1. Sri Lanka Has Maintained the Export-Oriented Development Strategy That Allowed It to Develop Some Dynamic Manufacturing Export Industries Over the Past Decades
Sri Lanka WT/TPR/S/237/Rev.1 Page 91 IV. TRADE POLICIES BY SECTOR (1) INTRODUCTION 1. Sri Lanka has maintained the export-oriented development strategy that allowed it to develop some dynamic manufacturing export industries over the past decades. No major trade liberalization or privatization measures have been introduced since its last Review. Likewise, the structure of the economy has not changed significantly since 2004. The services sector continues to be the largest contributor to GDP and employment; the share of the manufacturing sector in GDP has seen a slight decline, and that of agriculture has remained virtually unchanged, ending a long period of progressive decline. 2. Although its share in GDP stagnated during the review period (12.6% in 2009, at current prices), agriculture continues to play an important role in Sri Lanka's economy, as it provides the livelihood of a high percentage of the population, is an important foreign exchange earner, as well as a source of raw materials. Government intervention in agriculture, including border protection and domestic support, remains significant. Despite the provision of subsidies (e.g. subsidized inputs, price support, concessionary credit) and other types of assistance, productivity in domestic food crops has stagnated, and the country continues to be a net food importer. Tariff protection for agricultural products increased during the review period, and frequent changes in tariffs and ad hoc duty waivers have sometimes resulted in distortions in agricultural commodity markets and domestic production. The underlying structural factors that hold back the sector's growth include low levels of investment and credit, lack of quality inputs, inadequate transportation and marketing systems, lack of storage facilities, insufficient technological development, and land-use restrictions.
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