Trade Liberalization Effects on Agricultural Production Growth: the Case of Sri Lanka

Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies. Examining the effects of trade liberalization on agricultural sector is an interesting empirical question. This paper provides a quantitative assessment of the trade policy impacts on agricultural sector growth in Sri Lanka based on the national data from 1960 to 2010. The Ordinary Least Square (OLS) method and the multiple regression models were employed to investigate whether the trade policy reforms increase the agricultural sector growth or not. The empirical results suggest that the trade liberalization on agricultural sector growth and eventually lead to improved agricultural proclivity n Sri Lanka. Moreover, this analysis concludes that the trade openness, investment, interest rate Free Trade Agreements are significant factors that are positively related to agricultural sector growth. This research also confirms that the agricultural sector growth has made a wide contribution to total GDP to accelerate the economic growth in post-liberalization period in Sri Lanka.