Throughout its history, Sri Lanka has been a beneficiary of being an active partner in global trade. In addition to being located on a very convenient naval route, conducive policies adopted by successive rulers have been a booster to international trade, and through it, to wealth creation.
The reliance on services, especially commercial services, for wealth creation is not a new policy paradigm for Sri Lanka. Sri Lanka which is devoid of a sufficient natural resource base would find it difficult to enhance growth through industry or agriculture alone.
The country’s available land is limited and its population density at over 290 persons per square kilometer is one of the highest in the world. Another factor that has driven Sri Lanka to the services sector is the ever rising globalization of services.
At present the service sector is the leading factor for the total economic growth rate. This sector has contributed 72.7 percent for the economic growth rate in the third quarter of 2009, while Agriculture sector contributed negative 2.7 percent contribution for this quarter. Contribution of industry sector has recorded 30.0 percent for the same quarter.
Sri Lanka has generated 234,000 service sector jobs in the third quarter of 2009 from a year earlier, though 89,000 jobs were lost in industry, and 240,000 were lost in the farming sector according to government estimates. Tourism, banking, finance, and retail trade are the major components of the service sector.
Sri Lanka’s financial sector comes under the purview of the Central Bank of Sri Lanka. Liberal policies and a lucrative business environment have made the island nation an attractive location for several global banking firms to set up operations, complementing a strong local network of investment and commercial banks.
Sri Lanka’s IT industry has made rapid progress in the past decade, becoming a vibrant sector in the country and the region. The significant inroads has prompted growth and development in IT-related services as well as IT education. The sector has become particularly popular among the country’s younger generation who have given prominence to improving their skills and knowledge in IT-related products and services.
Last Updated on: 19-05-2010
