ABSTRACT
Since the mid-1970s, Sri Lanka has followed outward-oriented policies to promote rapid industrialization. Sri Lanka’s industrial performance lags behind those achieved by the East Asian newly industrializing countries (NICs) in the 1970s and 1980s, despite some successes in manufactured exports and manufacturing growth. This paper investigates some of the factors behind this lacklustre industrial performance-notably, the initial conditions, trade policy, macroeconomic stability and industrial strategy. One conclusion is that the absence of both macroeconomic stability and an industrial strategy may have hindered industrial performance in Sri Lanka.
