Escalation of political conflict in many developing countries and their impact on economic development has been a topical issue in recent development literature. The overwhelming emphasis on ‘ethnic conflicts’ in this literature has, however, precluded looking at political conflict in the wider context of the development process, going beyond the ethnic dimension. In particular, because of the preoccupation with the ethnic roots as the prime source of these conflicts, reverse causation running from economic policy to political conflict has been virtually ignored in the debate. The purpose of this paper is to redress this gap through an in-depth case study of the ‘twin political conflict’ in Sri Lanka¾the Tamil separatist war in the North and the Sinhala youth uprising in the South¾with emphasis on its economic roots. The findings suggest that fundamental contradictions in the national development policy throughout the post independence era were in the heart of the country’s twin political conflict.