13 - Myanmar's Opening to the World Economy

Summary

INTRODUCTION

Since 2011, Myanmar has entered an era of unprecedented economic opportunity. After decades of isolation, domestic political, social, and economic reforms have resulted in improved external relations, including the relaxation of international sanctions, opening vastly increased access to foreign resources. Together with domestic economic reforms, these events have placed Myanmar on a much more promising development trajectory. Enhanced trading opportunities, foreign investment inflows and international assistance can be expected to produce significant improvements in economic welfare, provided the right policy choices are made now and over the immediate future. Some important reforms are already in place. The former multiple exchange rate system that discouraged exports has been replaced by a single unified exchange rate system. A new foreign investment law has been enacted and some tariff liberalization has occurred. But further reforms are now required to convert the newly expanded opportunities into tangible economic benefits.

Notwithstanding formidable measurement problems, in 2013, Myanmar's gross domestic product (GDP) was estimated at around US$850 per person, making it one of the poorest countries of Southeast Asia, above only Cambodia (US$710) and Laos (US$751). The United Nations Development Programme (UNDP) Human Development Index ranks Myanmar 149 out of 187 countries in the world, the lowest in East and Southeast Asia. This situation is the outcome of five decades of growth-inhibiting, poverty-generating policies. But there are potential advantages to being a latecomer to economic development (Gerschenkron 1962; Warr 2009). Welldeveloped and tested production technologies in manufacturing and agriculture are available from countries that have trod this path before, and they do not have to be reinvented. There is also considerable experience about which policies work in promoting economic development and which do not. It is possible for a latecomer to learn from that experience, without having to repeat well-demonstrated mistakes. Moreover, some of the countries from which Myanmar can most readily learn these lessons are its neighbours and partners within the Association of Southeast Asian Nations (ASEAN).

For the past three decades, East Asia has demonstrated the value of trade-oriented economic growth. The region's industrialization has been built upon increased integration with the world economy. In 2013, total East Asian GDP in purchasing power parity terms was US$3.9 trillion with average growth of up to 8 per cent per annum in the emerging economies in the region for much of the period since 1970.