Sri Lanka(s) Economic Liberalization and its Contribution to the Economic Changes: An Empirical Evidences after 1977

Abstract

To preview this papers winding up the research work on Sri Lanka economic liberalization and its contribution to the economic changes: An empirical evidences after 1977. But generally it is found that it liberalization permanently lost its transparency. Its position has shifted from most favorable to reasonable rule of thumb. There is still a general believe for free trade as a best policy, and as a helpful target in the practical world of politics, but it can never be asserted that the liberalization policy is comparative to the economic theory that says is always right. Sri Lanka as a developing country was adversely affected by trade liberalization, structural adjustment and globalization. Show she began to have a process of regionalization. Consequently, intra- regional trade has come to play a vital role in international trade during the last three decades. The main objective of this study is to assess the benefits to Sri Lanka by engaging in economic pattern and trade with her partner countries after liberalization. And to examine as to whether there are any structural changes occurred on Sri Lankas economy based on the liberalization. A comparative and descriptive analysis was used to assess the impact on economic variables from selected explanatory variables such as GDP, per capita income, openness, imports and exports, and sectoral oriented indicators. One of the key findings of this study is that in terms of size of the economy and per capita income Sri Lanka has benefited immensely though liberal economic system as well as from the regional Cooperation. However, her dependency ratio has increased as highly through liberalization and free trade policy. And there are many structural changes had also taken place on the economy. This study also reveals that open economy and liberalization has promoted trade creation and expansion to a considerable level in Sri Lanka external trade. It has also been found that the trade-diversion effect has occurred to Sri Lanka. Sri Lanka has been able to have significant gains from economic liberalization and intra-regional trade with other member countries of SAARC. It is advisable that Sri Lanka should carefully reduces or eliminates all trade and non trade barriers simultaneously and also should include some of imports items in the negative list. The economy of the country has under gone reasonable structural changes but its dependency ratio is not helpful to the country. Hence, Sri Lanka could make further gains by moving into more advanced stages of regional co-operation such as Free Trade Area, Custom Union, Common Market and Economic Union within the region. And also this research would suggest that liberalization is not out dated but it should be moderated for the countrys situation for the best result and achievements

Keywords: Free Trade, Globalization, Liberalization, Regional Cooperation, Structural Adjustment, and Trade Liberalization

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