Nadeeka, G.H.D.Rajapaksha, R.K.M.2026-09-152026-09-152025-09-11Peradeniya International Economics Research Symposium (PIERS) – 2025, University of Peradeniya, P 122 - 128978624570957123861568https://ir.lib.pdn.ac.lk/handle/20.500.14444/8045Introduction Spatial inequality refers to the unequal distribution of income and access to services across different geographic areas or locations (World Bank, 2009). According to the World Bank (2024), rising food insecurity, increasing malnutrition, and growing rural poverty in Sri Lanka highlight widening spatial and intergenerational inequalities, which demand urgent and inclusive policy responses. Urban areas - especially in the Western Province have seen sustained improvements in education, healthcare, digital connectivity, and income levels, while many rural and estate sectors remain underserved. According to the Household Income and Expenditure Survey (HIES), (Department of Census and Statistics (DCS), 2021), the poverty headcount in rural areas is nearly three times that of urban areas. Rural youth continue to face higher rates of underemployment, and access to tertiary education and health infrastructure remains disproportionately concentrated in urban districts (Central Bank of Sri Lanka, 2022). Vicious cycle of poverty explains how poverty perpetuates itself across generations due to limited access to education, poor health, low productivity, and weak capital accumulation. In rural Sri Lanka, households often lack access to quality schools, healthcare, and markets, trapping them in a cycle of low income and limited upward mobility. As posited by Nelson (1993), breaking this cycle requires structural interventions, not merely short-term welfare assistance. This issue is not only empirical but also deeply rooted in development theory. One relevant framework is Gunnar Myrdal’s theory of cumulative causation, which explains how economic advantages tend to concentrate in specific regions, typically urban centers creating a reinforcing cycle of development. As urban areas grow, they attract more investment, talent, and infrastructure, while rural areas fall further behind due to “backwash effects.” This contributes to widening inter-regional inequalities, as seen in Sri Lanka, where public and private investments are disproportionately concentrated in the Western Province. Spatial Inequality Theory explains that development is unevenly spread across different areas because of historical, institutional, and geographic reasons. In Sri Lanka, historical infrastructure development, colonial plantation economies, and current centralization of services have resulted in significant spatial gaps. These disparities are visible in sectors such as education, where access to advanced schools and universities is heavily urban-centric, and in healthcare, where rural areas often lack specialists and well-equipped hospitals (Kanbur & Venables, 2005; Henderson, 2002). Marxian analysis helps explain how capitalist growth, the legacy of plantation economies, and neoliberal globalization deepen the gap between urban and rural areas. Recent years have witnessed increased global attention to the need to tackle inequality (Stewart, 2010). In Sri Lanka over 75% of population lives in rural areas. Regional inequality can trigger internal migration, overburdening urban infrastructure and weakening rural economies. Recent evidence from the World Bank's Sri Lanka Development Update (April 2024) highlights how these disparities are worsening with poor labor force participation particularly in rural and estate sectors, increased poverty (25.9% in 2023) etc. This signals geographically uneven issues and demands more targeted policy interventions. Therefore, this study investigates “What are the contemporary tendencies of Spartial inequality in Sri Lanka”. The research aims to contribute to development policy by identifying both the causes and consequences of regional inequality, offering insights into how Sri Lanka can move toward more balanced and inclusive growth.en-USSpatial InequalityUnequal DevelopmentPovertyRural WellbeingSustainable DevelopmentArticle