Last week we focused on a development problem that China has faced with and discussed how the Chinese government has been serious about dealing with the issue: Too many people are trapped in the rural sector and in farming communities!
How could it be a problem? How much the people who live in Colombo long for holidays to travel to their villages and birth places in the countryside? How much they, while living in Colombo, would appreciate the beauty of rural life as in the poems and songs as well as in fictions and movies?
Chinese problem
As countries grow and prosper, populations tend to move from rural areas into urban centres. In this process, people gradually abandon traditional agricultural activities and seek new employment opportunities in industry and services, which are predominantly urban-based. Evidence from advanced economies — including land-abundant nations such as the US and Australia — shows that the majority of people now reside in urban areas, engaged in industrial and service sector work.
This shift is widely regarded as a pro-development transition. By concentrating in urban centres, societies are able to utilise human resources more productively in modern sectors, thereby generating higher incomes and improved living standards. At the same time, the transition supports faster economic growth while releasing the agricultural sector to evolve into a large-scale, modernised system, shedding its traditional features.
China’s experience illustrates both the challenges and progress of this transformation. Despite rapid growth, the transition was relatively slow: in 2010, more than half of the population still lived in rural areas, and agriculture accounted for 37 per cent of total employment. Recognising this imbalance as a development constraint, the Chinese government began addressing the issue directly.
Since then, the rural population share has declined to 34 per cent, while agricultural employment has fallen to 22 per cent of the workforce. Projections suggest that by 2030, the rural population will drop below 30 per cent, and agricultural employment will fall under 20 per cent, marking a significant step toward structural transformation and sustained economic modernisation.
Sri Lankan problem
The 2024 Population Census of Sri Lanka reveals that the overwhelming majority of Sri Lankans continue to reside in rural areas. Excluding the estate sector, 78.5 per cent of the total population lives in the rural sector. This rural bias has intensified since 2012, with rural areas absorbing nearly 95 per cent of total population growth over the past 12 years. As a result, the urban population share has actually declined, falling from 18.2 per cent in 2012 to 17.5 per cent in 2024.
The persistence of such a rural concentration raises important developmental questions. Why do so many Sri Lankans continue to live in rural areas, despite the global trend of urban migration?
Unlike China, which identified rural overpopulation as a constraint on economic progress and actively addressed it, Sri Lanka has not treated this imbalance as a structural problem. For the past 75 years, policy has focused on alleviating rural hardships without tackling the underlying source of the issue — limited urban expansion and weak industrial and service sector growth.
Compounding this challenge is the narrow administrative definition of the “urban sector” in a census that is restricted to Municipal Councils, Urban Councils, and a few designated areas. Consequently, many fast-growing peri‑urban and semi‑urban settlements remain classified as “rural”.
Their expansion inflates the rural share while masking the true extent of urbanisation. This definitional bias, combined with policy neglect, perpetuates Sri Lanka’s rural dominance, constraining structural transformation and slowing the transition toward higher productivity and faster economic growth.
Urban definition
Urbanisation is usually defined using clear criteria such as population density, types of economic activity, infrastructure, and the built environment, including housing and commercial centres. Sri Lanka, however, relies only on administrative boundaries, which underestimates the true level of urbanisation.
Rural expansion has been stronger than urban growth. Population outside formal urban areas has increased, partly because land and housing are cheaper. Government policies and subsidies have also favoured rural expansion, while land colonisation and political land distribution programmes — with minimal infrastructure — pushed settlement further into the countryside.
Rural-urban migration has remained limited because of weak urban planning and the slow growth of industry and services. Sri Lanka has made little effort to develop medium and smaller cities that could absorb younger generations.
As a result, educated youth who wish to leave rural life and traditional farming for better opportunities in towns and cities face constraints. Their hopes for social mobility are held back by the lack of planned urbanisation and insufficient non‑agricultural development.
Urban planning
Sri Lanka lacks a proper scientific definition of the urban sector, and urban planning remains minimal. What often appears as “township growth” is simply people gathering along main roads, which does not qualify as true urbanisation. In countries with stronger physical planning, urban environments are deliberately created away from road corridors, supported by infrastructure, public services, utilities, and commercial centres.
Because industrialisation and service sector expansion have been weak, and urban planning largely absent, rural-urban migration has remained subdued. As a result, most people continue to live in rural areas, tied to farming communities with limited opportunities for upward mobility.
Employment data highlights this imbalance. Out of Sri Lanka’s eight million employed workforce 26 per cent are engaged in agriculture, yet the sector — including plantation crops — contributes only 7.5 per cent to GDP.
This mismatch shows that more than a quarter of workers are concentrated in a low-productivity, low-reward sector. The lack of urbanisation and diversification has therefore locked a large share of the population into rural livelihoods, slowing economic growth and perpetuating poverty.
Economic outcome
Sri Lanka’s urban and economic development suffers from deep structural weaknesses that reinforce poverty and slow growth. The absence of scientific criteria for defining the urban sector, combined with inadequate planning, has produced settlements that resemble roadside gatherings rather than genuine urbanisation.
Unlike countries with regulated land use and planned infrastructure, Sri Lanka’s towns lack the essential features of productive urban environments — reliable utilities, public services, and diversified commercial activity. This deficiency has constrained the expansion of industry and services, both critical drivers of modern growth.
As a result, rural-urban migration remains limited, leaving much of the population locked in low‑productivity agriculture. Even before recent economic and environmental crises, over 80 per cent of
Sri Lanka’s poor lived in rural areas tied to farming. More than a quarter of the workforce is concentrated in agriculture, yet the sector contributes less than a tenth of national output. At the same time, weak industrialisation and service sector growth restrict opportunities outside agriculture.
This imbalance perpetuates underemployment, low wages, and limited upward mobility. Households remain dependent on subsistence farming and plantation work, vulnerable to price shocks and climate risks.
The broader outcome is slower growth: with labour trapped in low‑yield agriculture and urban centres unable to generate dynamic opportunities, Sri Lanka struggles to achieve productivity gains essential for sustained development. Poverty persists, and economic progress is stifled by the lack of diversification and weak urban planning.
Environmental destruction
The absence of proper urban planning and population spreading thinly into rural countryside has intensified environmental destruction in Sri Lanka too. Unregulated land use and haphazard construction reduce natural drainage capacity, obstruct waterways, reduced water infiltration and destabilise slopes.
With large portions of the population confined to low-productivity rural agriculture, pressure on fragile lands increases through deforestation, encroachment, and poor soil management. These practices weaken ecological resilience, making communities more vulnerable to flash floods and earth slips. The lack of industrial diversification and planned urban infrastructure thus not only slows economic growth but also magnifies environmental risks, creating recurring cycles of disaster and poverty.
The irony is that China saw the excessive concentration of people in the rural areas as a development problem and initiated policy measures to address it at source. We in Sri Lanka never saw it as a development problem so that we struggle to find answers to development, poverty issues and environmental hazards on the shallow surface.
(The writer is Emeritus Professor at the University of Colombo and Executive Director of the Centre for Poverty Analysis (CEPA) and can be reached at [email protected] and follow on Twitter @SirimalAshoka).
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