This Study examines the nature of the economy in the Northern and Eastern Province of Sri Lanka and explores the causes and effects of econimic and social decline in the region during the past quarter century of civil conflict. It compares the economic and social development of the conflict region over time and vis-a-vis other provinces during the pre- conflict, civil war, and ceasefire period and argues that despite the higher growth rate during the ceasefire period,, very little positive change has occurred in the structure, nature, and extent of the region's economy.