Increase in Protectionism and Its Impact on Sri Lanka's Performance in Global Markets

Sri Lanka's external performance defies global trends on two counts. First, the level of openness as measured by the ratio of trade in goods and services, after a strong increase in 1987-95 and stagnation in 1996-2004, sharply fell in 2005-10...

Full description

Bibliographic Details
Main Authors: Kaminski, Bartlomiej, Ng, Francis
Format: Policy Research Working Paper
Language:English
en_US
Published: World Bank, Washington, DC 2013
Subjects:
Online Access:http://documents.worldbank.org/curated/en/2013/06/17933848/increase-protectionism-impact-sri-lankas-performance-global-markets
http://hdl.handle.net/10986/15870
id okr-10986-15870
recordtype oai_dc
spelling okr-10986-158702021-04-23T14:03:26Z Increase in Protectionism and Its Impact on Sri Lanka's Performance in Global Markets Kaminski, Bartlomiej Ng, Francis BUSINESS ENVIRONMENT EXPORTS GLOBAL MARKETS IMPORT SUBSTITUTION INVESTMENT MICROMANAGEMENT PROTECTIONISM TRADE LIBERALIZATION TRADE POLICY Sri Lanka's external performance defies global trends on two counts. First, the level of openness as measured by the ratio of trade in goods and services, after a strong increase in 1987-95 and stagnation in 1996-2004, sharply fell in 2005-10 to the levels experienced during the era of import substitution. Second, the share of clothing in manufactured exports has remained largely unchanged over the past 25 years. Had there been no economic growth, this would not have been puzzling. The paper argues that these unique features can be traced to (a) the duality of Sri Lanka's economic regime -- the legacy of unfinished structural reforms of a socialist economic regime -- and (b) high and growing protectionism in the 2000s. Sri Lanka's experience shows that the lack of stability in trade policy combined with recently expanding protectionism and the state's micromanagement of investment does not create an institutional/policy setting conducive to rapidly evolving composition of exports and their fast growth. The practice of dealing with weaknesses in trade policies and the business environment through granting exemptions to various activities deemed desirable by the authorities only exacerbates distortions and creates more fertile ground for rent seeking. Without a radical overhaul of the current policy framework shaping interaction of Sri Lankan businesses with global markets, economic growth may be reduced, if not reversed. 2013-09-26T18:02:03Z 2013-09-26T18:02:03Z 2013-06 http://documents.worldbank.org/curated/en/2013/06/17933848/increase-protectionism-impact-sri-lankas-performance-global-markets http://hdl.handle.net/10986/15870 English en_US Policy Research Working Paper;No. 6512 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research South Asia Sri Lanka
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
en_US
topic BUSINESS ENVIRONMENT
EXPORTS
GLOBAL MARKETS
IMPORT SUBSTITUTION
INVESTMENT MICROMANAGEMENT
PROTECTIONISM
TRADE LIBERALIZATION
TRADE POLICY
spellingShingle BUSINESS ENVIRONMENT
EXPORTS
GLOBAL MARKETS
IMPORT SUBSTITUTION
INVESTMENT MICROMANAGEMENT
PROTECTIONISM
TRADE LIBERALIZATION
TRADE POLICY
Kaminski, Bartlomiej
Ng, Francis
Increase in Protectionism and Its Impact on Sri Lanka's Performance in Global Markets
geographic_facet South Asia
Sri Lanka
relation Policy Research Working Paper;No. 6512
description Sri Lanka's external performance defies global trends on two counts. First, the level of openness as measured by the ratio of trade in goods and services, after a strong increase in 1987-95 and stagnation in 1996-2004, sharply fell in 2005-10 to the levels experienced during the era of import substitution. Second, the share of clothing in manufactured exports has remained largely unchanged over the past 25 years. Had there been no economic growth, this would not have been puzzling. The paper argues that these unique features can be traced to (a) the duality of Sri Lanka's economic regime -- the legacy of unfinished structural reforms of a socialist economic regime -- and (b) high and growing protectionism in the 2000s. Sri Lanka's experience shows that the lack of stability in trade policy combined with recently expanding protectionism and the state's micromanagement of investment does not create an institutional/policy setting conducive to rapidly evolving composition of exports and their fast growth. The practice of dealing with weaknesses in trade policies and the business environment through granting exemptions to various activities deemed desirable by the authorities only exacerbates distortions and creates more fertile ground for rent seeking. Without a radical overhaul of the current policy framework shaping interaction of Sri Lankan businesses with global markets, economic growth may be reduced, if not reversed.
format Publications & Research :: Policy Research Working Paper
author Kaminski, Bartlomiej
Ng, Francis
author_facet Kaminski, Bartlomiej
Ng, Francis
author_sort Kaminski, Bartlomiej
title Increase in Protectionism and Its Impact on Sri Lanka's Performance in Global Markets
title_short Increase in Protectionism and Its Impact on Sri Lanka's Performance in Global Markets
title_full Increase in Protectionism and Its Impact on Sri Lanka's Performance in Global Markets
title_fullStr Increase in Protectionism and Its Impact on Sri Lanka's Performance in Global Markets
title_full_unstemmed Increase in Protectionism and Its Impact on Sri Lanka's Performance in Global Markets
title_sort increase in protectionism and its impact on sri lanka's performance in global markets
publisher World Bank, Washington, DC
publishDate 2013
url http://documents.worldbank.org/curated/en/2013/06/17933848/increase-protectionism-impact-sri-lankas-performance-global-markets
http://hdl.handle.net/10986/15870
_version_ 1764431813323784192