In the early years following independence, Sri Lanka grappled with economic challenges that included a lack of industrial development, reliance on a few agricultural commodities for export earnings, and the need to diversify the economy. The government's attempts at nationalising key industries and promoting self-sufficiency led to inefficiencies and a slow rate of economic growth. The global fluctuations in commodity prices, especially for tea and rubber, also adversely affected the economy. Moreover, the emphasis on socialist policies limited foreign investment, constraining economic expansion and innovation.

The language policy, particularly the "Sinhala Only Act" of 1956, was a catalyst for ethnic conflict in Sri Lanka. It established Sinhala as the sole official language, disregarding the linguistic rights of the Tamil minority. This policy disenfranchised Tamils, excluding them from public service and educational opportunities, and signalling a state-sponsored promotion of ethnic Sinhalese supremacy. It was perceived by Tamils as a deliberate act of discrimination, which sowed the seeds of resentment and was a significant factor leading to the civil war.

External powers played various roles in Sri Lanka's civil war. India was particularly involved due to its proximity and the presence of a large Tamil population in Tamil Nadu. Initially, India supported the Tamil insurgents by providing training and refuge. However, it later attempted to mediate the conflict through the Indo-Sri Lanka Accord, leading to the Indian Peace Keeping Force's deployment in Sri Lanka, which ended unsuccessfully. Other countries, including the United States and China, have provided military aid to the Sri Lankan government, while international agencies have tried to facilitate peace negotiations.

The 1987 Indo-Sri Lanka Accord had a profound impact on the nation-building process by attempting to resolve the civil war through diplomatic intervention. It led to the 13th Amendment to the Sri Lankan Constitution, which established provincial councils and devolved powers in an effort to address Tamil grievances over political representation and autonomy. However, the accord was met with resistance from both Sinhalese nationalists, who viewed it as an infringement on sovereignty, and Tamil militants, who found it insufficient. The subsequent failure to implement the accord effectively prolonged the civil war and complicated the path towards a unified national identity.

The 1972 Constitution marked Sri Lanka's transition from a dominion to a republic, significantly impacting nation-building. It reinforced the dominance of the Sinhalese by making Buddhism the foremost religion, further alienating the Tamil minority and intensifying ethnic tensions. This constitution also abolished the Senate and established a unicameral legislature, concentrating power in the hands of the majority. The centralisation of authority under the republic and the symbolic steps taken to solidify Sinhalese and Buddhist prevalence in the state apparatus had profound implications for the country's national identity and unity.