Social Scientist. v 12, no. 130 (March 1984) p. 3.


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N SHAN MUG ARATNAM^

Sri Lanka's "New" Economic Policy and Agriculture

THE PRESENT GOVERNMENT of the United National Party (UNP) swept to power in 1977 with the promise of putting Sri Lanka's economy on a new course of development. Its election campaign was based on, among others, a manifesto which offered a "new" model of economic development, apparently inspired by the success stories of the Newly Industrializing Countries (NIC's) of South-East Asia. However, the UNP strategy—as admitted by the government itself—was more directly inspired by the prescriptions of the World Bank and the IMF. It would be wrong to think that these two agencies of international capital forced the strategy on an unwilling Sri Lanka government. The choice was primarily the responsibility of the latter which was motivated by the interests of the dominant domestic classes.

In a word, the UNP approach to Sri Lanka^s economic development was termed a "liberalization strategy55. An outstanding feature of this strategy was its promise of opening up new avenues of accumulation for the domestic bourgeoisie and its allies with tlie assistance of international aid and the collaboration of transnational corporations (TNG's) and other sources of foreign investment. The UNP victory in 1977 signalled a more active role to the state to promote and safeguard the private sector. The state was to play an important function in channelling funds secured as foreign aid to the private sector, iliereby enhancing the privatization of capital. In order to fully appreciate the shift in the role of the state it is necessary to recall certain ^antecedents of the political change of 1977.

Sri Lanka's private sector dominated by a mercantile bourgeoisie felt severely constrained by certain policies and actions of the 1970-1977 government. The SLFP-do ruinated United Front government pursued a policy of statization of capital through nationalization and by creating new state ventures with limited foreign aid. The state was used by the politically influential petty bourgeoisie and its middle class ideologues in the governing alliance to further their own class interests by strengthening and expanding the state sector which offered them access to power and finance via managerial positions. The United Front adopted

^Currently at the Institute of Developing Economies, Tokyo



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