One of the major claims of mainstream economics is that liberalization unleashes a
process of economic growth that is characterized by the reduction of economic
inequality. Literature propagating this tenet is aplenty and still proliferating. The oftquoted
Kuznet’s hypothesis claims that faster GDP growth facilitates reduction of
economic inequality in liberalized economies in the long run; many are the proponents
that Sri Lanka too would ultimately reach a stage of more equal distribution of
economic opportunities, equity in the distribution of income and associated conditions
necessary for inclusive growth.1
By 2006 Sri Lanka had completed almost 30 years of
undeterred commitment to free market policies. The country has experimented free
marketism for more than a generation of time which is sufficient to produce the
anticipated benefits of economic liberalization concerning income distribution.2
It is
therefore opportune to evaluate the economic performance of Sri Lanka in relation to
assuring inclusive growth where growth benefits filter more equally to different income
quintiles, sectors and geographic regions in the country.