Editing Economy of Sri Lanka (section)

===Independence to 1977===

Sri Lanka was ahead of many Asian nations and had economic and social indicators comparable to Japan when they gained independence from the British in 1948.

Sri Lanka's social indicators were considered "exceptionally high".  Literacy was already 21.7% by the late 19th century. A Malaria eradication policy of 1946 had cut the death rate from 20 per thousand in 1946 to 14 by 1947. Life expectancy at birth of a Sri Lankan in 1948 at 54 years was just under Japan's 57.5 years. Sri Lanka's infant mortality rate in 1950 was 82 deaths per thousand live births, Malaysia 91 and Philippines 102.<ref name="GrowthEquity">{{cite web |url= http://documents1.worldbank.org/curated/en/570211468777272881/pdf/multi-page.pdf |title= Growth and Equity in Developing Countries - Surjit S Bhalla, Paul Glewwe |publisher=[[World Bank]] |website=worldbank.org |access-date=18 December 2020}}</ref>

With its strategic location in the Indian Ocean, Sri Lanka was expected to have a better chance than most other Asian neighbours to register a rapid economic take-off and had "appeared to be one of the most promising new nations." But the optimism in 1948 had dimmed by 1960, due to wrong economic policies and mismanagement.

East Asia was gradually overtaking Sri Lanka.  In 1950 Sri Lanka's un-adjusted school enrolment ratio as a share of the 5-19 year age group was 54%, India 19%, Korea 43% and the Philippines 59%.  But by 1979 Sri Lanka's school enrollment rate was 74%, but the Philippines had improved to 85% and Korea was 94%.<ref name="GrowthEquity" />

Sri Lanka had inherited a stable macro-economy at independence.<ref name="whatwent">{{cite journal |last1=Kelegama |first1=Saman |year=2000 |title=Development in Independent Sri Lanka: What went wrong? |url=https://www.jstor.org/stable/4409207 |journal=[[Economic and Political Weekly]] |volume=35 |issue=17 |pages=1477–1490 |jstor=4409207 |access-date=18 December 2020}}</ref> A central bank was set up and Sri Lanka became a member of the IMF entering the [[Bretton Woods system]] of currency pegs on August 29, 1950.<ref>{{cite web |url=https://www.imf.org/en/Countries/LKA |title= Sri Lanka and the IMF |publisher=[[IMF]] |website=imf.org |access-date=18 December 2020}}</ref> By 1953 exchange controls were tightened with a new law.<ref>{{cite web |url=https://www.srilankalaw.lk/Volume-III/exchange-control-act.html |title=Exchange Control Act No 24 of 1953 |publisher=[[Blackhall Publishing]] |website=srilankalaw.lk |access-date=18 December 2020 |archive-date=21 July 2021 |archive-url=https://web.archive.org/web/20210721064151/https://www.srilankalaw.lk/Volume-III/exchange-control-act.html |url-status=dead }}</ref>

The economy was then progressively controlled and relaxed in response to foreign exchange crises as monetary and fiscal policies deteriorated. Controls and restrictions in 1961-64 were followed by partial liberalization in 1965–70. Controls were continued after a devaluation in the wake of 1967 [[Devaluation|Sterling Crisis]]. Controls were tightened from 1970 to 1977 alongside the [[Nixon shock|collapse of the Bretton Woods system]]. "In sum it was a story of tightening partial relaxing, and again tightening the trade regime and associated areas to over a perceived foreign exchange crisis," writes economist [[Saman Kelegama]] in 'Development in Independent Sri Lanka what went wrong'. "In the early 1960s strategy for dealing with the foreign exchange crisis was the gradual isolation of the economy from external market forces. It was the beginning of a standard import-substitution industrial regime with all the controls and restrictions associated with such a regime. Expropriation and state intervention in economic activities was common."<ref name="whatwent" />

In 1960 Sri Lanka's (then Ceylon) per capita GDP was 152 dollars, Korea 153, Malaysia 280, Thailand 95, Indonesia 62, Philippines 254, Taiwan 149.  But by 1978 Sri Lanka's per capita GDP was 226, Malaysia's 588, Indonesia's 370 and Taiwan's 505.<ref name="GrowthEquity" />

The 1970s also saw an uprising in the south from the [[1971 JVP Insurrection (Sri Lanka)|JVP insurrection]], and the roots of a [[Sri Lankan civil war|civil war]] in the North and the East.