As Sri Lanka moves from a low income to a middle income country, Colombo and neighbouring areas have prospered with the Western province now contributing more than 50 % to national GDP, according to a World Bank report released in Colombo recently.
This was a result of an increase in exports that has reshaped Sri Lanka’s economic geography. The unbalanced growth with prosperity concentrated in a few places is the norm, says the World Bank report titled, ‘Connecting People to Prosperity’. The report says that Sri Lanka’s development can still be inclusive as people who start their lives far from economic opportunity can benefit from the growing concentration of wealth in a few places.
Sri Lanka’s development journey to middle income status can still be inclusive if people who start their lives in lagging regions of the country can be connected to leading areas where there are leading opportunities, Naoko Ishii, World Bank Country Director for Sri Lanka and the Maldives, said at the press conference convened to release the World Bank report.
However targeted interventions aimed at simply relocating economic activities to lagging areas can in reality slow down economic progress because workers and firms earn higher returns when located close to the international gateways and similar businesses, she said.
This report uses the framework of the World Development Report 2009, ‘Shaping economic geography’.. It has identified the challenges and the policy options for economic integration using a calibrated combination of institutional changes, infrastructure investments and other interventions and applying this framework to the case of Sri Lanka.
The report shows that Sri Lanka’s economic geography is being reshaped as land uses change to accommodate higher value production, as people seek economic opportunities to both internal and external migration and as the country moves from specializing in primary products to manufacturing.