 BACKGROUND OF SRI LANKA
The first Sinhalese arrived in Sri Lanka late in the 6th century B.C. probably from northern India. Buddhism was introduced in about the mid-third century B.C., and a great civilization developed at the cities of Anuradhapura (kingdom from circa 200 B.C. to circa A.D. 1000) and Polonnaruwa (from about 1070 to 1200). In the 14th century, a south Indian dynasty established a Tamil kingdom in northern Sri Lanka. The coastal areas of the island were controlled by the Portuguese in the 16th century and by the Dutch in the 17th century. The island was ceded to the British in 1796, became a crown colony in 1802, and was united under British rule by 1815. As Ceylon, it became independent in 1948; its name was changed to Sri Lanka in 1972 to Democratic Socialist Republic of Sri Lanka.
Because of its location in the path of major sea routes, Sri Lanka is a strategic naval link between West Asia and South East Asia, and has been a center of Buddhist religion and culture from ancient times. Today, the country is a multi-religious and multi-ethnic nation, with more than a quarter of the population following faiths other than Buddhism, notably Hinduism, Christianity and Islam. The Sinhalese community forms the majority of the population, with Tamils, who are concentrated in the north and east of the island, forming the largest ethnic minority. Other communities include the Muslim Moors and Malays and the Burghers.
Famous for the production and export of tea, coffee, coconuts and rubber, Sri Lanka boasts a progressive and modern industrial economy and the highest per capita income in South Asia. The natural beauty of Sri Lanka's tropical forests, beaches and landscape, as well as its rich cultural heritage, make it a world famous tourist destination. After over two thousand years of rule by local kingdoms, parts of Sri Lanka were colonized by Portugal and the Netherlands beginning in the 16th century, before the control of the entire country was ceded to the British Empire in 1815. During World War II, Sri Lanka served as an important base for Allied forces in the fight against the Japanese Empire.[4] A nationalist political movement arose in the country in the early 20th century with the aim of obtaining political independence. ECONOMIC FACTORS In the nineteenth and twentieth centuries, Sri Lanka became a plantation economy, famous for its production and export of cinnamon, rubber and Ceylon tea, which remains a trademark national export. The development of modern ports under British rule raised the strategic importance of the island as a centre of trade. However, the plantation economy aggravated poverty and economic inequality. From 1948 to 1977 socialism strongly influenced the government's economic policies. Colonial plantations were dismantled, industries were nationalised and a welfare state established. While the standard of living and literacy improved significantly, the nation's economy suffered from inefficiency, slow growth and lack of foreign investment.
By 1996 plantation crops made up only 20% of export, and further declined to 16.8% in 2005 (compared with 93% in 1970), while textiles and garments have reached 63%. The GDP grew at an average annual rate of 5.5% during the early 1990s, until a drought and a deteriorating security situation lowered growth to 3.8% in 1996. * GDP (purchasing power parity) $81.29 billion (2007 est.)
* GDP (official exchange rate) $30.01 billion (2007 est.)
* GDP - real growth rate 6.3% (2007 est.)
* GDP - composition by sector agriculture: 16.5%
industry: 26.9%
services: 56.5% (2007 est.)
* Labour force - by occupation agriculture: 34.3%
industry: 25.3%
services: 40.4% (30 June 2006 est.) *Inflation rate 19.7 % (2007 est) *Budget revenues: $5.64 billion
expenditures: $7.77 billion (2007 est.)
*Electricity – production 8.411 billion kWh (2005)
*Electricity – consumption 7.072 billion kWh (2005)
*Oil – consumption 84,000 bbl/day (2005 est.) *Oil – imports 82,390 bbl/day (2004) *Exports $8.139 billion f.o.b. (2007 est.) * Imports $10.61 billion f.o.b. (2007 est.) | 
