Sri Lanka's Economy
The 1977 Opening
How Sri Lanka became the first South Asian country to liberalise its economy in 1977, creating export zones and attracting foreign investment.
In 1977, Sri Lanka made a sharp turn towards markets.
Before 1977
In the early 1970s, Sri Lanka had strict import controls, nationalisations and shortages.
The reforms
Under President J.R. Jayewardene, Sri Lanka:
- Lifted import and price controls.
- Devalued the rupee.
- Set up export processing zones, like Katunayake.
- Welcomed foreign investment.
Results
- Garment exports boomed.
- Growth accelerated.
- Sri Lanka was the first South Asian country to liberalise, over a decade before India’s 1991 reforms.
Big projects
The Mahaweli river development project built dams for irrigation and power.
Challenges
- Inequality rose.
- Ethnic tensions grew, leading into civil war from 1983.
The first factory zone
In 1978, the Katunayake export zone near Colombo opened, where foreign firms set up garment factories employing thousands of young women.
Thinking India was South Asia's first liberaliser
Sri Lanka liberalised in 1977.
Key takeaways
- Sri Lanka liberalised in 1977 under Jayewardene.
- Controls were lifted and export zones created.
- Garment exports boomed.
- It was South Asia's first liberaliser.
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