Introduction
Myanmar’s economy before 1988 was best characterized by isolation from the outside world. This
paper aims to review the development process of the agricultural sector after 1988, with special
reference to the extent to which the economy has been involved with, and influenced by, the
international markets. This involves exploring how Myanmar succeeded in making the best of the
sub-sectors in which it enjoyed comparative advantage, and the extent to which it overcame, or
failed to overcome, the demerits of the sub-sectors in which there was no comparative advantage. An
analysis carried out from this perspective makes it possible to examine the significance and the role
that the agricultural sector played in the development of Myanmar’s economy in transition.
Many analysts agree that the economic policy of Myanmar during the socialist period (1962-88),
especially up to the early 1970s, was essentially a policy of agricultural exploitation, with heavy
emphasis on rice production (Tin Soe and Fisher 1990, Takahashi 2001, Myat Thein 2004).
A policy of agricultural exploitation generally implies the following two elements. First, food
prices are repressed and wages are kept at a low level in order to promote industrialization. Second,
export crops are purchased at a price lower than the international price, and the resulting revenue is
used to promote industrialization. In this sense, the rice policy of Myanmar in the socialist period
was a typical policy of agricultural exploitation. Not only did the government introduce a
compulsory paddy procurement system at below-market prices and a system of rationing the supply
of cheap rice to consumers through people’s shops and cooperatives,1
but it also monopolized rice
exports, which became the largest source of foreign exchange earnings at that time.
Meanwhile, however, it should be noted that the existence of a procurement and rationing
system of itself does not necessarily indicate an exploitative policy. Consider for example the case of
edible oil. The socialist regime adopted a self-sufficiency policy with regard to edible oil production
even though Myanmar had no comparative advantage in this sub-sector. It was very likely that the
domestic price of edible oil was well above the international price and thus farmers were ‘protected’
by limiting imports, even though a procurement and rationing system similar to the one applied to
IntroductionMyanmar’s economy before 1988 was best characterized by isolation from the outside world. Thispaper aims to review the development process of the agricultural sector after 1988, with specialreference to the extent to which the economy has been involved with, and influenced by, theinternational markets. This involves exploring how Myanmar succeeded in making the best of thesub-sectors in which it enjoyed comparative advantage, and the extent to which it overcame, orfailed to overcome, the demerits of the sub-sectors in which there was no comparative advantage. Ananalysis carried out from this perspective makes it possible to examine the significance and the rolethat the agricultural sector played in the development of Myanmar’s economy in transition.Many analysts agree that the economic policy of Myanmar during the socialist period (1962-88),especially up to the early 1970s, was essentially a policy of agricultural exploitation, with heavyemphasis on rice production (Tin Soe and Fisher 1990, Takahashi 2001, Myat Thein 2004).A policy of agricultural exploitation generally implies the following two elements. First, foodprices are repressed and wages are kept at a low level in order to promote industrialization. Second,export crops are purchased at a price lower than the international price, and the resulting revenue isused to promote industrialization. In this sense, the rice policy of Myanmar in the socialist periodwas a typical policy of agricultural exploitation. Not only did the government introduce acompulsory paddy procurement system at below-market prices and a system of rationing the supplyof cheap rice to consumers through people’s shops and cooperatives,1 but it also monopolized riceexports, which became the largest source of foreign exchange earnings at that time.Meanwhile, however, it should be noted that the existence of a procurement and rationingsystem of itself does not necessarily indicate an exploitative policy. Consider for example the case ofedible oil. The socialist regime adopted a self-sufficiency policy with regard to edible oil productioneven though Myanmar had no comparative advantage in this sub-sector. It was very likely that thedomestic price of edible oil was well above the international price and thus farmers were ‘protected’by limiting imports, even though a procurement and rationing system similar to the one applied to
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