Growth of exports in Sri Lanka is relatively low compared with East Asian countries

East Asia or Eastern Asia is a area that living 22% of all the people containing the entirety of the countries such as People's Republic of China, Japan, North Korea, South Korea, Mongolia, Taiwan etc. It is clear that the growth of exports of these countries is higher than Sri Lanka since there are available statistics to prove such situation. This study is approaching to explain this situation by using economic theories in international trade. Basically there are major three economic theories which used in this area as follows.

1.      Absolute Advantage theory

2.      Comparative Advantage theory

3.      Opportunity Cost theory

4.      The Heckscher-Ohlin theory

The Absolute advantage theory explains country’s ability to produce a certain good more efficiently than another country. Since most of the East Asian countries having much efficiency in producing various goods such as Mechanical and electronic products, Clothes, mobile phones cars etc a country like Sri Lanka will not able to attain a higher export growth rate than such countries. As well as the efficient products that Sri Lanka produced within the country are not enough to compete in the global export market due to less quantity and lack of competitive prices too. However Absolute Advantage theory is not a base for international trade since still Sri Lanka is exporting goods and services even though the country is not possessing absolute advantage for production. 

The Comparative advantage theory refers to a country’s ability to produce a particular good with a lower cost than another country. This theory is suggested by most of the economists in order to explain the practical situation of international trade. According to this theory the country who having less cost will allow producing such good and they export that product to the country which having high cost. According to that Countries like Sri Lanka can produce products such as garments in a less cost and export them to various markets as well as East Asian countries also having the same opportunity to enter the international trade.  If this theory applies to the current variations in export growth rates Sri Lanka and East Asia, there are various reasons to occur such situation. Basically the production capacity of the country is depend on the ownership of resources and the usage of those resources to achieve the economic advantages. Most of the East Asian countries have their own economic policies to enhance their economic strengths. But still the country like Sri Lanka is not able to attain a better economic condition due to reasons such as the ethnic war which end recently in 2009.   

Finally the opportunity cost theory states that the country is producing goods which having less opportunity cost. This theory is also applicable to the international trade as the comparative advantage theory. In Sri Lankan context it has less opportunity cost to produce labor intensive production practices and most of East Asian countries probably use capital intensive production practices. But in the existing situation East Asian countries have achieved much higher export growth rate by using internal strengths which those countries owns. 

According to Heckscher-Ohlin even if countries have same factor endowment, its productivity in respect to production of a particular product differs between two countries. Therefore each country has a comparative advantage in the production that requires relatively less of the factor with which it is well endowed. A country like Sri Lanka owns much Labor and The East Asian countries have capital as their production factors and they decided their productions in accordance with those factor endowment. 

In generally the last three theories provide a practical basement to explain the international trade in the current context.  In my point of view it is better to use a hybrid of those theories in order to have much idea regarding the export sector growths. As well as the type of goods that various countries exports, the economic policies affect to the countries, trade agreements and barriers as well as the measurement scales which used in Sri Lanka and East Asian countries much leads to arise much variance in export growth rates.  

However following can be state as suggestion to enhance the export growth rate of Sri Lanka

1. Increased Production and the productivity.

2. Reduced Production cost.

3. Increased Quality of the exports to be competitive in the market.

4. Make much stronger and wider economic relationships with various economic regions.

5. Government policies should more specific and focused to enhance the traditional and non traditional exports.

6. New entrepreneurs should allow entering the market by using tax reductions.