4 SOCIAL SCIENTIST
(a) currency devaluation or depreciation (or the selection of a "realistic" exchange rate)
(b) import/exchange liberalisation
(c) multilataralism in foreign trade
(d) restrictive monetary management
(e) restrictive fiscal management
(f) restraint in granting wage/salary increases
(g) decontrol measures and promotion of the market mechanism and
(h) promotion of private capital, domestic as well as foreign
Thip following pages are intended to show how selected combinations of these measures came to be imposed on the governments of Sri Lanka at different times of its post-independence era. The IMF package in its most domptete form, that is, in terms of the country^s own historical experience in this regard, has been seen in operation since 1977, although even today, some of the elements in this package are conspicuously absent in the Sri Lankan strategy.
Sri Lanka at Independence
The economic structure inherited by Sri Lanka at its political indepen' dence in 1948 was the result of the introduction of "capitalist"1 forms o( organisation into certain economic activity areas during the colonial period while the bulk of the economy continued to remain pre-capit|ilist. In a pro dominandy agricultural economy, agricultural production for export contributed about one-third of the GDP in the early 1950's. The importance of the export agricultural sector was not confined to its direct contribution to 3utput and employment. A substantial part of the service sector, particularly commerce, finance and transport, derived its major support from the export agricultural sector. Export processing activities connected with the plantation crops also made up the bulk of manufacturing activities. Through its influence on government finances, the export sector also affected the volume and the composition of government expenditures. The necessary corollary of the heavy export-dependence was the equally heavy reliance on imports for consumer and capital goods requirements of the country. In the early 1950's imports of goods and services amounted to 36 per cent of the GDP.
The exports of the country at independence were heavily concentrated m three agricultural products—tea, rubber and coconut In 1948, they constituted 94 per cent of exports of Sri Lankan produce. The Gini-Hirschman coefficient of commodity concentration of exports in 1^48 works x>ut to 66 per cent, indicating, on the basis ofMichaely's calculations for a large number of countries (Michaely, 1962, pp. 11-12), a relatively high degree of commodity concentration.
The growth of export agriculture and the expansion of commercial and