External trade and foreign investment policy reforms in economic growth of Sri Lanka

Abstract

It is a fact that external trade (ET) and foreign direct investments (FDIs) are the two key determinants of the economic growth of a nation state. They are both intrinsically related to the trade and investment policy of the government (Krugman, 1992). Since independence, the external trade and investment policy of Sri Lanka has been one of the main causes of the fluctuations in its economic performance. In the course of time, Sri Lanka has witnessed numerous shifts in its external trade and investment policy, under various circumstances that used to influence the economic activities in the world for different periods of time. As such, a deep understanding of the shifts in Sri Lanka’s external trade and investment policy is considered crucial, especially when studying the growth patterns of her economy during the period 1948-2019. Against this background, this study builds a case for understanding the reforms which came into effect in Sri Lanka’s external trade and foreign direct investment policy and their impact on her post-independent period economic growth.