The international politics involved in Myanmar date back to its colonization. From 1852 to 1942, Myanmar was under the control of the British government (BBC News, 2016). Typically in cases of colonialism and imperialism, development is hindered because native populations are decimated, resources are exploited, the colony becomes solely concerned with making the mother nation rich, and the colonies are unable to access the world markets but instead only send goods to the mother nation. In Myanmar, many of these factors played a huge role in creation a nation that was not reader capable of adequately developing on its own following the attainment of independence in 1948 (BBC News, 2016). As Myanmar struggled to find its own identity following the end of colonialism, it did at a certain point turn to protectionist policies in order to allow domestic farmers to out compete foreign ones (BBC News, 2016). However, as is often the case, these international policies simply resulted in restricting the farmers access to the global economies and creating a nation where competition was non existent and there was no drive for innovation. Therefore, the presence of colonialism and the protectionist policies that followed sent Myanmar into underdevelopment and kept it there, resulting in its current position in the global community.
Figure 11: The British Colonial Regime
Therefore, the current state of underdevelopment that can be found in Myanmar is a direct reflection of its geographical position, multiple domestic policies, and its complicated history of interactions with the global community.
Over the past three decades, Myanmar has tried many tactics to aid their developments. Beginning the 1990s with growing trade deficits, moving into the late 1990s and early 2000s with Exported Oriented Industrialization, and currently existing in an age dominated by Foreign Direct Investment and foreign aid, Myanmar has truly tried an amalgamation of approaches, each having nuanced effects on their state of development, but none ultimately finding a sustainable solution (Institute of Developing Economies, 2008).
In Myanmar throughout the 1990s, imports grew far more rapidly than exports did. This trend was largely due to the global embrace of import substitution industries, which resulted in Myanmar’s trade policies during this time period carrying the general trend of importing first, exporting second to build their infrastructure and economy(Institute of Developing Economies, 2008). The Institute of Developing Economies stated that Myanmar’s “slow growth of exports was because of the government’s maintenance of a monopoly and restrictions on major export items”(Institute of Developing Economies, 2008). For example, in Myanmar, teak exports were historically monopolized and strictly controlled by the government. Under the State owned Economic Enterprises Law of 1989, the Myanmar Timber Enterprise was created and single handedly held the key to the extraction and export of teak, thereby giving the government sole control over the industry (Institute of Developing Economies, 2008). To clarify, it is interesting to note that Myanmar never accepted the idea of Import Substitution Industrialization, but instead practiced a policy that was almost the opposite as they imported far more than they exported (Institute of Developing Economies, 2008). Eventually, these tactics lead to overwhelming trade deficits, which forced Myanmar to complete shift their policies toward what is known as Export Oriented Industrialization.
Figure 12: Myanmar's Imports Compared to Exports From 1985 to 2002
In the late 1990s and early 2000s, Myanmar implemented a series of important policy changes, the most important of which was to rescind the “import first” policy, and replace it with an “export first” policy, in which the important can import only against export earnings (Institute of Developing Economies, 2008). The purpose of these new trade restrictions was to reduce the imports into Myanmar and particularly the imports of products the government deemed “non essential” (Institute of Developing Economies, 2008). According to the Institute of Developing Economies, “Myanmar’s imports decreased from US $ 3010.6 million in 1997 to US $ 2469.9 million in 1998 and further to US $ 2285.9 million in 1999. From then until 2002, its imports stagnated around this level, albeit exhibiting some fluctuations” (Institute of Developing Economies, 2008). However, in doing so, the government essentially deprived private factories of access to imported machinery and raw materials, which in turn began to inhibit exports and the growth of domestic industry, thereby calling into question which approach was truly more beneficial to Myanmar’s economy (Institute of Developing Economies, 2008).
Figure 13: Map Displaying Myanmar's Exports
Since 2002, Myanmar has enjoyed a growing economy, as they have lifted many of the restrictions on imports, focused on increasing exports, and received large amounts of foreign investment and aid. By focusing on exports, Myanmar diminished the trade deficit and kept it from growing throughout the early 2000s. However, what was most notable about this time period was the presence and benefits of foreign direct investment. According to the Institute of Developing Economies, “Myanmar’s foreign investment policy is a key component in the restructuring of the whole economy as well as an important element of development policy, and incorporates three main pillars, namely the adoption of a market-oriented system for resource allocation, the encouragement of private investment and the promotion of an entrepreneurial spirit while opening the economy for foreign trade and investment. In this way, encouragement of foreign investment can be seen as a development strategy with private initiatives, and one that is dependent on foreign capital. The basic aims underlying the introduction of foreign capital are export promotion, the development of natural resources which requires a large sum of investment capital, introduction of various types of high technology, the promotion of capital-intensive industries, the expansion of job opportunities, the saving of energy consumption and regional development”(Institute of Developing Economies, 2008). Furthermore, in recent years, Multi National Corporations such as Asia World (based in Singapore) and the Irrawaddy Flotilla Company (owned by a Scottish company) have begun to enter Myanmar, thereby increasing the permanence of foreign direct investment and proving to be strongly effective in bringing expertise, capital, and innovation to the nation (Institute of Developing Economies, 2008).
Figure 14: Graphical Display of the Positive Impacts of Foreign Investment
Therefore, throughout its tenuous history, Myanmar has attempted many different economic policies as a means of effectively developing; however, until recent years, none had proven tremendously effective. Their initial focus on imports to provide resources to local industry, and their subsequent barriers on imports to avoid increasing trade deficits both proved problematic and ineffective; however, in recent years, foreign direct investment has laid the groundwork for Myanmar being capable of building their economy.
Figure 15: Yangon, Myanmar Has Benefitted from Foreign Investment
Based on all aforementioned information, it is evident that Myanmar is in great need of policy reformation in order to create development in future years. In tackling this issue, it seems as though the government of Myanmar has to be prepared to adopt a multifaceted approach towards future advancement. Overall, the information above can be synthesized for background for 3 policy suggestions:
1) Encourage the foreign direct investment of technological corporations. Currently, the world is becoming more and more dominated by technology. Companies such as Apple and Google are widely recognized as the most profitable, more and more people are utilizing technology as essential aspects of communication and their daily lives, and governments are becoming reliant on technology for intelligence and security (Anonymous, 2017). Furthermore, it is widely accepted that the future will be dominated by cyber warfare (Anonymous, 2017). Therefore, it is vital that Myanmar develop when it comes to technology, especially by raising the number of people with access to internet. The easiest way to accomplish this goal is to encourage large technology corporations to invest in Myanmar through the creation of factories and operations. The reason behind this course of action is that when these companies enter the area, they will be forced to set up internet around their factories, which can be capitalized on by the citizens of Myanmar, they will bring expertise in technological fields to the nation, and finally, as they establish themselves in Myanmar, they will seek to utilize the local markets to sell their products which will result in the integration and establishment of internet and technology amongst the majority of citizens of the nation, thereby better equipping the people to compete in a global workforce, and better preparing the nation for a future defined by technology. The best way to go about encouraging these companies is to lower the taxes Myanmar will place on them similarly to Luxembourg’s policy on Multi National Corporations, which will economically incentive companies to invest in Myanmar, which will in turn economically and educationally benefit the nation.
Figure 16: Technology Is the Future
2) Create social educational programs to repair social divides and promote unity. Currently, as discussed previously, one of the largest issues plaguing Myanmar is the systemic oppression of the Rohingya Muslim minority (Human Rights Watch, 2016). While it is unreasonable to think that all tensions could potentially disappear from the region, it is important to attempt achieving unity in the area. Ending the human rights violations against the Rohingya Muslim minority will cast a better international light on Myanmar as a nation, and pave the future of the nation as one which many foreign nations will look favorably upon supporting. Furthermore, as ethnic divisions diminish the potential for development, it is in the government’s best interest to social repair their nation. The most effective way to go about this solution would be to create social educational programs in local areas throughout Myanmar for the purpose of defying stereotypes, redefining perspectives positively, and embracing acceptance. As with many ethnic divisions, tensions often stem from propagated misconceptions and ignorance, and the government attempting to diminish that ignorance will do nothing but bring the nation closer together, and ensure a future not defined by a lack of human rights, but by greater development and happiness. Such a program would not necessarily involve increasing the national budget for education as Myanmar’s increasing GDP means that the 0.8% of the budget devoted to education will implicitly increase; however, it is still advised to increase the educational budget in entirety to ensure greater education throughout the country. This specific program would be created by national government officials, and enforced on a local, intimate scale in order to be most effective.
Figure 17: Defying Stereotypes and Breaking Barriers
3) Repurpose the national budget to increase spending on healthcare. Currently, development is deeply hindered within Myanmar because the healthcare system is deeply inadequate. It is necessary for the government to increase spending on healthcare by repurposing the exceedingly large military budget for the purpose of creating a payroll tax system similar to America’s MEDICAID to ensure all citizens in need get the health attention they deserve. From 2014 to 2015, Myanmar’s defense budget increased by 11% of their national budget for no apparent reason, as the military threats to the nation remained relatively stagnant (World Bank, 2016). Repurposing that 11% of the budget to building a foundation for a universal healthcare program will in the end generate significantly greater revenue as citizens become more healthy and overall quality of life is elevated. However, the 11% would only pertain to 2017 to 2025 and would simply law the groundwork for the program. Following that, the system would be designed such that citizens paid a yearly tax on Myanmar’s standard of living that would pay for the healthcare of citizens who cannot afford any form of medical attention. This is effective because the cost medical care is directly correlated to the standard of living in a given nation, and therefore establishing that correlation and ensuring that collectively the average cost per citizen is met, all citizens should be ensured healthcare in future years. Given the unique situation that some healthcare is more severe than others, the funds from the repurposing would be able to cover any excess costs for the first 8 years by which point, the overall developmental stature of the nation should have drastically improved.
Figure 18: Myanmar's Current State of Healthcare Compared to Neighboring Countries
To conclude, Myanmar currently suffers from an amalgamation of factors that have contributed to its lack of development; however, if the trend of foreign investment continuous and the solutions presented above are implemented, Myanmar could be the next developmental star of Asia.