Exports affect economic growth through several channels. It is argued that not only the volume of exports but what you export also matters to growth. This article investigates the effect of exports and export composition on the economic growth process in Sri Lanka. Sri Lanka’s exporting sector has performed remarkably, in particular, in the post-liberalization period. During the same period, her former commodity-dependant exporting sector has been transformed into one that largely exports low technology manufactures. Our regression analysis showed that the expansion of the exporting sector has positively and significantly affected gross domestic product (GDP) growth due to higher productivity level in the sector. However, the full benefits of a vibrant exporting sector have not materialized in Sri Lankan context since the externality spillovers of the exporting sector are negligible. Further, it showed that export diversification has played an important role in enhancing the growth prospect since it is the manufacturing exporting sector that has higher productivity level than the other sectors.
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