A quick reading of the UNDP’s latest Human Development Index (HDI) rankings, perhaps the most authoritative and multi-faceted gauge of national well-being, suggests that the Rieffel-Gilpin presumption of Burma’s ranking as ‘among the lowest in the world by almost all socioeconomic indicators’ is at variance with the facts. Despite Burma’s poor income per capita, overall it is ranked 138 among 182 nations. Formally, it is clubbed alongside its Southeast and South Asian peers as a ‘medium human development country’ – hardly the ‘low human development’ country it is framed to be. On many select indicators, including literacy levels and enrolment ratios, Burma, developmentally, is ahead of all its immediate South Asian neighbors (and fellow ex-British colonial compatriots), including India. Of course, the operative comparison here should be with its ASEAN counterparts which, with the exceptions of Cambodia and Laos, exhibit superior development indices. Just by way of comparison, Indonesia ranks as 111 and Vietnam at 116.
Nevertheless, for a country subjected to multiple layers of trade, investment and financial sanctions, not to downgrade the on-going secessionist movements since inception, the Burmese development state does work, and has worked of late. Unsatisfactorily, no doubt, but it is far from being the kleptocratic caricature that it is assumed to be – even notwithstanding the callousness on display during one-off catastrophic events like Cyclone Nargis.
Recent economic management has not been too shabby either. A reading of the ADB’s most recent Asian Development Outlook, suggests that a rough-and-ready macro-economic stability obtains, with policy trending towards prudent, albeit piecemeal, reform. Inflation is down, deficits under control, and yawning gap between official and market exchange rates notwithstanding (presumably to ‘quarantine’ foreign exchange earnings), the differential between the two rates remains steady. Further, the market rate trades, typically, at only a slight premium to the central bank-issued foreign exchange certificates that are used for non-state external transactions. At bottom, Burma is neither flagrantly misruled economically nor is economic discontent about to erupt from beneath a shallow veneer of stability.
The other presumption, of Burma’s shining early economic prospects – presumably underwritten by agricultural and commodity exports – too needs reassessing. Burma, it is often forgotten, has never had anything resembling a modern capitalist class. Pre-independence, more than half of Rangoon’s population was comprised of Indians and almost three-fourths of built-up property in the capital was owned by them. Indians, in turn, supplied almost all the credit and management skills with barely a business of any recognisable size in the banking, insurance, shipping or export-import sector owned or managed by a Burmese. The tatmadaw’s (Burmese military) pretension to occupy this space vacated by Indian capital has, ever since the late-1950s, been a continuing failure.
Burma’s informal sector – agriculture and small scale rural/semi-urban enterprises, the bulwark of employment growth – meantime remains mired in circumstances that bear a loose resemblance to its Indian counterpart. A broken rural credit mechanism and spectacular casualisation of the workforce are but symptoms of a larger underlying disorder – extremely low levels of productivity arising from the subsistence/informal sector’s minimal exposure to external markets. Tinkering with well-intentioned but naive interventions within this informal end of the dualist domestic production structure is totally unlikely to reverse the sector’s heavy weightage towards the internal market.
Rather what is called for, to enhance productivity as well as to relieve pressures within the overcrowded farm sector, is significant foreign-invested capital in labor-intensive, light manufacturing whose output is exported onwards to western markets. The experience of its ASEAN compatriots – literate societies, yet many of which themselves had an only rudimentarily developed sense of modern commercialism – attests to this informal sector’s transformative potential as the mechanism for rapid growth and poverty alleviation. The enshrinement of a ‘market economic system’ as a Fundamental Principle of state within the new constitution hints at a process of, both, chastening and learning within the governing junta. Root-and-branch trade sanctions in the West however stand in the way.
Perhaps it is time then for Burma, as a member of the WTO, to mount a challenge within the trade body’s arbitral mechanism against the sanctions provisions in the US’ Burma Freedom and Democracy Act of 2003 and the EU’s Common Position of 2007. And during the interim period, simultaneously institute a wide-ranging political amnesty that allows for broad political participation in the forthcoming elections. Neither, quite obviously, is about to happen! In the main however, a peaceful path to ending Burma’s isolation will necessarily have to pass through the reciprocal doors of expanded political representation and sanctions alleviation. Festooning this path with multi-step conditionalities, finely targeted support, plethora of best practice norms and excessive non-economic considerations is only likely to end up collapsing this process upon itself.
Sourabh Gupta is a senior research associate at Samuels International Associates, Inc.