ABSTRACT
As we have seen in previous chapters, the nonfarm labor market could absorb excess agricultural labor force that is excluded from agriculture, offering job opportunities even for the unskilled and uneducated workers who belong to the poorer segment of the community. However, there seems to be a high concentration of nonfarm economic activities in urban or semi-urban areas because of the availability of infrastructure and agglomeration economies (Kanbur and Venables 2005; Renkow 2007; Sonobe and Otsuka 2006, 2011, 2014). Access to infrastructure – more importantly, paved roads and electricity – is a crucial determinant of nonfarm income (Chapter 6). This chapter aims to inquire about the long-term strategic processes that underlie income growth, the decline in poverty, and changes in sectoral inequality in Sri Lanka from 1990 to 2006, focusing on the role of infrastructure (electricity and pipe-borne water). We explore these processes in the urban, rural, and estate sectors separately, as the diverging endowments of infrastructure and distinct sectoral characteristics bring about differences in the underlying economic forces across sectors.
