The government elected in 1977 opted for a significant departure in Sri Lanka,s economic development strategies and policies when the country launched market oriented economic reforms. The paper reviews international labour migration, and its interactions with the economy and the labour market. The first section summarizes the main features of the evolution of economic strategies, particularly since 1977 which have a bearing on migration. It is followed by a brief overview of migration trends in the postreform era. The next section reviews the impact of migration on local employment, the labour market and development trends. The main challenges in relation to migration and policy responses are highlighted next. The final chapter draws some policy implications from the analysis. http://www.ilo.org/wcmsp5/groups/public/---ed_protect/---protrav/---migrant/documents/publication/wcms_179643.pdf