ABSTRACT
Sri Lanka is a small island (65,608 sq.km) with 17 million people and a per capita income of US $500. When it became an independent nation in 1948, its per capita income was about half of Japan’s or Malaysia’s and much higher than Korea’s and Thailand’s. The living standards of the people in terms of social indicators-life expectancy at birth, literacy, infant mortality and school enrolment-were among the highest in the world. However, four decades later, whereas the social standards have been maintained, the per capita income has declined to less than 5 per cent of Japan’s, less than 20 per cent of that of Malaysia, and well below that of Korea and Thailand.2 A growing unemployment problem has led to civil conflicts which now cost around 5 per cent of gross domestic product (GDP).
