Abstract:
Being one of the highest countries to have recorded inequality in the
case of regional development in South Asian region, Sri Lanka
confronts detrimental impacts on its future development due to lack
of attention of respective authorities on the issue of regional
disparity. Although the Provincial Council system in Sri Lanka was
initiated to provide greater autonomy to local governments to take
necessary measures to increase the local share of the resources and
thereby mitigate the regional disparities, the issue still remained
unaddressed. Therefore, addressing this issue is timely in order to
improve the efficiency of socio-economic performance and political
stability. With this background, this study mainly aims to investigate
the dynamics and main determinants of generating regional
development disparities in Sri Lanka. The methodology of this study
is mainly based on the panel data analysis following fixed effect and
cross-sectional effect estimation for the period of 2010-2015. The
empirical results of the study show that there is a greater income
concentration on Western Province whereas the other regions
perform relatively poor. According to our estimation results, the
development potentials of other regions depends on provincial-wise
capital and recurrent expenditure, investment in education sector for
increasing provincial-wise per capita GDP. Hence, these results
indicate that corrective measures for addressing regional disparities
is basically based on education, capital and recurrent expenditures,
but not further expansion of expenditures on administrative
functions.
