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Outward-oriented Policy Reforms and Industrialisation

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  • Prema-chandra Athukorala

    (Research School of Pacific and Asian Studies, Australian National University)

Abstract

This article examines Sri Lanka's industrialisation experience following the policy reforms initiated in 1977, with a view to informing the contemporary debate on the role of outward-oriented trade and investment policy in industrialisation in developing countries. There is strong evidence that improved performance of domestic manufacturing through greater export orientation has brought about significant improvement in output and total factor productivity growth, employment generation and terms of trade gains. The Sri Lankan experience also highlights the complementary role of investment liberalisation for ex-ploiting the potential gains from trade liberalisation. The reform outcome is particularly impressive given that it occurred during a period of persistent civil strife and macro-economic instability. Thus, this article, makes a strong case for firm commitment to an export-led growth strategy as the main pillar of national development policy while guarding against possible policy back-sliding emanating from the new-found enthusiasm for state activism.

Suggested Citation

  • Prema-chandra Athukorala, 2006. "Outward-oriented Policy Reforms and Industrialisation," Journal of South Asian Development, , vol. 1(1), pages 19-49, April.
    • Handle: RePEc:sae:soudev:v:1:y:2006:i:1:p:19-49
    DOI: 10.1177/097317410500100102
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    References listed on IDEAS

    as
    1. World Bank, 2004. "Sri Lanka : Development Policy Review," World Bank Publications - Reports 14577, The World Bank Group.
    2. Arvind Panagariya, 2004. "Miracles and Debacles: In Defence of Trade Openness," The World Economy, Wiley Blackwell, vol. 27(8), pages 1149-1171, August.
    3. T. N. Srinivasan & Jagdish Bhagwati, 2001. "Outward-Orientation and Development: Are Revisionists Right?," Palgrave Macmillan Books, in: Deepak Lal & Richard H. Snape (ed.), Trade, Development and Political Economy, chapter 1, pages 3-26, Palgrave Macmillan.
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    5. Krueger, Anne O, 1997. "Trade Policy and Economic Development: How We Learn," American Economic Review, American Economic Association, vol. 87(1), pages 1-22, March.
    6. Athukorala, Prema-chandra & Rajapatirana, Sarath, 2000. "Liberalization and Industrial Transformation: Lessons from the Sri Lankan Experience," Economic Development and Cultural Change, University of Chicago Press, vol. 48(3), pages 543-572, April.
    7. Prema-Chandra Athukorala & Bambang H Santosa, 1996. "Gains from Export Growth: Do Linkages Matter?," Departmental Working Papers 1996-13, The Australian National University, Arndt-Corden Department of Economics.
    8. Premachandra Athukorala, 1995. "Foreign Direct Investment and Manufacturing for Export in a New Exporting Country: The Case of Sri Lanka," The World Economy, Wiley Blackwell, vol. 18(4), pages 543-564, July.
    9. Harberger, Arnold C., 1996. "Reflections on economic growth in Asia and the Pacific," Journal of Asian Economics, Elsevier, vol. 7(3), pages 365-392.
    10. Kelegama, Saman & Foley, Fritz, 1999. "Impediments to Promoting Backward Linkages from the Garment Industry in Sri Lanka," World Development, Elsevier, vol. 27(8), pages 1445-1460, August.
    Full references (including those not matched with items on IDEAS)

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