GLOBALIZING THE SRI LANKAN ECONOMY:
A CASE STUDY OF THE SOCIAL COST OF
MODERNITY IN A TRADITIONAL SOCIETY
HILLWOOD COLLEGE KANDY SRI LANKA, Sri Lanka, year
One of the major challenges posed by Globalization to developing and undeveloped nations is how they
retain traditional value systems on the one hand and be receptive to modernity demanded by global trans-
formations on the other. The November protest at the World Trade Organization (WTO) summit in
Seattle forced people to rethink Globalization and its positive end negative consequences. I shall take up
Sri Lanka as a case study gauging the social cost of development in a borderless economy.
Sri Lanka is an island measuring , square miles and is centrally located within the Indian Ocean rim
connecting major trans - oceanic trade routes from the West and the East. Throughout history intrusive
technological and cultural elements converged on this island resulting in its rich multi-cultural mosaic.
Century AC Sri Lanka was a major commercial hub for the international luxury trade. Travel
notices from the Roman World, West Asia and China carry descriptions of traded items from Taprobane
(Bandaranayake ). UNESCO world Heritage Sites in Sri Lanka have yielded thousands of Roman,
Indian and Chinese coins in addition to imported ceramics, beads and ivory objects (The Cultural
Triangle 2005). Sri Lanka was therefore never isolated but very much part of the early ‘Global System’.
Since the th
Century, the island was incorporated into another type of Global System through
Portuguese, Dutch and British Colonialism. With the unfolding of the Industrial Revolution and
Imperialism, the economy of Sri Lanka (or Ceylon) was turned into an export - oriented plantation econo-
my mainly based on coffee, and later tea, rubber and coconut. This feature dominated the Sri Lankan
economy until the decade of , during which successive governments experimented on capitalist,
socialist and mixed economies.
The Global integration of this island commenced in the late ’s when the government finally liberal-
ized the economy. It reduced state interference and permitted free market forces to come into play. Tariff
were either slashed or removed, export promotion zones (Free Trade Zones) were inaugurated and local
as well as foreign investments were encouraged with attractive incentives. Movement of capital was unre-
stricted in order to enhance its investment capacity. This movement was also extended to the free flow of
labor, goods, services, information and knowledge. Sri Lanka was effectively connected to the Globalized
World! Globalization was different to the earlier Global Systems, both in its form and content. It cut
across natural and political boundaries and integrated, vertically and horizontally, nationalities, local
economies, societies and cultures to the world.
Modernization of Sri Lanka was a consequence of the open economy. Huge doses of foreign investments
and loans were injected where a large volume of cash circulated for investments providing employment.
It facilitated the purchasing power of commodities in an expanding consumer society. Massive reser-
voirs, hydro - power projects, new power grids, upgrading of infrastructure facilities, new townships.
large urban constructions, installation of small scale industries especially in the apparel sector, the IT rev-
olution and developments in the electronic media, vast expansions in the travel trade and hospitality man-
agement were all newly developed after the decade of . Colombo harbor was converted into the most
modernized container hub in South Asia. In addition to urban development, village development pro-
grams took priority. The positive investment climate was reflected in a vibrant stock market. The export
of skilled and unskilled labor, mainly to the West Asian countries, witnessed the generation of a new
source of foreign income. Petro - Dollars effectively augmented earnings derived from traditional cash
crop exports. With the expansion of international trade, non traditional products such as: gems, spices,
leather etc. had a demand. In spite of an internal conflict with terrorism for the past twenty years and with
a population of million, in , Sri Lanka showed an unemployment level only at % and Per Capita
GDP at , US$ (Annual Reports of the Central Bank 1971 - 2004). This is the positive side of
The grim side slowly emerges when one adds up the social cost of Globalization. Kofi Annan once stated
that “Globalization might not benefit all counties - but would lift the ‘yachts’ of the wealthiest while capsiz-
ing the ‘canoes’ of everyone else” (Mendis : li). Whether open borders, reduced tariff and forced
trade would benefit the poorest billion people in the world was in question (iMendis : xxii). What I
present below are my personal observations and news items gathered from the media and debates.
Every historical society represents its own value system in culture, environment, ethics and morals
reflecting the wisdom of traditional and indigenous knowledge. These traditions are found in their norms
of good governance, accountability and quality of life. Modernization introduced a whole new set of attrib-
utes, behavior norms, value systems that did not necessarily comply with contentment of the individual
leading to social harmony prescribed in the traditional way of life.
In Sri Lanka democratic values, good governance, accountability and transparency were the first causali-
ties of Globalization. The change over to an executive Presidential system and adjustment in the electoral
system to carry out open economic policies subverted free and fair elections. Often the judiciary came
under pressure and the parliament became a rubber stamp. Patronage and corruption seeped into all lay-
ers of the government.
The open economic policy sounded the death knell for most local industries and traditional crafts and
dependent families were pauperized. With unrestricted imports of consumer goods, food and other items,
the markets for local products were obliterated. Marginalization of rural Sinhala youth and Tamil youth
from economic opportunities and decision making processes may have contributed to the rise of anarchic
and terrorists movements represented by the JVP (Janatha Vimukthi Peramuna - Peoples’ Liberation
Front) and the LTTE (Liberation Tigers of Tamil Elam). Both movements advocated centrifugal tenden-
cies. A combination of the open economy and the war witnessed a coalescence of the international
weapons business, dangerous drug sales and looting of antiquities, often the same groups involved in all
The new cash nexus had a vertical impact. Consumerism and a new culture of hedonism engulfed the
rural and urban sectors alike. The community was living beyond its means. In the past, Sri Lanka was a
model country for its social welfare with free dry rations, education, public transport and health care for
its citizens. With liberalization, welfare measures were curtailed. Indebtedness is high and it is not sur-
prising that until five years ago Sri Lanka headed the youth suicide rate in the world! Consumerism also
took its toll on traditional values, culture, folk memory, dance forms and even moral values. The personal-
ized community feeling and social obligations are rapidly declining. Incidences of aged parents ‘dumped’
at shelters or thrown out of their own homes by their children are on the rise.
With an aggressive multi national agro business, industrialization and tourism, it retarded environmental
care. Increased levels of sight, air, sound, ground and water pollution went unabated. Unchecked use of
Chemical fertilizers and insecticides marketed by multi-nationals polluted ground water and soil and
destroyed the micro fauna in many places. Expanded budget tourism has resulted in Sri Lanka becoming
a haven for child prostitution, pornography and pedophiles. Social diseases are on the rise and we are
expecting an outburst of AIDS in the next ten years.
Overseas investments and the movement of multi-nationals into this country created different problems
at different levels. One good case study is the Collaborative venture at the Eppawela phosphate deposit
by the Sri Lanka government and US based multinational Freeport-McMoRan (or IMC Agrico). The proj-
ect nearly sparked off a rural uprising. The exploitation of the deposit would directly affect over thou-
sands of traditional farmers and crucial bio - diversity areas housing endemic herbal forests, wild life and
heritage sites (Mendis ; ).
The second case study is the extensive Free Trade Zones that form a state within a state with labor forces
having no trade union rights. Their large female labor forces recruited from rural homes live under
appalling conditions and are often forced into prostitution for additional income. The employment of
females in the FTZ factories and as expatriate workers in the Middle East has created enormous social
and cultural problems leading to broken homes, children gone astray, deserted babies and the spread of
This brief essay may indicate that Sri Lanka is a disaster prone zone conditioned by Globalization. But it
is unfair to blame only Globalization for all the miseries we have inflicted on ourselves in the past three
decades. In a contracting world, a shared global culture would certainly emerge. I partially blame succes-
sive governments for nurturing corruption and mismanagement. It was their obligation to provide safety
mechanisms for its citizens. On the contrary, each administration subverted good governance, accounta-
bility and transparency, negating quality of life. There have been positive developments in the past few
years on the preservation of tangible and intangible cultural values. awareness programs on indigenous
medicine and crafts and subsistence patterns, hands - on programs to school children developing tradi-
tional life - skills using modern techniques on IT.
In a contracting and competitive world we must not fear Globalization but utilize it to our advantage. The
next generation must not be steeped in tradition and be inward looking. They must draw the best ele-
ments of traditional wisdom and adapt modernity to be truly representative citizens of a borderless World
nurturing quality of life and humaneness.
Annual Reports of the Central Bank. Colombo -
Bandaranayake. Senake and others (Ed.)
Sri Lanka and the Silk Road of the Sea. Colombo. UNESCO Commission & Central Cultural Fund.
Eppawala - Destruction of Cultural Heritage in the name of Development. Colombo. Sri
Lanka Pugwash Group.
WTO, Globalization and Eppawala after Seattle. Colombo. Sri Lanka Pugwash Group.
Water Heritage of Sri Lanka. Colombo. Sri Lanka Pugwash Group.
The Cultural Triangle of Sri Lanka. . UNESCO Publishing / CCF. Paris and Colombo