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Rethinking Sri Lanka's Industrialization Strategy: Achievements, Lost Opportunities and Prospects

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  • Prema-chandra Athukorala

Abstract

The purpose of this paper is to contribute to the contemporary policy debate on the industrialization strategy in developing countries by analyzing policy regime shifts and outcomes in Sri Lanka during the post-independence era. The analysis is guided by the received body of knowledge relating to the challenges faced by a small economy that takes world prices as given and is unable to affect world demand and supply in designing national industrialization strategy in this era of economic globalization. The findings demonstrate that the backlash against liberalization reforms in the contemporary Sri Lankan policy debate is largely based on ideological predilections rather than factual analysis. The comparative analysis of Sri Lanka's industrialization experience during the state-led import-substitution era and that of the post-reform era (in particular during the first two decades) makes a strong case for reconsidering the merit of the emerging emphasis on combining import substitution with export orientation with a sector specific focus. Selective policies to promote import substitution essentially impose a "tax" on export producers.

Suggested Citation

  • Prema-chandra Athukorala, 2022. "Rethinking Sri Lanka's Industrialization Strategy: Achievements, Lost Opportunities and Prospects," Asian Economic Papers, MIT Press, vol. 21(2), pages 14-37, Summer.
    • Handle: RePEc:tpr:asiaec:v:21:y:2022:i:2:p:14-37
    DOI: 10.1162/asep_a_00849
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    References listed on IDEAS

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    1. World Bank, 2004. "Sri Lanka : Development Policy Review," World Bank Publications - Reports 14577, The World Bank Group.
    2. 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.
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    4. Dunham, David & Kelegam, Saman, 1997. "Does leadership matter in the economic reform process? Liberalization and governance in Sri Lanka, 1989-1993," World Development, Elsevier, vol. 25(2), pages 179-190, February.
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    Cited by:

    1. Shan Jayasinghe & Lester W. Johnson & Nilan Udayanga & Lakshitha Kumarapperuma & Sanath Ranjitha, 2023. "Drivers Enabling Developing Countries to Enter High-Tech Production Networks through Global Production Sharing: Evidence from Malaysia, Taiwan, and Vietnam," Sustainability, MDPI, vol. 15(3), pages 1-16, January.

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    More about this item

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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