Rm collections

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RM collections

Economic development and structural changes since independence View(s):

The 66 years since regaining independence have been years of structural changes in the economy and economic and social transformations. There have been many achievements as well as emerging concerns. Sri Lanka’s post-independent economic development transformed a predominantly agricultural economy at the time of independence in 1948 into a diversified one where agriculture accounts for only about 11 per cent of national output, services for 59 per cent and industry for 30.4 per cent of GDP. An economy dependent on three agricultural export crops has been transformed into one that exports mostly manufactures. Sri Lanka has attained low middle income status with a per capita income of over US$ 3000 in 2013. Since regaining independence, the economy grew at an annual average of 4.5 per cent. The economy grew at a much higher annual average of 7.5 percent in the post-war period. Unemployment has fallen below 4 per cent and the poverty headcount is 9 per cent. Social indicators have been impressive. In 2012, life expectancy was 75.1 years, infant mortality was as low as 9.4 per thousand (2009) and adult literacy was 92.2 percent in 2011. Despite these achievements there are serious fundamental economic weaknesses. The high domestic and foreign debt and its onerous debt servicing burden, inadequate export earnings and large fiscal deficits are serious concerns. While recent improvements in infrastructure could contribute to enhanced productivity, inadequate funding of education and health could constrain economic development.

Economic growth Although, Sri Lanka’s economy grew at an annual average of 4.5 per cent since independence (1950-2013), there were significant differences in economic growth rates during this period. In the first half of the 1960s, the economy grew at 4.5 per cent per year, while during the second half, under more liberal policies, growth was slightly higher at 4.8 per cent. The lowest rates of growth were during 1970-77 and 1987-89 when the average annual growth was only 2.8 and 2.2 per cent respectively. Low growth in 1970-77 was due to droughts, the 1971 insurrection, state control and inefficient management of the economy, unfavourable international factors such as food grain shortages, an oil


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