LOCAL CONCERNS GLOBAL APPROACHES

By Adam McCarty (adaminhanoi@gmail.com)

“Myanmar development paths and lessons from Vietnam”

Lecture to Yangon Institute for Economics, Rangon, Myanmar (13 September, 2012)

www.mekongeconomics.com

Introduction

• Adam McCarty (ANU; Vietnam; SOAS; ISS; MKE; mmtimes)

• Development Economics…• Let us assume…

Contents

1. Perspective: – Key data– development path (Gapminder; Hans

Rosling; www.Ted.com) – slower but not stagnant; need to “reindustrialise”.

2. Three paths to prosperity (LRL)

3. The positive lessons from Vietnam

4. The negative lessons from Vietnam

Better, yet poorest in ASEAN

GDP: Roll a dice

Country Data source 2007/2008 2008/2009

2000 to

2008 GDI/GDP ICOR

Myanmar Official 11.9 10.7 12.6 12.4 1.0

  ESCAP 5.5 2.0      

  IMF 5.5 4.5 4.6     

  ADB 5.5  3.6 6.0

(2012)     

 The Economist 3.4 0.9      

China   11.4 10.0 9.3 39.3 4.2

Vietnam   8.5 7.0 7.1 34.1 4.8

Other indicative and key data

• Electricity sales grew 4.5% p.a. 2002-2009• Cement sales grew 1.8% p.a. 2004-2009• Poverty 26% (IHLCS 2010)• 26% of households have grid electricity• Adult literacy 92% (?)• Infant mortality rate 50/1,000• Life expectancy 62 years• 13 million (of 60 million) aged 15-28 years

Where, economically, is Myanmar now?Why any need to learn from Vietnam?

How does a poor country “catch up”?

1. Copying, not inventing (technology transfer, including tacit knowledge)

2. Openness (not “self-reliance”; protectionism; import-substitution; infant industries; etc.)

3. Embracing “creative destruction”

4. Embracing “exploitation” (industrialisation)

5. Letting households do business (and farmers own land)

NOTE: The magic word is “productivity”

Three paths to prosperity• LEFT (Indian sub-continent): red tape; rather

protectionist; illiteracy and weak health; some landlords. Result: OK growth.

• RIGHT (Thailand, Vietnam, China): literacy with health; farmers own land; SEZs; openness. Result: Fast growth.

• LATIN (Latin America, Philippines): rural aristocracy; protectionist; urban enclave; informal sector & NGOs; inequality. Result: Erratic OK growth.

GAPMINDER

1. Industrialisation (rural-urban) is the essence of catching up (to middle-income status)

2. Countries copy the policies of their neighbours (e.g. Latin inequality reveals Latin path) – will Myanmar look left or right?

3. Literacy data confirms the left/right paths

68% of exports

are gas, logs,

and legumes.

Clothing

and footwear

are only 8%

of exports.

Vietnam: Positive lessons to learn

1. Land reform

2. Grass-roots democracy

3. Microfinance

4. Primary education

5. Household enterprises

6. Industry zones

7. Targeting help to the poorest

Vietnam: Negative lessons

1. General Corporations

2. Banking sector

3. Macroeconomic management

4. Pubic Investment Planning

5. Tertiary education

The above have caused Vietnam to become inefficient; growth is accumulation-based not productivity-based.

Vietnam’s low productivity problem

GDP Growth, Investment Rates, and ICOR (Selected Countries, 2007-09)

LOCAL CONCERNS GLOBAL APPROACHES

By Adam McCarty (adaminhanoi@gmail.com)

“Myanmar development paths and lessons from Vietnam”

Lecture to Yangon Institute for Economics, Rangon, Myanmar (13 September, 2012)

QUESTIONS?