Since 1977 the government of Sri Lanka implemented a series of economic reforms to create a more open economic environment and integrate the economy with the global trading system with the ultimate objective of creating an enabling economic environment so that production and other resources are used more efficiently to improve the living standards of people. The benefits of trade liberalisation, however, do not seem sommensurate with the extent of reforms in comparison to other countries that introduced similar reform measures. This paper argues that one of the main reasons for the failure in Sri Lanka's poor attention to the creation of an enabling policy and regulatory framework that would have enhanced the supply capacity of the country. Without paying adequate attention to the creation of an enabling policy and regulatory framework, Sri Lanka will not be able to reap the benefits of freer international trading environment of domestic trade liberalization.
