Burma is one of the poorest nations in the world, suffering from decades of stagnation, mismanagement, and isolation. Burma’s GDP grows only 2.9% annually -- the lowest rate of economic growth in the Greater Mekong Subregion.
Burma is also the poorest country in Asia, with a nominal GDP per capita of only $230 (2003), and ranks 174th out of 180 in terms of nominal GDP per capita in the world, thus being classified by the UN as one of the "least developed countries".
Under British administration, Burma was one of the wealthiest countries in Southeast Asia. It was once the world's largest exporter of rice. During British administration, Burma supplied oil through the Burmah Oil Company. Burma also had a wealth of natural and labor resources. It produced 75% of the world's teak, and had a highly literate population. The country was believed to be on the fast track to development.
After a parliamentary government was formed in 1948, Prime Minister U Nu attempted to make Burma a welfare state. His administration adopted the Two-Year Economic Development Plan, which was a failure.
When Burma gained independence in 1948, it was believed to be on its way to become the first Asian Tiger in the region. However, after the military dictatorship seized power in 1962, Burma became an isolated and impoverished nation.
After the 1962 military coup d'état, the military government introduced an economic plan called the Burmese Way to Socialism, under which the military regime nationalized all industries with the exception of agriculture. In 1989, the Burmese government began decentralizing economic control. It has since liberalized certain sectors of the economy. The government heavily regulates lucrative industries, such as gems, oil, and forestry. Foreign corporations have partnered with the government to gain access to these natural resources.
The economy of Burma is currently mixed. The private sector dominates in agriculture, light industry, and transport activities, while the military government controls mainly energy, heavy industry, and rice trade.
Burma was designated a least developed country in 1987. Private enterprises are often co-owned or indirectly owned by the Tatmadaw. In recent years, both China and India have attempted to strengthen ties with the government for economic benefit. Many nations, including the United States, Canada, and the European Union, have imposed investment and trade sanctions on Burma. Foreign investment comes primarily from China, Singapore, South Korea, India, and Thailand.
In the eleven years from 1989-1999, the military government tried to revitalize the economy after three decades of tight central planning. However the regime has recently canceled its reforms. Despite this, the private sector continues to grow albeit slowly.
Today, Burma lacks adequate infrastructure. Goods travel primarily across the Burmese-Thai border, whence most illegal drugs are exported, and along the Ayeyarwady River. Railroads are old and rudimentary, with few repairs since their construction in the 1800s. Highways are normally unpaved, except in the major cities. Energy shortages are common throughout the country including in Yangon. Burma is also the world's second largest producer of opium, accounting for 8% of entire world production and is a major source of narcotics, including amphetamines. Other industries include agricultural goods, textiles, wood products, construction materials, gems, metals, oil and natural gas.
Burmese exports in 2006The major agricultural product is rice which covers about 60% of the country’s total cultivated land area. Rice accounts for 97% of total food grain production by weight. Through collaboration with the International Rice Research Institute (IRRI), 52 modern rice varieties were released in Burma between 1966 and 1997, helping increase national rice production to 14 million tons in 1987 and to 19 million tons in 1996. By 1988, modern varieties were planted on half of the country’s ricelands, including 98 percent of the irrigated areas.
The lack of an educated workforce skilled in modern technology contributes to the growing problems of the Burmese economy.
Inflation is a serious problem for the Burmese economy. In April 2007, the National League for Democracy organized a two-day workshop on the economy. The workshop concluded that skyrocketing inflation was impeding economic growth. “Basic commodity prices have increased from 30 to 60 percent since the military regime promoted a salary increase for government workers in April 2006," said Soe Win, the moderator of the workshop. “Inflation is also correlated with corruption." Myint Thein, an NLD spokesperson, added: “Inflation is the critical source of the current economic crisis."