Review of Economic Disparity and of Economic Transition

Ikuko Okamoto, Economic Disparity in Rural Myanmar: Transformation under Market Liberalization.

Singapore: NUS Press, 2008. Pp. xvi, 239; figs., tables, notes, bib., index.

 

Koichi Fujita, Fumiharu Mieno, and Ikuko Okamoto, eds., The Economic Transition in Myanmar after 1988: Market Economy versus State Control.

Singaporeand Kyoto: NUS Press in association with Kyoto University Press, 2009.  Pp. xv, 322; figs., tables, notes, bib., index.

Reviewed by Sean Turnell.

Books about Burma’s economy are rare, and books about economic conditions in Burma’s vast rural hinterland, home to the great majority of its people, rarer still. For these reasons alone, the two books under review here are greatly welcome. At the time of this review, Burma—also known as Myanmar, as it is labelled in both of these volumes—is embarking upon what may or, more likely, may not be a new political journey. Either way, one does not have to be a Marxist to believe that the country’s economic foundations will greatly determine the trajectory of its political superstructure. Understanding the under-analysed Burmese economy will, accordingly, be critical—regardless of where one is positioned in the often contentiousBurma “debate”. In different ways, both of these books make a contribution to such an understanding, and to providing a factual base upon which reasonable discussion and further research can proceed.

Okamoto’s Economic Disparity in Rural Myanmar is the more path-breaking of the two books, and the culmination of many years of unique field work of exceptional quality. As her book’s title suggests, Okamoto is concerned to examine the extent to whichBurma’s move towards a more market-oriented economic system since 1988 has caused income disparities and other disparities in the countryside. Significantly, her specific focus isBurma’s “beans and pulses” sector, the one component of Burmese agriculture that has actually thrived in recent years. Okamoto’s conclusion as to the broad success of this sector is revealing—simply, that these commodities “were of little importance to the political stability of [Burma’s] regime” and, as such, “were not regulated” by otherwise omnipresent and parasitic state organs (p. 197). This was in contrast to what is famouslyBurma’s main crop, rice, which “continued to be restricted so that it could be supplied inexpensively for domestic consumption” (p. 193). Thus, in most spheres has economic activity inBurma been bent towards the (nearly insatiable) demands of the sovereign. The problem in this particular context is that incomes for a great many people inBurma have sunk so low that, however “inexpensive” rice might be, increasing numbers of people go hungry.

Okamato’s field work took place in villages belonging to Thongwa Township of Rangoon Division. Surveying farmers, traders, and non-farmers (essentially landless labourers), the research was undertaken from 1998 to 2004. Okamoto found that, in the wake of the growth of the bean and pulse export sector, there had been “a rapid and striking increase in economic disparity among the rural actors” (p. 200). The “winners” in this growing disparity were traders (especially) and farmers, while the losers were the landless labourers. The dire employment prospects inBurma, which ensure a constant supply of surplus labour, and the relatively low level of unit labour demand from the bean and pulse sector meant that the real wages of landless labourers fell across the study period, and their food security grew more precarious.

Adding to the burdens of landless labour and also harming the prospects of other groups was the absence of a functioning formal rural credit system in Burma. A fundamental dysfunction at the heart of Burma’s economy that persists to the present, the absence of accessible formal credit in Burma places landless labour into the hands of informal moneylenders, as well as of their employers via advance payment of wages—and at the cost of locking them “into a cycle of small loans that carry exorbitant interest rates” (p. 201).

In the context of the credit problem and of other problems that have pushed much ofBurma’s rural population into penury, one might have expected ameliorative government policies and initiatives. Alas, inBurmanothing like these were put into place. As Okamoto sadly concludes, “[p]olicies supporting poverty alleviation through production, employment or credit provision have been almost absent from government policy for over 60 years…” (p. 203).

In contrast to the grass-roots “micro” analysis of Okamoto’s monograph, the edited volume Economic Transition in Myanmar is a broad “macro” examination ofBurma’s economy, even though its constituent chapters are often founded on survey and other “on the ground” investigations. Burma’s rural sector features prominently, accounting for three of the volume’s eight chapters—including one written by Okamoto alone and another co-authored by her and Koichi Fujita. Other chapters explore the characteristics of capital accumulation in Burma during the “reform” era (Fumiharu Mieno), Burma’s industrial sector and policies towards it (Toshihiro Kudo), trade and foreign investment (Kudo and Mieno), and Burma’s financial sector (Koji Kubo, Ryu Fukui, and Mieno). Finally, the book is rounded off by an examination of the dire circumstances facing informal-sector labourers inBurma’s former capital ofRangoon orYangon (Nang Mya Kay Khaing and Fujita). A theme running through all of the chapters is that of squandered potential, and of policy-making that has wilfully or otherwise brought uponBurma’s decline. Best representative of this theme perhaps are the concluding thoughts to Kudo’s splendid chapter on industrial policy, in which he laments that, in recent years inBurma,

The sphere of freedom for private sector activities has been shrinking as the government strengthens its control…Without fundamental policy changes and reform programmes…broad-based industrial development is not possible in Myanmar. (p. 98)

As can be expected in a compendium such as The Economic Transition in Myanmar, there are hits and misses amongst the contributions. The already mentioned contribution of Kudo, who like Okamoto is an acute Burma observer and scholar of long standing, is especially good. Similarly making an excellent contribution to a particularly obscure corner of Burma’s economy is the chapter devoted to the financial sector. Its findings are consistent with those of Okamoto with respect to rural finance in particular; they point to a sector that has been all but moribund. It too is damning with respect to government policy, pointing out the dreadful mistakes made by the Burmese monetary authorities in response to a much under-reported “bank run” in 2003, and of a supervisory and regulatory environment that has long been “extremely inconsistent” and in a “primitive” state (p. 162). Solutions? The authors call for “drastic restructuring” (p. 162), and rightly so. Alas, this is not likely to happen any time soon.

All of the contributions at least implicitly lay responsibility for Burma’s economic decline on the regime that has ruled over it for 60 years, but at times somewhat sotto voce. Likewise, in some of the chapters there is rather too much readiness to acceptBurma’s official data at face value.

The above reservations aside, both of these books represent valuable contributions to the study ofBurma. Works of fine scholarship in their own right, their emphasis upon primary data collection means that they will also prove invaluable sources for other researchers, who may or may not reach similar conclusions. Either way, our understanding of this fascinating if tragic country will be much advanced.

Sean Turnell is  Associate Professor in the Faculty of Business and Economics of Macquarie University in Sydney and  the author of Fiery Dragons: Banks, Moneylenders and Microfinance in Burma (NIAS Press).