WEB MBA502-INDIVIDUAL ASSIGNMENT.docx - Individual Assignment Key Challenges to Sri Lankan Economy Course MBA 502 Economic Analysis for Business

WEB MBA502-INDIVIDUAL ASSIGNMENT.docx - Individual...

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Individual Assignment Key Challenges to Sri Lankan Economy Course : MBA 502 Economic Analysis for Business Instructor : Dr. Trevor Mendis Term : January –March 2020 Postgraduate Institute of Management University of Sri Jayewardenepura
Declaration I am fully aware of the content under plagiarism stated in the PIM Student Handbook, and I hereby declare and affirm that I have strictly observed the law relating to intellectual property, copyright and plagiarism in this exercise (Student Handbook, 2018:25) 1. Introduction “Economics is the study of how societies use scarce resources to produce valuable goods and services and distribute them among different individuals.” (Samuelson & Nordhaus, 1998, p.4).
Economics can be defined in many ways. Even though it often revolves around wealth and finance, it does not necessarily have to be money. It focuses on how people would use limited resources to fulfil their unlimited wants and needs. Therefore, the subject economics is described as a broad discipline that provides guidance to understand historical trends, decipher current economic trends and make prediction on future by considering past and present. This report briefly describes about the current economic state of Sri Lanka, the challenges it faces and recommendations to overcome those challenges to reach greater heights economically. 2. Importance of economy model From the inception of human evolution, people always found tools or ways that can help them carry out everyday tasks easily. The invention of wheel led to automating most of the everyday tasks, a map is used to find the right direction, social media and emails have helped people to communicate among themselves even across geographical borders and space. Further, engineers build models to analyse how systems work; biologists use human body as a tool to explain how internal organs work; likewise, economists use economic models to find answers for the economic crisis. An economic model predominately portrays a simplified version of the reality that allows economists to observe, understand and predict on the economic behaviours. It analyses the complex situations and narrow it down to key essentials. A properly designed model is fairly simple to understand whilst being sophisticated enough to capture all the key information. ("Economic Models | Microeconomics", 2020) 3. Overview of Sri Lankan economy Sri Lanka, previously known as Ceylon is an island in Southeast Asia of 65,610 squared- kilometres and 21.7 million of population. Amidst the macroeconomic challenges, Sri Lanka has shown a steady economic growth in the last decade. Sri Lanka is identified as a middle income country with a Gross Domestic Production (GDP) per capita of USD 4,102 (2018). Even after a 30 years long civil war that ended in 2009, Sri Lanka managed to sustain a steady economic growth between 2010-2018 recording an average of 5.6 percent.
As per the world bank records, the Sri Lankan economy is in the transition process from rural-based economy to a more urbanised economy which predominately evolves around manufacturing and services.

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