Sri Lanka's Trade Policy: Reverting to Dirigisme?

Abstract

The paper surveys recent development in Sri Lankan trade policy, with an emphasis on emerging protectionist tendencies, using Sri Lanka's Trade Policy Review (2010) by the World Trade Organisation as a reference point. The Sri Lankan experience for over the three decades following the liberalisation reforms stated in 1977 has clearly demonstrated that an outward-oriented policy regime can yield a superior development outcome compared to a closed-economy regime, even under severe strains of a protracted ethnic conflict and macroeconomic instability. Viewed against this backdrop, recent developments in the Sri Lankan policy scene do not seem to augur well for the future of the Sri Lankan economy.