100%(1)1 out of 1 people found this document helpful
This preview shows page 1 - 5 out of 16 pages.
Individual Assignment Key Challenges to Sri Lankan EconomyCourse: MBA 502 Economic Analysis for Business Instructor: Dr. Trevor MendisTerm: January –March 2020Postgraduate Institute of ManagementUniversity of Sri Jayewardenepura
DeclarationI am fully aware of the content under plagiarism stated in the PIM Student Handbook, andI hereby declare and affirm that I have strictly observed the law relating to intellectualproperty, 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 goodsand 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 wealthand finance, it does not necessarily have to be money. It focuses on how people would uselimited resources to fulfil their unlimited wants and needs. Therefore, the subjecteconomics is described as a broad discipline that provides guidance to understandhistorical trends, decipher current economic trends and make prediction on future byconsidering past and present.This report briefly describes about the current economic state of Sri Lanka, the challengesit faces and recommendations to overcome those challenges to reach greater heightseconomically.2.Importance of economy modelFrom the inception of human evolution, people always found tools or ways that can helpthem carry out everyday tasks easily. The invention of wheel led to automating most ofthe everyday tasks, a map is used to find the right direction, social media and emails havehelped people to communicate among themselves even across geographical borders andspace. Further, engineers build models to analyse how systems work; biologists usehuman body as a tool to explain how internal organs work; likewise, economists useeconomic models to find answers for the economic crisis.An economic model predominately portrays a simplified version of the reality that allowseconomists to observe, understand and predict on the economic behaviours. It analysesthe complex situations and narrow it down to key essentials. A properly designed model isfairly simple to understand whilst being sophisticated enough to capture all the keyinformation.("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, SriLanka has shown a steady economic growth in the last decade. Sri Lanka is identified as amiddle income country with a Gross Domestic Production (GDP) per capita of USD4,102 (2018). Even after a 30 years long civil war that ended in 2009, Sri Lanka managedto sustain a steady economic growth between 2010-2018 recording an average of 5.6percent.
As per the world bank records, the Sri Lankan economy is in the transition process fromrural-based economy to a more urbanised economy which predominately evolves aroundmanufacturing and services.