Sri Lanka’s Export Problem: Not Concentration, But Composition

Abstract

Sri Lanka's exports are heavily concentrated in a few markets and a few products. The government's recognition of export diversification as an important policy strategy to revive exports indicates that both market and product concentration are seen as critical bottlenecks in this regard. This report compares and contrasts Sri Lanka's export product and market concentration and its export composition against that of the world and selected Asian economies. This analysis indicates that Sri Lanka's export problem may not necessarily be in relation to the extent of its product and market concentration, but rather their composition—the particular markets and product categories in which the concentration persists. Sri Lanka's variance with world trends is particularly striking in terms of product composition.