Inclusive Development in Myanmar: Learning from Neighbours Thangavel Palanivel UNDP Regional Bureau for Asia-Pacific
Outline Myanmar vis-à-vis its neighbours Economic reforms in selected Asian countries Salient features and lessons for Myanmar
Myanmar s progress on human development is more rapid compared to its neighbours (low base effect); but its HDI value (0.48) is still low
Myanmar s HDI ranking improved in recent years, but it is still low ranking - 149 out of 187 countries (2011) Source: UNDP HDR 2011 HDI ranking Malaysia 61 China 101 Thailand 103 Philippines 112 Indonesia 124 Viet Nam 128 India 134 Lao PDR 138 Cambodia 139 Bangladesh 146 Myanmar 149
Myanmar s adult literacy rate is relatively high (over 90%), but quality of education remains a concern; Children spent less than four years in the school - lowest in Asia
Despite similar levels in the 1960s, the per capita income of China, Malaysia, and Thailand pulled ahead more than five times Non-income HDI seems to drive the progress of HDI in Myanmar
Poverty declined significantly in Myanmar during 2005-2010, but one third of population continues to face multidimensional deprivations
Myanmar s social sector expenditure as % of GDP is lowest in the region; its historical legacy has contributed to its non-income HDI values
An Overview of Economic Reforms in Selected Asian Countries
GDP Growth at the Time of Economic Reforms in Selected Asian countries China, Vietnam and Laos initiated their reforms in a stable economic environment India and Cambodia initiated their economic in a unstable environment (due to economic crisis) Starting year Period GDP Growth CPR- 1978 74-78 6.1 VIE- 1986 82-86 6.5 LAO-1986 82-86 5.6 IND-1991 81-90 5.6 CMB-1993 89-91 2.2
Conditions before the economic reforms Motivation has generally been to improve the socio-economic development Poverty Incidence is very high at the onset of economic reform $1.25 a day $2.00 a day China 1981 84 98 Vietnam 1993 64 86 IND 1988 54 84 Lao 1997 49 80 External trade (as % of GDP) is not only low, but trade balance is also high during Pre- Reform period Exports Imports balance CPR 74-78 5 5 0 VIE 82-86 26 36-11 LAO 82-86 4 10-5 IND 87-91 6 7-1 CMB 89-93 6 12-6
China s reforms in stages The first stage from 1978 to 1984: Reforms started in the countryside with the introduction of the household responsibility system and liberalization of agricultural prices and markets. The second stage from 1984 to 2000: privatization and contracting out of much state-owned industry, the lifting of price controls and protectionist policies and unification of exchange rate with managed floating system. The third stage from 2000 to 2005: China accessed into the WTO in 2001China became member of WTO in 2001 The fourth stage from 2005 to now: improving social protection and reforming banking sector This illustrated Chinese gradualism in the transition.
India s Reforms Initial reforms focused on reducing fiscal deficit Trade reforms - removal of quantitative restrictions along with rationalization of the tariff structure Exchange rate reforms- unification of rates and shift to a market determined exchange rate; large depreciation Financial sector reforms - entry of new private and foreign banks; operational autonomy to banks (interest rates largely deregulated) Industry - State monopoly abolished in virtually all sectors
Viet Nam s Reforms Doi Moi or renovation started in 1986 Like China, early reform focused on agriculture; farm prices deregulated, and farm subsides eliminated During 1989-1993, a major devaluation and unification of exchange rates; the elimination of direct budget subsidies to state owned enterprises (SOEs); a sharp reduction in monetary and credit growth; the reduction of the number of SOEs; and a widening of the "open door" policy Bilateral Trade Agreements signed including with the US in 2001; WTO accession in 2007
Key features and lessons learned
Key Features Reforms in Asia have been Gradual" rather than "big bang as in Europe and Central Asia Experimental and incremental Focusing on outward orientation - trade & exchange Fostering high levels of savings, plus public and private investment
Lessons Learned High growth can cause inequalities; ensuring inclusiveness through policy is essential Agricultural reforms can create pro-reform constituencies in nonagricultural sectors Presence of an external anchor can assist domestic reforms e.g., ASEAN Free Trade, WTO Trade and FDI are important; can facilitate technology and knowledge transfer Protect people during transitions Sequencing of reforms is critical Pragmatic leadership is vital