Stabilization and Adjustment: A Second Look at the Sri Lankan Experience, 1977–93
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Date
1997
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John Wiley
Abstract
Mainstream thinking on economic policy assumes a logical progression from stabilization to liberalization and adjustment that is rarely attainable in practice. Most developing countries have been forced to undertake them simultaneously with a resulting tension between them, and with conflicting demands being made on economic policy. This paper reexamines Sri Lankan economic performance in the 1980s from this perspective. It argues that the pristine application of theory is not an appropriate yardstick and that “economic mismanagement” is at best an incomplete explanation of what was happening. It contends that incompatible demands were at the time being made on economic policy, and stresses the importance of external shocks and the political sustainability of the reform process.
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Keywords
Sri Lanka, Economic reforms, Stabilization