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Sri Lanka  Economy
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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.
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