1. What is economics growth?

Economic growth refers to an increase in the output of goods and

services produced in an economy over a certain period of time. It
is usually measured by the Gross Domestic Product (GDP) or Gross
National Product (GNP) of a country.

Economic Growth: Refers to an increase in a country’s production of goods and

services, usually measured by GDP or GNP, over a period of time (at least 1-2
years). It reflects a rise in the economy's output.
Economic Development: Involves improvements in the standard of living for a large
part of the population. This includes increases in income, as well as enhancements
in other areas like health, education, and overall well-being. It's about bettering
people's quality of life, not just producing more goods and services.

2. Development issues in Sri Lanka

Sri Lanka faced several development issues in 2023 that impacted
its economic, social, and environmental progress. Here's a list of
key issues, along with explanations and examples:
I. Economic Crisis
a. Explanation: Sri Lanka's economy was severely impacted by
a prolonged economic crisis, marked by a high level of debt,
a declining currency, and dwindling foreign reserves.
b. Example: The country struggled to pay for essential imports
like fuel, food, and medicine, leading to shortages and
inflation. For instance, fuel shortages caused significant
transportation disruptions, affecting both public and private
sectors.
II. Political Instability
a. Explanation: Political instability further exacerbated the
economic crisis. Frequent changes in leadership and policy
directions created uncertainty, which discouraged both
domestic and foreign investment.
b. Example: Protests in Colombo and other major cities
highlighted public dissatisfaction with government policies,
leading to frequent changes in government officials and a lack
of cohesive economic planning.
III. Environmental Challenges
a. Explanation: Sri Lanka faced significant environmental
challenges, including deforestation, pollution, and the
impacts of climate change. These issues hindered
sustainable development and affected agricultural
productivity.
b. Example: In the central highlands, deforestation for
agriculture and development projects led to landslides
during the monsoon season, causing loss of life and property
damage.
IV. Agricultural Crisis
a. Explanation: The agricultural sector, a key part of Sri Lanka's
economy, faced a crisis due to misguided policies and
external factors. The shift towards organic farming without
adequate preparation led to a sharp decline in crop yields.
b. Example: The ban on chemical fertilizers in 2021 continued
to have effects into 2023, as farmers struggled with lower
rice and tea production, leading to food insecurity and
increased imports to meet demand.
V. Healthcare System Strain
 a. Explanation: The healthcare system in Sri Lanka was under
strain due to the economic crisis, leading to shortages of
essential medicines and equipment. This impacted the
delivery of healthcare services, especially in rural areas.
b. Example: Hospitals reported running out of basic supplies
like antibiotics and anesthesia, forcing many patients to seek
treatment abroad or in private hospitals at higher costs.
VI. Youth Unemployment
a. Explanation: High levels of youth unemployment persisted in
2023, partly due to the economic downturn and the
mismatch between educational outcomes and market
needs.
b. Example: Many graduates found themselves unemployed or
underemployed, contributing to social unrest and a brain
drain as young professionals sought opportunities abroad.
VII. Tourism Decline
a. Explanation: Tourism, a significant source of revenue for Sri
Lanka, continued to suffer due to both the economic crisis
and global factors like the COVID-19 pandemic's lingering
effects.
b. Example: Tourist arrivals were far below pre-pandemic
levels, impacting businesses in coastal areas like Galle and
Bentota, which rely heavily on tourism for their livelihoods.
VIII. Education System Disruption
a. Explanation: The education system faced disruptions due to
economic challenges, including teacher strikes, school
closures, and a lack of resources.
b. Example: Many schools struggled to provide basic supplies
and maintain facilities, while students faced interruptions in
 their studies, especially in rural areas where online
education was less accessible.
IX. Urbanization and Infrastructure
a. Explanation: Rapid urbanization in cities like Colombo led to
infrastructure challenges, including inadequate public
transportation, waste management issues, and the strain on
housing.
b. Example: The lack of affordable housing in urban areas
forced many to live in informal settlements, where they
faced poor living conditions and limited access to basic
services.
X. Corruption and Governance Issues
a. Explanation: Corruption and weak governance continued to
impede development efforts, with public funds often
misallocated or misused, reducing the effectiveness of
development programs.
b. Example: Scandals involving public procurement and
mismanagement of resources in projects like the
Hambantota port highlighted the ongoing challenges in
governance and transparency.

These development issues illustrate the complex challenges Sri Lanka

faced in 2023, where economic, political, and environmental factors
intertwined, affecting the overall progress of the country. Addressing
these issues requires coordinated efforts from both the government
and the private sector, along with international support.
Development issues of Sri Lanka
1. Economic Instability:
Example: If the government owes a lot of money and prices keep going up
(inflation), it makes it hard for businesses to plan and invest. For instance, high
inflation might mean that the cost of everyday items, like food, becomes
unaffordable for many people.

2. Political Uncertainty:

Example: If the government changes frequently and policies keep shifting, it’s hard
for businesses to make long-term plans. For example, a company might start a new
project, but if the new government changes the rules, the project might be delayed
or canceled.

3. Poverty and Inequality:

Example: Even if the country’s economy is growing, some people in rural areas
might still live-in poverty without access to basic needs like clean water or good
education. For instance, a village might lack proper schools and healthcare
facilities.

4. Unemployment:
Example: Many young people and graduates can’t find jobs, which can lead to
frustration and social problems. For example, a recent college graduate might
struggle to find a job in their field, leading to underemployment or migration in
search of work.

5. Infrastructure Deficiencies:
Example: Poor roads and unreliable electricity can make it difficult for businesses to
operate efficiently. For instance, if roads are in bad shape, it can delay deliveries
and increase costs for businesses and consumers.
6. Environmental Degradation:
Example: Deforestation for farming can lead to soil erosion and loss of wildlife. For
instance, cutting down forests for agriculture can reduce the land’s ability to
absorb rainwater, leading to flooding.

7. Climate Change:
Example: Rising sea levels and extreme weather events, like heavy rains and
storms, can damage coastal areas and affect farming. For instance, floods from
heavy rains can destroy crops and homes, leading to economic losses.

8. Education and Skills Gap:

Example: There might be a mismatch between what people are taught in schools
and what employers need. For instance, if schools don’t teach practical skills,
graduates might struggle to find jobs that require those skills.

9. Healthcare Challenges:
Example: Some areas, especially rural ones, may not have enough doctors or
hospitals. For instance, a rural community might have to travel long distances to
reach the nearest healthcare facility, affecting timely treatment.
10. Urbanization Pressures:
Example: Rapid growth in cities can lead to problems like traffic jams and poor waste
management. For instance, a growing city might struggle with managing garbage
effectively, leading to pollution and health issues.
 3. Stages of economic development according to rostows
W.W. Rostow, an American economist, outlined five stages of economic
development that countries typically go through as they progress from
a traditional society to a more advanced economy. Here's a summary of
those stages:
I. Traditional Society
a. Characteristics:
b. Economy based primarily on agriculture.
c. Limited technology and slow progress.
d. Social structures are often rigid, with little mobility.
e. Subsistence farming is common, with little surplus for trade.
f. Example: Many ancient civilizations, where economies were
centered around farming and there was little industrial
activity.
II. Preconditions for Take-Off
a. Characteristics:
b. Society begins to build the foundations for growth, such as
improved infrastructure (roads, railways, etc.) and increased
investment in agriculture.
c. A shift from subsistence farming to more commercial
farming.
d. The development of mining, transport, and
communications.
e. The beginnings of a more centralized state and national
identity.
 f. Example: The early stages of industrialization in Britain in
the 18th century, where there was investment in
infrastructure and innovation.

III. Take-Off
a. Characteristics:
b. Rapid growth in a few key industries (like textiles, railroads,
or steel).
c. The emergence of a manufacturing sector.
d. Increased investment and savings, leading to higher
economic growth.
e. Urbanization begins as people move from rural areas to
cities for work.
f. Example: The Industrial Revolution in England during the
late 18th and early 19th centuries.
IV. Drive to Maturity
a. Characteristics:
b. Diversification of the economy as new industries emerge.
c. Technological advancement spreads to all sectors.
d. National income rises, and the economy becomes less
dependent on any single industry.
e. Improvements in education, healthcare, and infrastructure.
f. Example: The United States in the late 19th and early 20th
centuries, when it expanded its industrial base and saw
significant technological advances.
V. Age of High Mass Consumption
a. Characteristics:
b. The economy shifts from heavy industry to consumer goods.
 c. The majority of the population enjoys a high standard of
living.
d. Increased consumer spending on goods and services like
cars, electronics, and entertainment.
e. Welfare systems, social security, and more leisure time
become common.
f. Example: Modern developed countries like the United
States, Japan, or Western European nations, where the
focus is on consumer goods and services.
These stages describe a linear progression from a traditional,
agricultural society to a modern, industrialized economy. While
Rostow's model has been influential, it's important to note that not all
countries follow this exact path, and some may experience different
trajectories due to various factors like culture, politics, or geography.

4. Education plays a crucial role in the development of a country.

Here’s how:
I. Economic Growth
a. Improved Skills and Productivity: Education equips people
with the skills and knowledge needed to be more productive
 workers. This leads to better job opportunities, higher
wages, and overall economic growth.
b. Example: Countries with higher literacy rates and better
educational systems tend to have stronger economies
because their workforce is more skilled and capable of
innovation.
II. Reduction of Poverty
a. Breaking the Cycle of Poverty: Education provides
individuals with the tools to improve their economic
situation. Educated people are more likely to secure
wellpaying jobs, which helps them escape poverty.
b. Example: In many developing countries, access to education
has enabled people to lift themselves and their families out
of poverty, leading to improved living standards.
III. Social Development
a. Empowerment and Equality: Education promotes gender
equality and empowers marginalized groups by providing
them with opportunities to participate fully in society.
b. Example: Educated women are more likely to participate in
the workforce, make informed health decisions, and
contribute to community development. IV. Health
Improvement
a. Better Health Outcomes: Education leads to better health
outcomes because educated individuals are more likely to
understand health information, practice good hygiene, and
access healthcare services.
b. Example: Educated mothers are more likely to ensure their
children receive vaccinations and proper nutrition, reducing
child mortality rates.
V. Democracy and Governance
a. Informed Citizens: Education fosters critical thinking and
informed decision-making, which are essential for the
functioning of a healthy democracy. Educated citizens are
more likely to vote, engage in civic activities, and hold their
leaders accountable.
b. Example: Countries with higher levels of education tend to
have more stable and effective governments because their
populations are more engaged in political processes.
VI. Innovation and Technology
a. Driving Innovation: Education, especially in science and
technology, drives innovation by enabling individuals to
develop new ideas, technologies, and processes that can
lead to economic and social advancements.
b. Example: Countries like South Korea have invested heavily in
education, particularly in STEM (Science, Technology,
Engineering, and Mathematics), leading to rapid
technological advancements and economic growth.
VII. Environmental Sustainability
a. Promoting Awareness: Education increases awareness of
environmental issues and encourages sustainable practices.
Educated individuals are more likely to support policies and
take actions that protect the environment.
b. Example: Environmental education programs can lead to
more responsible behavior, such as recycling, conservation,
and support for clean energy initiatives.
VIII. Peace and Stability
 a. Reducing Conflict: Education can reduce the likelihood of
conflict by promoting understanding, tolerance, and
cooperation among different groups within a society.
b. Example: In post-conflict regions, education can help rebuild
societies by fostering reconciliation and preventing the
resurgence of violence.
In summary, education is a fundamental driver of development,
influencing various aspects of economic, social, and political progress.
By investing in education, countries can create a more prosperous,
equitable, and sustainable future.
Role of education when it comes to development
1. Economic Growth:
- Skills Development: Education provides individuals with skills and knowledge
needed for various jobs, leading to higher productivity and innovation. For
instance, trained engineers can develop new technologies that boost
industries.
2. Poverty Reduction:
- Improved Employment Opportunities: With better education, people can
access higher-paying jobs and improve their economic status. For example, a
well-educated individual is more likely to secure a stable job and escape
poverty compared to someone without formal education.
3. Health Improvement:
- Awareness and Practices: Educated individuals are more likely to adopt
healthier lifestyles and practices. For example, awareness about hygiene and
nutrition can reduce the prevalence of diseases and improve overall public
health.
4. Social Stability:
 - Informed Citizenship: Education helps people understand their rights and
responsibilities, leading to more active and informed participation in civic
activities. For instance, educated citizens are more likely to vote and engage
in community initiatives.
5. Innovation and Technology:
- Research and Development: Education fosters critical thinking and creativity,
which are essential for scientific research and technological advancements.
For instance, research in universities can lead to breakthroughs in medicine or
engineering.
6. Gender Equality:
- Empowerment: Education empowers women and girls, providing them with
opportunities for economic and personal growth. For example, educated
women are more likely to contribute to the workforce and make decisions that
benefit their families and communities.
7. Environmental Awareness:
- Sustainable Practices: Education promotes awareness about environmental
issues and sustainable practices. For instance, educating farmers on
sustainable agriculture techniques can lead to better environmental
management and conservation.
8. Social Mobility:
- Opportunity for Advancement: Education can break the cycle of poverty by
providing individuals with the tools to improve their social and economic
status. For example, a scholarship for higher education can enable a talented
student from a low-income background to achieve career success.
9. Cultural and Social Development:
- Preservation and Growth: Education helps preserve cultural heritage and
fosters social cohesion. For instance, educational programs about local history
and traditions can strengthen community identity and pride.
10. Democratic Participation:
 - Effective Governance: An educated population is better equipped to
participate in democratic processes and hold leaders accountable. For
example, understanding legal rights and political processes helps citizens
engage more effectively in governance and advocacy.

5. What is Sustainable Development?

Sustainable development refers to the process of meeting the needs of
the present without compromising the ability of future generations to
meet their own needs. It aims to balance economic growth, social
inclusion, and environmental protection. In simple terms, it's about
making sure that we use resources wisely today so that people in the
future can also enjoy a good quality of life.
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Sustainable development
Sustainable development is the practice of meeting the needs of the
present without compromising the ability of future generations to meet
their own needs.
A set of goals created by the United Nations in 2015, building on and
expanding the earlier Millennium Development Goals.
The three main parts of sustainable development are:
1. Healthy Environment: Keeping our natural world clean and safe so
we have fresh air, clean water, and resources now and in the future.
2. Social Justice: Making sure everyone is treated fairly, improving
people's lives, and working to reduce poverty and inequality.
3. Economic Growth: Helping the economy grow by creating jobs and
improving living standards, while also taking care not to harm the
environment.

United Nations Goals of Sustainable Development (SDGs)

The United Nations has outlined 17 Sustainable Development Goals
(SDGs) as part of the 2030 Agenda for Sustainable Development,
adopted by all UN Member States in 2015. These goals provide a
blueprint for achieving a better and more sustainable future for all.
Here's a brief overview of each goal:
1. No Poverty
- Goal: End poverty in all its forms everywhere.
- Focus: Ensure everyone has access to basic needs like food, shelter,
and clean water.
2. Zero Hunger
- Goal: End hunger, achieve food security, improve nutrition, and
promote sustainable agriculture.
- Focus: Ensure that everyone has enough nutritious food.
3. Good Health and Well-being
- Goal: Ensure healthy lives and promote well-being for all at all
ages.
- Focus: Improve healthcare access, reduce disease, and promote
mental health.
4. Quality Education
- Goal: Ensure inclusive and equitable quality education and promote
lifelong learning opportunities for all.
- Focus: Provide quality education and promote lifelong learning.
5. Gender Equality
- Goal: Achieve gender equality and empower all women and girls.
- Focus: End discrimination and violence against women and girls.
6. Clean Water and Sanitation
- Goal: Ensure availability and sustainable management of water and
sanitation for all.
- Focus: Provide access to clean water and sanitation.
7. Affordable and Clean Energy
- Goal: Ensure access to affordable, reliable, sustainable, and modern
energy for all.
- Focus: Promote renewable energy sources like solar and wind.
8. Decent Work and Economic Growth
- Goal: Promote sustained, inclusive, and sustainable economic
growth, full and productive employment, and decent work for all.
- Focus: Create jobs, encourage entrepreneurship, and ensure fair
wages.
9. Industry, Innovation, and Infrastructure
- Goal: Build resilient infrastructure, promote inclusive and
sustainable industrialization, and foster innovation.
- Focus: Develop reliable infrastructure, support industries, and
encourage innovation.
10. Reduced Inequality
- Goal: Reduce inequality within and among countries.
- Focus: Address disparities in income, education, and healthcare.
11. Sustainable Cities and Communities
- Goal: Make cities and human settlements inclusive, safe, resilient, and
sustainable.
- Focus: Improve urban planning, public transport, and housing.
12. Responsible Consumption and Production
- Goal: Ensure sustainable consumption and production patterns.
- Focus: Reduce waste, promote recycling, and use resources more
efficiently. 13. Climate Action
- Goal: Take urgent action to combat climate change and its impacts.
- Focus: Reduce greenhouse gas emissions, promote climate resilience,
and support global efforts to mitigate climate change.
14. Life Below Water
- Goal: Conserve and sustainably use the oceans, seas, and marine
resources for sustainable development.
- Focus: Protect marine ecosystems, reduce pollution, and promote
sustainable fishing.

15. Life on Land

- Goal: Protect, restore, and promote the sustainable use of
terrestrial ecosystems, manage forests, combat desertification, halt and
reverse land degradation, and halt biodiversity loss.
- Focus: Protect forests, combat deforestation, and preserve
biodiversity.
16. Peace, Justice, and Strong Institutions
- Goal: Promote peaceful and inclusive societies, provide access to
justice for all, and build effective, accountable, and inclusive
institutions at all levels.
- Focus: Reduce violence, ensure equal access to justice, and
promote human rights. 17. Partnerships for the Goals
- Goal: Strengthen the means of implementation and revitalize the
global partnership for sustainable development.
- Focus: Encourage global cooperation and partnerships to achieve
all the SDGs.
These goals are interconnected, meaning progress in one area can
influence outcomes in others. The aim is to achieve these goals by 2030
to ensure a sustainable future for everyone.
1. No Poverty: Make sure that no one lives in poverty, and everyone
has enough money to meet their basic needs like food, shelter, and
healthcare.

2. Zero Hunger: Ensure that everyone has enough food to eat, and that
the food is healthy and nutritious.

3. Good Health and Well-being: Help people live healthy lives by

providing good healthcare and promoting healthy habits.

4. Quality Education: Make sure everyone, especially children, has

access to good education so they can learn and grow.

5. Gender Equality: Ensure that men and women are treated equally in
all aspects of life, like in jobs, education, and rights.

6. Clean Water and Sanitation: Provide access to clean drinking water

and proper toilets to everyone, preventing disease and promoting health.

7. Affordable and Clean Energy: Ensure that everyone has access to

energy that is reliable, affordable, and doesn’t harm the environment.

8. Decent Work and Economic Growth: Create good job opportunities

for everyone and support economic growth that benefits all people.
9. Industry, Innovation, and Infrastructure: Build strong roads,
buildings, and other infrastructure, and encourage innovation and
technology to drive progress.

10. Reduced Inequality: Work to reduce the gap between the rich and
the poor, ensuring fair treatment and opportunities for everyone.

11. Sustainable Cities and Communities: Make cities and communities

safe, inclusive, and sustainable places to live, with good housing,
transportation, and green spaces.

12. Responsible Consumption and Production: Encourage people and

businesses to use resources wisely and reduce waste, ensuring products
are made and used in ways that don’t harm the environment.

13. Climate Action: Take steps to combat climate change by reducing

pollution, protecting the environment, and promoting sustainability.

14. Life Below Water: Protect oceans, seas, and marine life from
pollution, overfishing, and other threats to ensure healthy and thriving
aquatic ecosystems.

15. Life on Land: Protect forests, wildlife, and natural habitats on land,
prevent deforestation, and promote sustainable use of the planet’s
resources.
16. Peace, Justice, and Strong Institutions: Promote peace and justice by
building strong, fair institutions and ensuring everyone has access to
justice and can live without fear of violence.

17. Partnerships for the Goals: Encourage countries and organizations

to work together in partnership to achieve all these goals and create a
better world for everyone.

6. GDP (Gross Domestic Product) and GNP (Gross National Product)

are both measures of economic performance, but they have
different focuses:
Gross Domestic Product (GDP)
- Definition: GDP measures the total value of all goods and services
produced within a country's borders over a specific time period,
regardless of who owns the production assets.
- Focus: It includes only the value of production within the country,
whether performed by domestic or foreign entities.
- Example: If a Japanese car company operates a factory in the U.S.,
the production of cars at that factory counts toward the U.S. GDP.
Gross National Product (GNP)
- Definition: GNP measures the total value of all goods and services
produced by the residents of a country over a specific time period,
regardless of where the production occurs.
- Focus: It includes the value of production by the country's citizens
and businesses, both domestically and abroad, and excludes production
by foreign entities within the country.
- Example: If an American company owns a factory in China, the
production from that factory counts toward the U.S. GNP, but not the
U.S. GDP.
Key Differences
1. Location vs. Ownership:
- GDP: Focuses on the location of production.
- GNP: Focuses on the ownership of production.

2. Inclusion of Foreign Earnings:

- GDP: Includes earnings from foreign-owned businesses within the
country.
- GNP: Includes earnings from domestic-owned businesses operating
abroad. 3. Example Illustration:
- GDP: The value of cars manufactured in the U.S. by a foreign
company is included.
- GNP: The value of cars manufactured abroad by a U.S. company is
included. Practical Use
- GDP is commonly used to measure the economic performance of a
country and to compare economic productivity between different
countries.
- GNP can provide a measure of the economic performance of a
country's residents and businesses, reflecting the overall economic
contribution of its citizens, regardless of where they operate.
 Understanding both GDP and GNP helps in analyzing a country’s
economic performance from different perspectives, providing insights
into domestic production versus the global reach of a nation’s
businesses.

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Gross Domestic Product
GDP stands for “Gross Domestic Product”. It's a measure of the total
value of all goods and services produced in a country over a specific
period, usually a year. GDP is used to gauge the overall economic health
of a country and to compare the economic performance of different In
simple terms:
• GDP tells us how much a country's economy is producing.
• It includes everything from cars and computers to haircuts and
medical services.
• A higher GDP usually indicates a stronger economy.

Gross National Product

GNP stands for “Gross National Product”. It measures the total value of
all goods and services produced by a country's residents, regardless of
whether the production happens inside the country or abroad.

Features GDP (Gross Domestic GNP (Gross National

Product) Product)
Definition Measures the total value of Measures the total value of
goods and services produced goods and services
within a country. produced by a country's
residents, both domestically
and abroad

Focus Production within Production by the country's

the country’s residents, regardless of
borders. location.

Domestic production by Domestic production by

Includes both residents and non- residents plus income from
residents. abroad.

Excludes Income earned by residents Income earned by foreign

from foreign investments. residents from domestic
production

Example A car manufactured in the Profits earned by a U.S.

U.S. by a foreign company company from a factory in
counts in U.S. GDP. another country count in
U.S. GNP.

7. Current World Economy and GDP: Relation to Sri Lanka Current

World Economy:
The global economy is navigating challenges such as inflation,
supply chain disruptions, and geopolitical tensions. Economic
recovery post-pandemic is uneven, with many countries facing
inflationary pressures and varying growth rates. Technology and
sustainability trends are driving new economic dynamics, while
global trade patterns are shifting due to geopolitical events. GDP
and Sri Lanka:
- Economic Context: Sri Lanka's GDP has been significantly impacted
by recent economic crises, including high debt levels, political
instability, and a severe balance of payments crisis. The country's
economic growth has slowed, and it faces challenges such as inflation
and a debt default.
- Current Trends: Sri Lanka is focusing on economic reforms and
restructuring to stabilize its economy. International assistance and
investment in key sectors are crucial for its recovery. Efforts to boost
sectors like tourism and agriculture are part of the strategy to revive
economic growth.
In summary, while global economic trends influence Sri Lanka’s
economic performance, the country's immediate focus is on stabilizing
its economy through reforms and strategic investments.