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The Political Economy of Neoliberalism in Sri Lanka

by B Skanthakumar, 7 January 2014

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. . . neo-liberalism has failed to eradicate poverty and actually exacerbated inequality and vulnerability, why has the Sri Lankan state not abandoned the perspectives and approaches that it has followed since 1977?

The introduction of neo-liberal economic reforms in Sri Lanka is associated with the doubling, and on occasion almost trebling, of pre-liberalisation rates of growth, propelling the country once described as exemplar of ‘equity with low-growth’ into the category of lower middle income economies.

However, also accompanying these reforms are growing inequalities of income and wealth, as well as persistent poverty, amidst mass unemployment or underemployment and precarious employment where jobs are generated. The perspective of the state is that the alleviation of poverty will be a by-product of high and faster economic growth. Despite the rhetoric of ‘growth with equity’ – the emphasis is on growth, rather than equity, and the result has been one of ‘growth with inequality’.

The socio-economic policies that provided the foundation for remarkable results in increasing longevity, nutrition and health as well as literacy and life opportunities – that endured during two-and-a-half decades of bitter and costly war and in spite of chronic underinvestment in social sectors – have been gutted through neo-liberal reforms. Sri Lanka’s genuine advances in human development risk stagnation or even reversal. Meanwhile, the multiple and combined crises of food, energy, environment, debt and the economy that are symptomatic of neo-liberal globalisation have, and are, worsening conditions of poverty and vulnerability in Sri Lanka.

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Growth With Inequality: The Political Economy of Neoliberalism in Sri Lanka | B. Skanthakumar
Country Paper for the South Asia Alliance for Poverty Eradication (SAAPE) Crises, Vulnerability and Poverty in South Asia 2013 report