ABSTRACT
Sri Lanka inherited from the British a prosperous and well-organised export sector, high education levels in relation to other Asian countries, and a stable macro-economy. However, post-independence, the development path of the country has been shaped by differing political ideologies of the ruling elites. This chapter identifies four broad phases of economic regimes, based on the State ideology intertwined with the global development thinking and explores how the economic zones have been arrayed in an instrument mix by different governments and how the approaches adopted towards them evolved. It discusses in detail the political economy of SEZs and how it has impacted the status and performance of the SEZs. The objective is to dig into the historical evolution of economic zones and SEZs in particular and assess how their objectives evolved over time with the changing political and macroeconomic contexts in which they are situated. The study finds that the key objectives of the SEZ policy have indeed been aligned with the broader development strategic goals. However, the SEZ policy in Sri Lanka is vulnerable to State capture and depends upon the government’s ideology.
