This paper analyses the performance of aid-funded livelihoods recovery efforts in Sri Lanka following the Indian Ocean tsunami of 26 December 2004, with special attention paid to the effects on the rural poor. It argues that successful livelihoods recovery was hampered by an excessive focus by aid agencies on entrepreneurs and entrepreneurship, and by the lack of a politically informed understanding of the economy. Based on ethnographic and survey-based research, the study demonstrates that the category of 'entrepreneur' is misleading for large parts of the economy. Indeed, the desire to build an entrepreneurial economy actually hampered successful livelihoods recovery in Sri Lanka and, in some cases, reinforced inequitable relations of power. The paper concludes that for livelihoods recovery programmes to be effective, they must be founded on an understanding of the relations of power that constitute the economy; these relations operate across scales, and are historically and geographically specific.

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