Promoting Inclusive Growth Through Skills Development: The Experience of Tourism Industry in Sri Lanka

This article delves into validity of skills development hypothesis in promoting inclusive growth in the context of a lower-middle income economy confronted with several macroeconomic problems and labour market challenges. The analytical outline is guided by the theory of inclusive growth (IG) and existing body of empirical literature on skills development. As debated in the literature, there is no single solution to foster inclusive growth. Each country approaches the inclusive growth challenge differently, based on its resource endowments and unique socio-economic circumstances. There is a major literature gap using skills development models to promote inclusive growth. Thus, industry and country specific studies contribute to ongoing theoretical debate on inclusive growth on one hand and enrich empirical evidence on interlinks between skills development and IG on the other. Here, we present a case study of a skills development project (2017-2024), designed to promote inclusive growth through skills development of the tourism industry. Its target beneficiaries include both formal and informal sector business owners and employees of tourism sector micro, small and medium scale enterprises (MSMEs) operating in economically backward regions. The study utilizes data from both primary and secondary sources and employs mixed methods approach for detailed analysis. The paper provides several interesting findings on key themes of inclusive growth. First, the evidence on skills development of employees in the tourism value chain reveals sharing of growth benefits by low-income earners and the unemployed including females and disabled persons. Second, the findings on employer capacity building and skills development demonstrate inclusive growth benefits through entrepreneurship development, incremental income, and new product development. Third, the findings on gender and disability inclusion demonstrate power of skills development in promoting inclusive growth through MSME development. Finally, the overall findings enable policy makers in developing countries to promote inclusive growth through skills development of MSMEs operating in the tourism sector.