The Political Economy of Postwar Economic Development in Sri Lanka

Abstract

Thirty years of civil war in Sri Lanka has affected economic, political, social, cultural and psychological aspects of the society significantly. This paper presents an overview of postwar development strategies in Sri Lanka and compares it with the prewar economy from a political economic perspective. The paper specifically examines the progress of the overall postwar development in the war affected Northern Province of Sri Lanka. Using mixed methodologies data was gathered on critical aspects related to political economy. According to the current study, no clear progress has been made in the areas of economic growth, FDI growth, household income, and poverty and income inequality in the postwar economy of Sri Lanka when compared with the prewar economy. Government fiscal policy targets the postwar reconstruction works while monetary policy enjoys the amalgamation of North and East provinces to country’s aggregate supply apart from introducing very few loan schemes. Security phobia of the government of Sri Lanka limits local, national, regional and international none-government organizations especially in the North and East. There is a considerable amount of progress made in the area of infrastructure development and resettlement of displaced persons. However, primary data from the study indicates these strategies lack conflict sensitivity and public trust. This study emphasizes that postwar economic development strategies should address the critical determinants of sustainable recovery, peace and development aiming at protecting human rights, ensuring rule of law, establishing efficient public service system and finally offering constitutional reforms in Sri Lanka.