Social Development, Economic Growth and the Liberalization in Sri Lanka

Abstract

Sri Lanka’s achievement in social development front is remarkable in the developing world. However, by and large, this achievement did not help Sri Lanka achieve a rapid economic growth particularly during the pre-liberalization period. In the early years of the implementation of extensive welfare programmes, there was only a weak positive relationship between economic growth and expenditures on welfare programmes in Sri Lanka. The country continued to implement extensive welfare programmes even when it had low levels of per capita income and GDP growth rates. Though these measures helped Sri Lanka achieve an admirable position with regard to social development, the economic growth rate did not pick up until the introduction of liberalization. However, the improved economic growth rates materialized only after economy was liberalized. Apart from this growth performance, increased employment opportunities in the newly emerged garment industry and abroad, particularly in the Middle East, provided a chance to Sri Lanka to reduce unemployment significantly and to benefit from the welfare achievements.