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Myanmar’s Two Decades of Partial Transition to a Market Economy: A Negative Legacy for the New Government

Discussion Papers

No.376

December 2012

ABSTRACT

Despite more than two decades of transition from a centrally planned to a market-oriented economy, Myanmar’s economic transition is still only partly complete. The government’s initial strategy for dealing with the swelling deficits of the state economic enterprises (SEEs) was to put them under direct control in order to scrutinize their expenditures. This policy change postponed restructuring and exacerbated the soft budget constraint problem of the SEEs. While the installation of a new government in March 2011 has increased prospects for economic development, sustainable growth still requires full-scale structural reform of the SEEs and institutional infrastructure building. Myanmar can learn from the gradual approaches to economic transition in China and Vietnam, where partial reforms weakened further impetus for reforms.


Keywords: Myanmar, transition, state economic enterprises
JEL classification: H61, O53, P21

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