursuing its national development goals.
Nonetheless, the bygone internal arm conflict in the country was a huge obstacle to attract
to FDI to the country. Because due to increased risks and uncertainties associated with
war, foreign investors were induced to locate their investment projects beyond the Sri
Lankan territories.
However, the end of the internal strife offers new and more development opportunities to
Sri Lanka. Improvement of economic growth in Sri Lanka has been given top priority in
post war scenario. Furthermore, the end of the internal strife has increased the capacity of
utilization of entire lands, natural resources and labour force in Sri Lanka in the context of
SRVWZDUHFRQRPLF UHYLYDO $IWHUWKHLQWHUQDO VWULIH6UL/DQND¶VHFRQRPLF RXWORRNV KDYH
become positive56 and its economic growth is anticipated to exceed six per cent in the year
56 www.sundayobserver.lk/2011/01/02/fin01.asp
172
of 2011.57According to the economic analysts, to arrive at over six percent economic
growth rate at least country should attract investment up to forty percent of its GDP.58
