Since the ending of Sri Lanka’s long-drawn separatist conflict in May 2009, mediumterm
growth prospects for the country have looked promising. However, sustaining
growth and ensuring peace depends on reducing disparities and improving opportunities
for participation in development. It has been established that growth is a necessary
condition for poverty reduction: most countries that have experienced high levels of
growth have also experienced reductions in the number of poor (Rodrik, 2000).
However, it is increasingly acknowledged that poverty alleviation depends not only on
growth, but also on income distribution. For example, at Brazil’s level of inequality, one
per cent growth is estimated to reduce poverty by less than one per cent, while in India
and China – countries with greater equality – one per cent growth is estimated to reduce
poverty by more than three per cent (Thomas, 2007, cited in IPS, 2011).
Recent debates on development have focused on the need for ‘inclusive growth’ to
achieve sustained growth outcomes. The inclusiveness approach focuses on addressing
disparities in population groups across a variety of dimensions, including sector,
industry, geographic location, gender, and ethnicity. Inclusive growth strategies have
become increasingly popular among developing Asian economies which have faced
both rapid growth and rising inequalities in the recent past.
Sri Lanka is no exception. While being well-known for exceptional human development
comparable to developed economies, Sri Lanka faces significant challenges, postconflict,
and in order to sustain growth momentum in the long run, it is imperative to
address sources of exclusion.
This paper is organised as follows. The next section examines trends and patterns of
growth and inclusiveness in Sri Lanka, both at national and at disaggregated levels.
Section 3 attempts to link empirical findings with economic and social policies adopted
over time that have impacted growth and made it more inclusive. The final section
concludes and offers some policy recommendations on making growth more inclusive