Sri Lanka's traditional economy has been agricultural with rice being the
main food crop. Spices, tea, rubber and coconuts were especially encouraged
by the British under the colonial system and are still an important part of
the economy. Apart from these there were more exotic products like precious
stones and even elephants and peacocks which were exported. However in
recent years there has been a thrust on developing new areas. One of these
has been textile and garment manufacturing which has overtaken tea as an
Another big export earner is tourism which has shown resilience inspite of
the dragging military conflict in the north, probably because of the
remarkable efforts of the industry and the natural wealth of the country.
Contributing also are Sri Lankan's working abroad-mainly in the oil rich
countries of the Persian Gulf-who reemit as much as U.S $1.5 billion
The opening of the economy to private enterprise with encouragement to
invest in key areas has led to total government disinvestment from certain
areas, achievement of self sufficiency in rice production and setting up of
large irrigation and hydro electric projects like the Mahaweli River scheme.
Several development projects today receive IMF and World Bank assistance.
The biggest stumbling block in economic progress has undoubtedly been the
Tamil war which with the tripling of the armed forces has increased expenses
on defence to approximately 20 % of total government expenditure. Per capita
income in 1993 was US$ 465 per annum, unemployment over 13 % and inflation