Sectoral Interdependencies and the Contribution of Agriculture in Reducing the Regional Growth Imbalance in Sri Lanka

Type Working Paper
Title Sectoral Interdependencies and the Contribution of Agriculture in Reducing the Regional Growth Imbalance in Sri Lanka
Author(s)
Publication (Day/Month/Year) 2010
URL http://www.rimisp.org/wp-content/uploads/2010/05/Paper_Anura_Herath.pdf
Abstract
Sri Lanka is witnessing a regionally imbalanced economic growth for the last three decades. The per capita income levels and its growth rates, poverty reduction rates and the structure of provincial economies are significantly different in the nine provinces. The Western Province, the fastest growing region, maintained an average growth rate of 6.2 percent in the real Gross Domestic Product (GDP) during the last two decade, while it was 2.3 percent in the rest of the country where 71 percent the of the country’s population live. Therefore the issue is important in Sri Lanka’s inclusive-growth debate. The inequality in the rate of regional growth of the agriculture, industry and services sectors is the main reason for the regional imbalances. The poverty levels remain high in the provinces where the agricultural GDP is higher than that of the other two sectors. The opposite association is observed in the Western Province. Getting the agriculture sector moving faster is therefore a mean to foster economic growth in the poor regions which could reduce the regional imbalances. The literature provides theoretical and research evidence to suggest that the agricultural growth is facilitated by the growth of the other sectors, mainly industrial and services. This study presents the nexus among the agriculture, industrial and service sectors in order to understand the sector interdependencies, facilitative conditions, and policy directions that would nurture the agriculture sector and enhance its growth.

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