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Japan's role in Asian development: lessons for Sri Lanka
(Institute of Policy Studies, Sri Lanka, 1996-03) Weerakoon, Dushni; Ratwatte, Lekha
Capital account liberalization and financial crises in East Asia: lessons for Sri Lanka
(Institute of Policy Studies, Sri Lanka, 1998-07) Weerakoon, Dushni; Salih, Rozana
Changing role of non-timber forest products (NTFP) in rural household economy: the case of Sinharaja World Heritage site in Sri Lanka.
(Springer-Verlag, 2003-11) Senaratne, Athula; Abeygunawardena, Piyasena; Jayatilake, Wijaya
This paper examines the modified patterns of utilizing non-timber forest products (NTFP) and associated behavioral changes around tropical forest areas in the context of conservation-related objectives and other commercially driven objectives. Our study introduces a conceptual framework based on the household production theory and tests empirically the hypotheses drawn at Sinharaja World Heritage in Sri Lanka. The results show that conditions introduced by forest conservation programs and the spread of small-scale commercial tea cultivation are transforming the economy around Sinharaja. The process is an economically rational one where resident communities decide upon their actions based on the opportunity cost of time involved with NTFP in the absence of observable prices. Although the process, overall, has led to a decline in the role of NTFP in the household economy, its impact over different NTFP are not uniform, leaving sustained demand for certain NTFP. This situation calls for a multifaceted approach in forest management programs to address the various household needs fulfilled by NTFP-based activities.
The Economics of Tobacco in Sri Lanka
(Center for Tobacco Control Research and Education, UC San Francisco, 2004) Arunatilake, Nisha; Opatha, Maduwanthi
This paper describes trends in tobacco use in Sri Lanka, assesses the economic contribution of the industry (jobs, earnings, tax revenues and trade balance), and analyses the relationship between demand for cigarettes and prices and incomes, looking at different socioeconomic groups. It uses the estimated elasticities to simulate the likely impact of a tax increase on prices, government revenues and on demand, expenditures and tax burdens of different socio- economic groups.
Disaggregated Projections on Supply, Demand, and Trade for Developing Asia: Preliminary Results from the Asiafish Model
(International Institute of Fisheries Economics and Trade (IIFET), 2004-07) Dey, Madan M.; Rodriguez, U-Primo; Briones, Roehlano M.; Li, Chen Oai; Haque, Muhammad Sirajul; Li, Luping; Kumar, Praduman; Koeshendrajana, Sonny; Yew, Tai Shzee; Senaratne, Athula; Nissapa, Ayut; Khiem, Nguyen Tri; Ahmed, Mahfuz
The AsiaFish model is a quantitative tool for making disaggregated projections and impact analysis for fish supply, demand, and trade. It has recently been applied to nine major fish producers in Asia (Bangladesh, China, India, Indonesia, Malaysia, Philippines, Sri Lanka, Thailand, and Vietnam). The resulting analysis is useful for the evaluating strategies and identifying priority technologies for the propoor and sustainable development of the fish sectorin these countries. The paper summarizes the method for applying the AsiaFish model, presents the results of model projections for these countries, and draws preliminary conclusions from a cross-country comparison.
Microfinance in Sri Lanka: a household level analysis of outreach and impact on poverty
(Institute of Policy Studies, Sri Lanka, 2005) Tilakaratna, Ganga; Wickramasinghe, Upali; Kumara, Thusitha
Microfinance, one of the widely accepted instruments for poverty alleviation throughout the world, has been used in Sri Lanka spanning for over several decades. Despite the long history and the large number of institutions providing microfinance services particularly to the poor, there is limited knowledge on the impact of microfinance on poverty alleviation in Sri Lanka. This study fills this gap by studying some important issues related to the microfinance sector: outreach of microfinance, role of informal sources of finance and the impact on poverty and welfare of households. Microfinance services in Sri Lanka have a wide geographical outreach but the extent of outreach of private operators including NGOs and commercial banks in rural areas is rather limited. Although the poor and the poorest groups have been reached by Microfinance Institutions (MFIs), a significant proportion of their clientele seems to be from the non-poor groups. Microfinance has helped households in middle quintiles to increase their income and assets; helped the very poor to increase consumption expenditure; has inculcated savings habits among the poor; has worked as an instrument of consumption smoothing among almost all income groups; and has helped women to increase their social status and improve the economic conditions. The study also finds that the informal financial market is pervasive across districts and among different income groups. The study recognizes that financial services alone are not sufficient to raise the living conditions of the poor. To create sustainable micro-enterprise and other economic activities, it is important that MFIs facilitate or directly involve in providing 'credit-plus' services to their clients, particularly to those in low income categories. Development of rural infrastructure facilities is of prime importance to improve the outreach of MFIs in remote rural areas and encouraging the private and NGO sectors to involve more effectively in microfinance provision. The study also stresses the need to take into account the heterogeneity of microfinance clients and their needs in designing more effective microfinance instruments.
Labour standards and international trade: the case of EU GSP concessions to Sri Lanka
(Institute of Policy Studies, Sri Lanka, 2005-07) Weeraratne, Bilesha
Transforming Conflict with an Economic Dividend: The Sri Lankan Experience
(Routledge, 2005-09) Kelegama, Saman
Peace can generate an economic dividend, which can be further increased by appropriate economic reform. This dividend can in turn be used to raise popular support for conflict-resolution measures along the road to achieving a final political settlement, a strategy that characterizes the recent period in Sri Lanka. However, despite an increase in economic growth following the cessation of hostilities between the LTTE and the government, no substantial dividend has materialized for either government supporters in the South or LTTE supporters in the war-torn Northeast. The causes of this failure include delays in disbursing aid which would have eased adjustment to economic reforms—resulting in cuts to public spending that affected Southern households—and weak institutions that impeded the effective use of aid in the Northeast. The Sri Lankan experience highlights some important lessons for both government and donors on making use of an economic lever for consolidating a peace process and conflict resolution. It also highlights some of the dangers in relying too much on economic levers to consolidate a peace process when levels of mistrust are high.
Impact of trade liberalization on poverty and household welfare in Sri Lanka
(Institute of Policy Studies, Sri Lanka, 2005-09) Jayanetti, Sanath; Tilakaratna, Ganga
It is argued that economic growth is a necessary condition for poverty alleviation while a liberal trade regime is a prerequisite for sustainable economic growth. However, trade liberalization affects consumers and producers differently. While tariff reduction on imports may bring welfare gains to consumers, there would be many producers who are adversely affected by such trade policy reforms. Hence, our attempt in this paper is to look at the impact of trade liberalization on poverty and welfare of households, with a special focus on the rice and potato sectors of Sri Lanka. Both a descriptive approach (for rice and potato sectors) and an analytical model (for rice sector) are used in this regard. The paper also analyses various trade policy reforms taken place during the last decade and, the extent and nature of poverty in Sri Lanka. The descriptive analysis showed various trade policy reforms in rice and potato sectors during the last decade and their implications. The results of the analytical model showed an overall welfare improvement to the country (in the short run) from a tariff reduction on rice. Net welfare effect for all the income deciles is positive. However, the extent of gain for low-income deciles is higher compared to richer deciles. District level analysis showed welfare gains for all the districts except for two large-scale rice producing areas of Ampara and Polonnaruwa. Moreover, Estate sector households had the highest positive welfare effect while the urban sector had the lowest (positive) effect. The rural sector showed a mixed effect depending on whether the households in the area/district, in general, are net producers or net consumers of rice. The paper stresses the need to eliminate ad hoc trade policies and move towards a low uniform ad valorem tariff rate for rice and potato. Moreover, it highlights the importance of having both the compensatory and the complementary policies to minimize the adverse effects of trade liberalization on households, particularly those effects on the poor
An Investigation of the Replicability of a Microfinance Approach to Extending Telecommunications Access to Marginal Customers
(LIRNEasia, 2005-12) Knight-John, Malathy; Zainudeen, Ayesha; Khan, Abu-Saeed
This study is an attempt to examine and document particular sets of solutions that have emerged for the extension of telecommunications access to marginal customers in Bangladesh, under the Grameen Village Phone (VP) program. The study looks at the fundamental problem of access to telecommunications, and focuses on one of the ‘solutions’ that have emerged in response to this problem, in specific that adopted by Grameen of Bangladesh. The solution adopted by Grameen, which has also proven to be an extremely successful business model, stems from the organization’s desires to (a) promote development and poverty alleviation through the use of ICTs and (b) increase telecom access to the rural poor. It is examined closely to establish the factors that have contributed to its success, including the roles of microfinance and infrastructure sharing in the approach. The replicability of the Grameen ‘model’ is then discussed, attempting to answer questions such as how replicable is this model? and if so which parts?
Education Participation in Sri Lanka—Why all are Not in School
(Elsevier, 2006) Arunatilake, Nisha
Despite Sri Lanka’s 1990 commitment to provide 10–11 years of free education to all, only 93% of children in the 5–14-year-old age group were in school by the year 2000. Moreover, the education participation rates are not equitable across the country, varying by socio-economic groups. This paper examines the determinants of school non-participation of 5–14-year olds in Sri Lanka using household, community and school-level information obtained from an island-wide survey. The study finds that demand side problems such as poverty, direct and indirect costs of schooling, and cultural factors as well as supply side shortcomings such as quality of education seem to affect schooling behavior of children. Policies facilitating compulsory education in the country at present gives prominence to awareness building, monitoring and improvements in education delivery. The results show that these efforts need to be complemented by other supply side improvements and income transfer measures, especially for the poorest, to achieve universal school attendance.
Transaction Costs and Institutional Innovation: Sustainability of Tank Aquaculture in Sri Lanka
(South Asian Network for Development and Environmental Economics (SANDEE), 2006) Senaratne, Athula; Karunanayake, Kalpa
Freshwater community-based aquaculture was introduce to village irrigation tanks in the dry zones of Sri Lanka in order to off-set the limited supply of animal protein available to residents in inland areas. This paper examines transaction costs associated with the management of community-based aquaculture in Anuradhapura district, the most important inland fish production area in the country. Using data from 41 tanks and 340 households, the study finds that community-based aquaculture involves three types of management forms: tank management by farmer organizations, mangaement by sub-group within farmer organizations and out-sourcing of management to third parties. All three institutional arrangements involve transaction costs associated with information provision, collective decision-making, and protection of fish harvest from poachers. While the costs of information provision and collective decision-making are relatively low under all three institutional arrangements, the cost of protection is significant and is considerably reduced when the entire farmer’s association is involved in tank management. In general, while community based fisheries contributes cash flow to farmer organizations and bolsters village food security, the benefits to individual farmers are low. Hence, farmers have little incentive to participate in collective action. Of the three different institutional arrangements, management by farmer sub-groups is the most successful in providing benefits to participants. The study suggests that sustainability of community-based aquaculture depends on successes in experimenting with institutional arrangements that can minimize transaction costs and achieve adequate returns to participants through productivity gains from tanks.
Book Review: Sustainable Energy in Developing Countries: Policy Analysis and Case Studies
(New Delhi: Sage, 2007) Wickramasinghe, Kanchana
Energy is central to sustainable development and poverty reduction efforts and affects all social, economic and environmental aspects of development. The main objective of this book is to contribute to the resolution of many current energy and environmental policy issues by an objective analytical approach using the tools of environmental economics and cost benefit analysis.
Socio-economic Impacts of Forest Conservation on Peripheral Communities: Case of Knuckles National Wilderness Heritage of Sri Lanka
(12th Biennial Conference of the International Association for the Study of Commons, Cheltenham England, July 14-18, 2008, 2008) Wickramasinghe, Kanchana; Steel, Paul; Senaratne, Athula
Forest conservation generates significant economic benefits to the society. However, the conservation strategies should pay necessary attention to the resultant socio economic aspects. Otherwise; conservation efforts affect the welfare of peripheral communities due to restrictions on their livelihoods. The present paper intends to assess the socio-economic impacts of declaration of Knuckles Conservation Zone (KCZ) on the livelihoods of surrounding communities, using data and information collected through a household survey, focus group discussion, interviews and observations. The Knuckles National Wilderness Heritage (NWH) is an important natural forest in Sri Lanka, due to its richness in biodiversity, uniqueness in habitat diversity and being a vital catchment to the main rivers. The forest has greatly been threatened by the promotion of cyltivation of cardamom, which receives high prices in the international market and shifting cultivation that has resulted in a sizeable decrease in the forest cover. With the declaration of KCZ, shifting cultivation and cardamom cultivation were banned and access to forest products was restricted. Consequently, although conservation activities generated considerable environmental improvements, they caused direct negative impacts on the peripheral communities. The quantity and frequency of forest products harvested has declined due to limited access to the forest, causing income losses and affecting food security. The dependency on non timber forest products (NTFPs) as a source of income is much low according to this study finding, but the forest had played a major role as a subsistence source of food, wood, fuel wood etc earlier. The annual income loss due to banning of shifting cultivation and reduced harvesting of NTFPs is estimated around US$ 150 per household. Promotion of ecotourism activities, which are already in place, and creation of proper marketing channels for agricultural products is recognized as alternative ways to increase income, thus to improve the well-being of households. Villagers could also be allowed to harvest selected NTFPs, provided that sustainability of the forest is not affected. Therefore a mechanism should be created that communities are compensated through alternative income sources rather than depending on monetary compensations from the government thereby setting a useful example for the future conservation strategies of the country and elsewhere.
The Impact of Population Aging on the Labor Market: The Case of Sri Lanka
(Institute for the Study of Labour (IZP), 2008) Vodopivec, Milan; Arunatilake, Nisha
Sri Lanka’s population is predicted to age very fast during the next 50 years, bringing a slowdown of labor force growth and after 2030 its contraction. Based on an original, 2006 representative survey of old people in Sri Lanka conducted as a part of this study, the paper examines labor market consequences of this process, focusing on retirement pathways and the determinants of labor market withdrawal. The paper finds that a vast majority of Sri Lankan old workers are engaged in the informal sector, work long hours, and are paid less than younger workers. Moreover, as one of the first findings of its kind, the paper shows that labor market duality that characterizes most developing countries carries over to old age: (i) previous employment is the most important predictor of the retirement pathway; (ii) older workers fall into two categories: civil servants and formal private sector workers, who generally stop working before they reach 60 because they are forced to do so by mandatory retirement regulations, and casual workers and the self-employed, who are forced to work until very old age (or death) due to poverty and who stop working primarily because of poor health; and (iii) the option of part-time work is used primarily by workers who held regular jobs in their prime age employment, but not by casual workers and self-employed.
Analysis of the Fisheries Sector in Sri Lanka: Guided Case Studies in Value Chain Development for Conflict-Affected Environments
(United States Agency for International Development, 2008-03) Arunatilake, Nisha; Gunawardena, Asha; Marawila, Dilhani; Samaratunga, Parakrama; Senaratne, Athula; Thibbotuwawa, Manoj
Sri Lanka has been affected by prolonged armed conflict, and attendant chronic governance failures, for the past three decades. Evaluating its impact on the performance of specific productive sectors, such as ocean fisheries, remains a timely and important exercise. The value chain analysis methodology offers an insightful way to approach this critical topic due to its focus on identifying the actual and potential competitiveness of particular products and the areas of possible economic development and growth. The USAID AMAP program commissioned this study to ascertain the ability of a value chain analysis to determine the impact these two types of conflict have had on the fisheries industry in southern Sri Lanka—both the direct and indirect physical and other effects the armed conflict has inflicted and the structural consequences of institutional and governance failures. The study used the analysis to compose recommendations for effectively developing the capacity of the fisheries sector to contribute to equitable economic opportunities in Sri Lanka. The research team based their analysis on data from primary and secondary sources at both the national and regional levels. Team members obtained secondary data from fishery-related institutes—community-level organizations, the Ministry of Fisheries and others—and used a participatory appraisal approach to collect primary data from stakeholders involved directly and indirectly in the fisheries value chain—fishermen, traders, processors, government officials and other informed groups. The team selected three study sites—Negombo, Chillaw and Hambanthota—and convened focus groups representing the ethnic and religious heterogeneity of the country’s fishing communities and the range of impacts the conflict was having on different regions of the country. The study addresses the research question, ‘How can value chain analysis and the value chain framework help to identify and understand both the major opportunities for upgrading and the driving constraints to market growth of the fisheries sector given the context of conflict?’ To fully demonstrate the opportunities and constraints associated with the direct and indirect impacts of the conflict, the team developed a value chain/conflict dynamics matrix that identifies both the different chain segments affected directly and indirectly by conflict and the ways in which they are affected. Further analysis of the opportunities and constraints posed by the various dimensions of the conflict yields case-specific examples of the ways the conflict interacts with and affects a given value chain. Opportunities generated by the continuing violent conflicts and related institutional failures in Sri Lanka are negligible compared to the large number of constraints they present to the entire chain, including lack of access to and competitiveness in end markets; sluggish or dormant firms and supporting markets; the need for firm-level upgrading, and a poor business enabling environment. The limited supply of fish to end markets, both domestic and export, and the increased cost of inputs are the most visible impact of conflict on the fisheries industry at the present time. Further, increased security measures and related expenditures have increased the transaction costs for the industry. Such conditions have made ocean fishery a high-cost industry in Sri Lanka, thus reducing not only its competitiveness but also its ultimate potential for growth and ability to act as a driver of poverty reduction. Many entrepreneurs in Sri Lanka’s fisheries industry have identified the constraints to and potential of the sector, but they are unable to bring about substantial change in the conflict-affected environment. The research concludes that the current situation is one of impact-mitigation and maximization of gains because of constraints imposed by the conflicts. Issues related to the generation of a favorable enabling environment through the improvement of public infrastructure (harbor facilities and roads) and services (research, extension and institutional support such as policy reform, quality assurance, input delivery, etc.) depend primarily on the capacity and commitment of relevant state agencies. Although private-sector actors may be able to play a role in advocating for needed reforms the weak governance environment poses obstacles to targeting such efforts and driving meaningful change. To improve competitiveness of the industry, the state should focus on identifying niche markets and product categories, introducing technology, facilitating support services, revising existing trade and export policies and developing needed infrastructure. The private sector can improve the functioning of the value chain through wider access to credit, infrastructure enhancement and increased inter-firm cooperation. These changes are not easily implemented by individual actors, but are possible through collective action with existing fisheries cooperative societies playing a role. In addition, the development of micro-credit facilities is a promising way to circumvent the problems fishers experience with formal financial institutions and could provide them with an alternative to the private moneylenders who are part of an often highly exploitative industry. Cooperative societies can increase fishers’ bargaining power with large organizations higher up the chain and conduct lobbying efforts with state authorities for better operating conditions. Successful cooperative organizations have the potential to enter into public-private partnerships to facilitate the provision of much-needed infrastructure, such as harbors, anchorages and related facilities and to participate in broader development of the sector. To further an understanding of how the conflict affects Sri Lanka’s fisheries industry and how the chain might realize its competitive potential, this study analyzes the value chain as well as the way it interacts with direct and indirect conflict dynamics. Section 1 provides an overview of the conflict context and the fisheries sector and identifies the key development and relief initiatives currently being implemented. Section 2 presents the methodology employed in conducting this study, and Section 3 gives a detailed analysis of the conflict environment in Sri Lanka.1 In Section 4, a detailed analysis of the fisheries industry leads to a discussion of the links between value chain and conflict dynamics. The concluding section highlights insights from applying the value chain analysis in a conflict-affected context, as well as possible ways forward identified by the integrated conflict/value chain analysis.
Educational opportunities for the poor in Sri Lanka: assessing spatial disparities
(Institute of Policy Studies, Sri Lanka, 2008-11) Tilakaratna, Ganga; Galappattige, Ayodya; Jayatilaka, Ruwan; Perera, Ramali
Sri Lanka Country Investment Study
(Asian Development Bank, 2009) Weerakoon, Dushni; Thennakoon, Jayanthi
This study reports on an initial exploration of issues related to the investment climate for FDI, and documenting the nature and role of FDI in the Sri Lankan economy. The study also examines the potential for intra-South Asian trade and investment flows, and presents an analysis of emerging trends in trade and investment linkages within South Asia with a focus on the textile and clothing (T&C) and automobile sectors.
Ready-made Garment Exports from Sri Lanka
(Routledge, 2009) Kelegama, Saman
With the phasing out of the Multi-Fibre Arrangement (MFA), the Sri Lankan economy, highly dependent on ready-made garment exports, has become vulnerable to the changing global trading system affecting this industry. In such a global environment, strengthening the competitiveness of the industry has become imperative for Sri Lanka if it is to remain as one of the suppliers of choice in major markets. The paper highlights the strengths and weaknesses of the industry and shows the steps that have been taken to address the latter. Additional steps taken to select specific garment products according to past performance and global positioning for further improvement and promotion are also highlighted. The paper also suggests some strategies to cope up with the new global challenges.
Climate Change, Local Institutions and Adaptation Experience: The Village Tank Farming Community in Dry Zone Sri Lanka
(International Water Management Institute (IWMI), 2010) Senaratne, Athula; Wickramasinghe, Kanchana
Farmers are in a continuous process of, individually and as community groups, adjusting to the observed variability in climate parameters. Climate shocks are considered by farmers in their decision-making as factors affecting risk and uncertainty, and farmers make their choices so as to minimize such risks. The overall outcome of these individual and community efforts is known as ‘climate adaptation’, which itself is a continuous process. Farmers are traditionally supported by local institutions in this process, which are also currently in a state of transformation. This study examines the climate adaptation responses of the village tank farming community in the dry zone of Sri Lanka in the context of transforming socioeconomic conditions and with the objective of identifying policy implications for adaptation to global climate change. The study was conducted in six Divisional Secretariat areas in the Anuradhapura District of the North Central Province. Both, primary and secondary data was collected in the study. The major sources of primary data included a series of focus group discussions and key informant interviews conducted with village tank farmers and local of ficers. The findings reveal that there are two major forms of voluntary adaptation responses by farmers against climate shocks: 1) aligning of farming activities with the recognized seasonal pattern of rainfall; and 2) management of rain water harvested in commonly owned village tanks. Farmers’ adaptation responses have been facilitated by local institutions that helped to adopt joint adaptation responses. However, recent socioeconomic dynamics introduced by rapid population increase, spread of commercial opportunities and change in agricultural technology have drastically altered conditions in the village tanks in favor of developing a commercial farming system. As a result, local institutions that traditionally facilitated the climatic adaptation responses are also in a state of transition. Therefore, farmers face problems in adapting to the impending risks and uncertainties of global climate change. The paper emphasizes the need for appropriate policy measures to facilitate the adaptive capacity of farmers.

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