Abstract:
The need for economic development for full employment, equity, poverty alleviation and regional
development in the Third World cannot be over-emphasized. It is well known that agriculture and
service sectors, by themselves, are not in a position to achieve these commencing objectives
excluding the industrial sector. In the process of economic development industrialization through
agriculture-industry linkages is obviously of paramount importance.
In the context of inadequate domestic industrial capital in a broad-based industrial development
strategy would obviously place a great emphasis on small industrial sector rather than formatting
large-scale industries. Therefore, in order to improve living conditions especially in the rural sector,
greater emphasis have been placed on promoting small sector by the successive governments since
independence. However, there seems to be a significant gap between the objectives of these policies
and their outcome.
The paper reviews how the small sector has progressed in the past and the future survival of these,
under the prevailing economic policies. It has found that small sector which exists today has
suffered due to certain weaknesses in the industrial policy rather than enjoying promotional benefits.
However, the present trade open up will decide the country’s future prospects in industrialization and
undoubtedly the competitiveness of the industry will be the utmost important factor for the survival
of small industrial sector in Sri Lanka.
