Tourism and economic development

GENERALLY, tourism is one of the world’s major economic sectors. It is the third-largest export category (after fuels and chemicals) and, in 2019, accounted for 7% of global trade. In some countries, it can account for more than 20% of their GDP. For example, Croatia, with a population of 3.9 million, reached a record 26.38 million international visitors in 2024. Its land area is 56,561 sq. km, a little less than Sri Lanka’s. Its stunning Adriatic coastline is the main attraction for visitors.

- By Rohan Abeygunawardena

This sector is often called a "cash cow" for a country's economy because it generates steady and significant income with relatively low investment once established

This sector is often called a “cash cow” for a country’s economy because it generates steady and significant income with relatively low investment once established.

During the colonial era and many years after independence, Sri Lanka’s main export crop and cash cow was tea.

Since the end of the civil war in 2009, tourism has become a major source of foreign currency for Sri Lanka and a key driver of economic growth.

In 2018, tourism revenue peaked at over $ 4.4 billion (Central Bank Report 2024), but was impacted by events like the Easter attacks in 2019, which caused a significant loss of revenue, dropping it to $3.6 billion.

It was also affected by the COVID-19 pandemic in 2020 and 2021. This impact was mainly due to a decline in tourist movement, which affected economies, people’s livelihoods, public services, and opportunities worldwide. It influenced all parts of the extensive value chain, as the decrease in arrivals and revenue due to these events can be clearly seen in the given graph compiled using published statistics.

The phrase “if you don’t know your history, you think short term” is a quote attributed to Lee Kuan Yew, the founding father of modern Singapore. Therefore let us identify the History of Tourism in Sri Lanka, first.

Long before modern tourism, Sri Lanka attracted Indian, Chinese, Persian, and Arab traders due to its strategic location along Indian Ocean trade routes. The island has been a prominent and memorable landmark for sailors since ancient times, thanks to the visible presence of Adam’s Peak from the west coast. Sailors used these landmarks to keep a general course and help steer their vessels, even when sailing with the wind.