On the advice of foreign and local economists, the government of Myanmar has started to emphasize certain aspects of the economy. Nobel Prize-winning economist Joseph Stiglitz advised the Myanmar government to focus on building up the agricultural sector in 2010. He warned the government that focusing too much on extractive industries like mining and natural gas would be detrimental in the long run. Countries like Myanmar, which have many natural resources, tend to extract and sell these resources raw – exporting them to countries with a higher level of technology which then process the raw materials and produce finished goods.
These finished goods obviously have a much higher market value then the raw materials, and profit generated from sales can be used to reinvest in better technology. The resource rich country, still lacking the technology to produce finished goods, becomes trapped in a cycle of supplying raw materials, while the wealthier country acquires greater technology – making it difficult to compete with. This is the situation Myanmar finds itself in today. Myanmar has tried to develop its own industries and has implemented import substitution policies, but these policies have largely failed due to a lack of capital, outdated technologies and processes, and widespread corruption.
The new government, and even the previous government, have recognized this situation and are looking at creating more value-added products. An impediment to the further development of these value-added products is that the lack of infrastructure in Myanmar hinders the expansion of the manufacturing sector.
The current strategy is to increase agricultural exports and then use those export earnings to develop a competitive manufacturing sector, much like Thailand did in the 80s and 90s. Although the government has allowed considerable foreign investment in extraction based industries by pure necessity, investors considering manufacturing or other value-added industries will receive preferential treatment from the government as it tries to push economic reforms forward.
In order to further expand Myanmar’s agricultural sector, the government is emphasizing the adoption of mechanical agriculture as opposed to traditional manual labor. This is such a strong emphasis that it is even written in the Constitution in article 29:
29. The Union shall provide inputs, such as technology, investments, machinery, raw materials, so forth, to the extent possible for changeover from manual to mechanized agriculture.