August 12, 2007 (LBO) – If market reforms and globalization that brought prosperity to Sri Lanka’s Western Province could be replicated countrywide, extreme poverty could be eliminated in a generation, a development economist said. Many economists had pointed out that Sri Lanka is held back by policy errors, despite being rich in human, natural resources and an unmatched geographical location, which time and again has allowed the economy to recover from policy shocks. Sri Lanka’s Western Province which had seen the most market oriented reforms since 1977 and was most open to the world, had grown the fastest and had reduced poverty to 9 percent while the national poverty headcount was 23 percent.
“If the rest of the country can mimic the Western Province’s performance Sri Lanka can eliminate extreme poverty in one generation,” Naoko Ishii, World Bank’s country chief, told the annual sessions of the Sri Lanka Economic Association.
“The rising inequality within the country has severely limited the extent the growth could have reduced poverty.”
Despite an internal conflict consuming massive resources Sri Lanka had grown by 4.5 percent a year on average with the Western Province growing by an average of 6.2 percent betwee