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Common economic problems for Sri Lanka.

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Introduction There are two common economic problems for Sri Lanka, one would be that the increasing and unmanageable debt problem. And the other one would be the terrorist problem. Sri Lanka was considered as a lower-middle income developing country, but now it's been pushed down to poorest countries in the world. One quarter of the population in Sri Lanka lives in poverty. Twenty years of civil war between the government of Sri Lanka and the Liberation Tigers of Tamil Eelam (LTTE) will be the main cause of this problem. This war has claimed more than 50,000 lives. Even The governments of Sri Lanka been changed but the problem remains unchanged. More than 50% people in Sri Lanka still live in rural areas and still living with traditional agricultural base lifestyle. The government process of developing these rural areas was quite slow. However the health and education systems are good compared to other regional countries in Southeast Asia, but now their quality is getting verse because of less government investment. "In developing countries the major concern is that economic liberalization, motivated by the desire to benefit from the growth of the world trade and investment flows, will generate high transitional unemployment and cause an increase in inequality." (Globalization and Employment: Is Anxiety Justified?" ...read more.


Sri Lankan population growth was quite high for the past few years. This increase the number of young people entering the labour force every year. Because of this unemployment rate shoots up in the country. When it comes to the quality of the labour in Sri Lanka, more than 90% of the population have the ability to read and write. This would be a key element for the countries economic growth. And also comparing the south East Asian region Sri Lanka would hold the highest educated population. For the education of this country, the government have to allocate quite a lot of money. And also there will be an opportunity cost for this educated labour. We can also see some disadvantages for countries like Sri Lanka. Professionals like doctors and accountants can migrate form their country to another country because of better income and a good life style. Improvement in Capital Resources This can be also defined as investment. You can divide this element in to two * Directly productive capital * Indirectly productive capital The amount of investment and the quality of that will directly affect the level of the economic growth of the country. This is an important factor of economic growth because the efficiency of labour and other factors of production will depend on the amount and quality of the investment. ...read more.


And also bringing Sri Lanka as a potential industrial country is the key factor for economic growth. If these been put to right then the rising demand for the industrial countries would help more investors in to Sri Lanka. As a country in war it should find its path for peace as soon as possible. So that government's expenditure on war can be diverted in to countries development process, such as developing roads and education. This means the tourism industry will bloom up and unemployment rate will go down which directly effect on the economic growth. Encouraging investment would be another area that the government have to look into. In terms of textiles the government can give tax free zones to start garment factories which investors will have the opportunity to make more profit. The government can encourage more exports by reduced taxation and discourage the unnecessary luxury goods by increased taxation. This can help GDP growth in Sri Lanka. And mainly this would be a path for a developed Sri Lanka. Reference * (www.ausaid.gov.au/country) * Companion to the History of Economic Thought by Warren J. Samuels, Jeff Biddle, and John Davis * Knowledge and Persuasion in Economics by Donald N. McCloskey * The Philosophy of Economics: An Anthology by Daniel M. Hausman * (www.servesrilanka.blogspot.com) * Global Political Economy: Understanding the International Economic Order by David Smith * Limits to Growth by Donella H. Meadows, Dennis L. Meadows, * http://news.bbc.co.uk/1/hi/world/south_asia/1736001. ...read more.

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