BY EDWARD THEOPHILUS

Before the European invasion, the economic policy of Sri Lanka was believed to be maintaining a production economy with a view to enduring of people and making savings for the future. The definition of production is a dynamic term that products and services creation related to agriculture, industry, construction and related services were required to people and the closed economy had in the country responded in the way people wanted, however it was not a highest potential situation. The belief that Sri Lanka had a production economy is an assumption based historical view as interpreted by many historians. Although Sri Lankans assumes it had a production economy such policies were not written in any document, many literatures endeavoured to explain the country was a prosperous economy based on many productions and services.

The so-called production economy in the history had a priority for absorbing grains and related industrial products such as manufacturing mamoties, knifes, plough equipment and many others. Services as medical, religious and cultural activities related to the rural economy and also provided advisory services by relevant experts. Policymakers of the historical administration were not economic scholars who completed thesis on various subject matters, and education was religious based and competency based on activities. The education was not concerned to teach economics, but it used to provide the traditional knowledge for various animation and enterprises. The policy determination was based on the general conduct of people.  The nature gave directions for the economic activities (For example, begin to start agricultural seasons) and the traditional knowledge was key to determine the economic and social activities.

The production policy of the government was not declared by the authority as the country had a free economic system without regulation for controls and government intervention. There was no official regulation, but acceptances or ascendances in the society were strong like regulations in modern society. This focus has been changed during the foreign controls of the country; The foreign control means the regulations of the European invaders. Various factors may have contributed to change the policy focus from time to time within domestic society as well as in the rule under the invaders, when people expressed opposition to invaders policy activities, they withdrew the policy and attempted present the policy in the way people agreed. It is quite difficult to appraise the policy directions of invaders as well as domestic rulers as the purpose of invaders and domestic rulers concerned with many aims, which were not disclosed, sometimes they were enigmatic to public who were not too much concerned on politics like today. The colonial policy did not concern on economic prosperity of people, the significant nature of the domestic society was selfish and self-centred. Invaders did not express the policy concerns on the economy as it could imagine that they had hidden motives with the invading activities. 

According to historical analysts the major reason to invade the country was to promote trade between invading countries and Sri Lanka, now it is easy to assume that invaders concerned on a hidden policy focus which was not disclosed to people, but it had a closed administration strategy.

Under the leadership of domestic kings and Indian rulers the concept of production economy was generally accepted and gave priority to the concept as it was supporting the prosperity of public who were in a closed society. The priority of Indian invaders based on the available information they were also traders and they had no declared reasons to stop domestic agriculture and related industrial work. In terms of historical literature, the policy of Indian invaders was not concerned to work against the production economy.

The promoting trade between Sri Lanka and European invaders gave new elucidation to the concept of production economy, which meant that producers could have earned profits than hoarding produced goods in material format and the opportunities to participate in international trade was a vital opportunity for domestic producers, it may had get a price than expected, however, the concept of production economy must have diversified under the European invaders because they too had diversified aims of invasion and the tax policy of the Dutch rulers would have based on information they got about the profit making of people.

The application of the concept of welfare economy by European invaders especially the British rulers had potential to disadvantaged the country because the welfare economic policy encouraged promoting discouraging attitudes of domestic producers.  Invaders generally focused to promote trade between Sri Lanka and their countries, and invaders forced to apply the concept of welfare economy in Sri Lanka the policy developments toward colonies in the British society discouraged imposition of hard rules in colonies based on democratic policies of ruling parties in Britain. The negative effect of the aspect of welfare policies was local producers animated to depend on welfare payments despite hanging in the concept of production economy, this nature appeared in Western countries after 1980 and the behaviour of trade unions in modern Sri Lanka confirms this view.  

Since the era of Donor-more system which introduced certain feature of Western democratic administration the concept of production economy has gradually been locked by the welfare concept of especially the British rulers. Recent negotiation with the International Monetary Fund and the outcomes of such negotiations highlighted in media it is not clear whether IMF has focused on the traditional concept of production economy. Indirectly, IMF may want to support for a production economy in Sri Lanka despite this situation the operational structure and pattern of IMF might force them to get way from talking on the concept of practical circumstances related to a production economy.

Historical experience related to the beginning of the IMF indicates that it originated as a solution to the existed international financial crisis which complicated the international financial system by arbitrary devaluing and revaluing currency to gain trade advantages. The International Monetary Fund has not concerned on the problem of currency devaluation of poor countries and sometimes it forces to determine that the fund was a protector of the US Dollar and currencies of European countries.  In this situation, IMF may not concern on the production economy of Sri Lanka, in fact the fund needs to protect the values of the countries where have a greater contribution to international trade.

The major role of the IMF towards developing countries to support the balance of payment adjustment process and its sister organizations such as IBRD, ADA and other provide support for specific development projects they are accompanying the concept of production economy which has a relationship other factors that are not considered as prominent areas of Sri Lanka. For example, corrupt practices of politicians and public servants in government and private enterprises seem to working against the concept of production economy and there is no acceptable authority with potential to take honest decisions to eliminate corruptions supporting the concept of the production economy.

Blaming the IMF would not support the concept of the production economy.