Economy of Sri Lanka
Sri Lanka has enjoyed both
subsistence and commercial agriculture for centuries. Most of
agricultural products were exchanged in trades with India, its
closest neighboring country and European countries when the
Portuguese and the Dutch dominated the maritime trade those times.
However, Sri Lanka's economy
evolved in earnest under the British rule. The agricultural sector
has benefited its efficiency in productivity from the foundation
of plantation agriculture by the British during their occupation
on the Island. Tea plantation was spread over the areas of Central
Highlands, making it the most important cash crop of Sri Lanka.
Apart from tea, rubber and coconut were encouraged to grow
according to the plantation system, bringing about a mass amount
income from exportation which enabled Sri Lanka to import food,
textiles, and other consumer goods in the first half of the
twentieth century.
After Sri Lanka shifted to the
republican regime in 1977, economic sectors were privatized and
opened to international market. Exportation of food and textiles
became the vanguard product alongside agricultural ones, followed
by tourism which gained dramatic revenue. But the political
challenges inevitably made the Sri Lanka's economic growth uneven,
particularly the ethnic disputes which became strained in 1983. As
a result, a large amount of an annual budget was flowed into the
defense expenditure for national security. The capital expenditure
was accordingly reduced, marking a slowdown in economic
diversification and liberalization.
The most important market of Sri
Lanka's exports is the United States which demands a large portion
of garments while the largest supplier of the country is Japan.
India is the second-largest source of Sri Lanka imports. Other
leading suppliers of Sri Lanka are Hong Kong, Singapore, Taiwan,
and South Korea.
Nonetheless, with its
vicissitudes of economic growth, Sri Lanka is still considerably
dependent on foreign aid and assistance in recent years, with
Japan the biggest donor. Foreign financial aids mostly focus on
education, health, legal reform, environment, privatization, and
other infrastructure developments. |
