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Item IMPACT OF TRDE LIBERALIZATION ON ECONOMIC GROWTH OF SRI LANKA: AN ECONOMETRIC INVESTIGATION(2010) Herath, H.M.S.P.This paper examines impact of trade liberalization on economic growth of Sri Lanka.The research problem is expressed as ?To what extent does trade liberalization or openness of the economy influence on economic growth of Sri Lanka?? The primary objective of the study is to investigate the causal relationships between the trade liberalization and economic growth of Sri Lanka. The study is mainly based on secondary data. In identifying the impacts of trade liberalization on growth and trade balance, data were collected on a specific time interval before and after the trade liberalization. The time period selected is from 1960 to 2007. To identify the impacts of trade liberalization, total time period is divided into two sub periods of before trade liberalization i.e. (1960 to 1976) and after trade liberalization i.e. (1977 to 20070). Since the study is based on secondary data, basically it is uses data published in annual reports of Central Bank of Sri Lanka. The variables identified in the main objective of the study are tested hypothetically, and quantitative analytical methods are applied to make accurate and reliable conclusions. Therefore, graphical presentations and regression analysis are used to assess the degree of relationships among variables concerned. Further to test the structural changes of the country, the Chow test is applied. Findings of the study confirm a significant positive relationship between trade liberalization and economic growth of Sri Lanka. The result of Chow test proves a clear change of economic growth before and after trade liberalization of the country.Item Financial Intermediation and Economic Growth: A Lesson from Sri Lanka(2011) Rexiang, W.; Rathanasiri, R.A.The relationship between finance and growth has been well documented in the economic literature. A considerable body of theoretical literature suggests a strong and positive link between financial development and economic growth. The purpose of this study is to examine whether financial intermediation leads to economic growth in a small open economy of Sri Lanka using time series macro data for the period 1977-2008. This basically investigates the channel and the effect of financial intermediation to economic growth with a new framework. The model framework of the study develops as per the endogenous growth theory. The model explains the joint effect of financial intermediation, trade openness and other economic factors on economic growth in Sri Lanka. This paper uses Engle-Granger two step methodologies to find out long term relationship between financial intermediation and economic growth. And, short run dynamic of the model is explained by granger causality test. The findings of the study revealed that financial intermediation impact on economic growth in the long run but the relationship is not strong. Further, study reveals that financial intermediation promotes growth through the productivity channel rather than accumulation of capital.Item Can Foreign Direct Investments Influence Sri Lankan Economic Growth? An Econometric Analysis(2011) Deyshappriya, N.P.R.According to the early economics literature, factor accumulation was the key component of economic growth, but in this respect he recent economic history had highlighted additional factors such as total factor productivity, international trade and foreign direct investment. As a whole, the economic integration of developing countries has increased dramatically in 1990s, consequently most of the developing countries concern about the foreign direct investment (FDI) as a tool of economic growth, since it provides more job opportunities, technological transfers and foreign reserves in order to achieve a higher level of economic growth. In the context of Sri Lanka, especially prior to 1970?s FDI was not seen as an instrument of economic growth. The period of 1970-1977 was characterized by a highly regulated economy although FDI was encouraged by the White paper in 1972, the climate for such foreign investment or any private investments were not congenial. Since 1977, the country has practiced the open economy policy, therefore has vigorously promoted foreign capital inflows where FDI particulars are viewed as a necessary condition to accelerate the growth. In this setting therefore, it has a timely importance to examine the effects of FDI on economic growth. In this study, I attempt to identify the relationship between FDI and Sri Lankan economic growth. The current study is basically based on time series data during the period of 1990 ? 2009 which have been collected from the various issues of Central Bank annual reports. In accordance with the theory macroeconomics time series data follow the unit root process, Augmented Dicky Fuler test was employed to check the stationary of the variables. After checking the stationary of the variables by employing ADF test, the Vector Autoregressive (VAR) model has been employed to identify the short run dynamics, followed by the Granger Causality Test. According to the results, though FDI positively related to economic growth of Sri Lanka, the magnitude of contribution is quite low compared to the other determinants of economic growth. Hence, it is very crucial to provide and maintain the encouraging vicinity for FDI, in order to enhance the contribution of FDI by getting the optimum benefit of the FDI inflows.