Home Insider Economic Growth Versus Development – For Myanmar’s Common Man

Economic Growth Versus Development – For Myanmar’s Common Man

Myanmar is making headlines globally, a country showing promise of growth and development, with a new, democratically elected government in place that is gradually putting in place futuristic policies and regulations, and international interest reaching a crescendo, albeit with cautious optimism, to tap the population of over 55 million, who can gain access to the best that the world has to offer. Change is evident even though progress is slow. Expatriates coming in 3-5 years ago have witnessed the gradual transformation of cities like Yangon, which lead the change, be it social or economic. Myanmar’s economic growth, measured by its GDP, is expected to recover to 8.4% in the current financial year ending in March 2017, according to a forecast by the Asian Development Bank. The latest IMF World Economic Outlook rates Myanmar as the world’s fastest growing economy.

The news reports and media coverage seem to indicate a country making rapid strides, catapulting into the league of rapidly developing nations, bypassing the imperative stages of economic development. The ground reality is somewhat different. One sees a country vulnerable to weather conditions, with floods causing considerable damage year after year, poor infrastructure and insufficient access to markets and services, rampant poverty and a wide gap between the haves and the have-nots. There is a wave of consumerism, a new emerging middle class with more purchasing power than before, which is evident in the crowds seen in new shopping malls, restaurants and entertainment hubs. But with it come traffic jams and congested roads, in big cities like Yangon and Mandalay, the time taken in commuting adding to stress and impacting productivity.

This brings us to the inevitable question about Myanmar’s economic growth – can all its growth be termed ‘development’? And, whatever the growth rate, or the stage of economic development, what does it translate into, for the common man?

Economists reiterate that all economic growth cannot be termed development. This is evident from the very definition of the two terms. In simple words, economic growth means an increase in the national income and output (GDP) of a country. As a sub-category of economic development, growth takes place as economies see an increase in demand for goods and services, along with an increase in their supply ideally through local production and not imports. Economic development incorporates economic growth but only its positive impacts. It refers to a sustained increase in the standard of living of a country’s population, and is typically measured in terms of jobs and income. Development is evident in the quantitative and qualitative changes in an existing economy, and includes improvements in the quality of life of the people, in terms of education, health, living standards, choices, and the environment, in a just social system. Thus, literacy levels increase, infrastructure improves, and the common man’s health and safety is better than before.

Theoretically, an increase in GDP, indicating economic growth, should mean that there is economic development, since higher earnings should show higher expenditure on the needs of the population especially in fields of education, healthcare and job creation. However, this is not true and economists like Joseph Stiglitz say that GDP is not a good indicator of a country’s economic performance and does not reflect the well being of its people. This is because development looks at a series of indicators beyond GDP per capita since it is concerned with how people and their lives are actually affected. It is not unusual to find countries showing a considerable increase in GDP per capita, indicating economic growth, but the actual living conditions and standards of the people remaining the same.

Growth and development determining factors

Economists believe that economic growth is affected mainly by the level of infrastructure development in a given time period, the education and productivity of the work force, the freedom of their movement from agriculture to industry, from rural to urban areas, their ability to save and invest, and the existence of corruption and system of governance in a country. Governance reveals whether power is concentrated in the hands of a few and whether privileges leading to economic gains are given to a selected elite. In such a case, there is a mismatch between growth and development since the increase national output does not translate into benefits for the entire population. Development being concerned with how the lives of the people are actually affected, incorporates measures including real income per capita, literacy level and the standard of education, skill development, quality of healthcare and the number of doctors per thousand people, life expectancy, availability of housing and environmental standards. Often, a Human Development Index is used to measure the level of economic development.

Myanmar’s Reality The economic growth of Myanmar, as measured by growth of GDP is pegged at 8.4 % for the current financial year. But this figure does not indicate certain realities. There is poverty in rural areas with complete dependence on agriculture for sustenance, with 25.6% living below the poverty line (according to an ADB report). The urban poor are worse off than the rural poor, since the former are more vulnerable to inflationary pressures and do not have access to food as their rural counterparts who may not have liquid cash, but have food due to subsistence farming. The urban have access to products and services which have not yet trickled into the vast rural expanse. Out of all ASEAN nations, Myanmar has the lowest life expectancy and the highest infant and child mortality rates, indicative of the reach and efficiency of the healthcare system. Electric power is available to just one-third of the population and the road network is the most poorly developed in the region.

Myanmar’s modernization

Ever since the country opened up five years ago, a series of changes have taken place all at once. Suddenly, one finds the process of modernization setting in, and attempts being made to make Myanmar part of the global village with less barriers and borders being broken down, at least for economic reasons-a process often called globalization.

Modernization is a new term for what was called ‘social change’ by sociologists. It refers to the process whereby less developed societies acquire the characteristics and features of their more developed counter parts without going through the haphazard unplanned path the latter may have followed to reach their level of development. The core of modernization is the focus on the economic development aspect. With an end result known, less developed countries can pursue a path of planned economic development and avoid the mistakes and hurdles crossed by the economies they try to emulate.

Modernization has certainly picked up in Myanmar. This is evident in the opening up of the economy, the inflow of technological innovations, improved telecommunication network, transformation of the banking sector, better transport and automobiles, and move towards setting up local industry to reduce dependence on imports. Dated practices and policies are being discarded for newer, more advanced mechanized processes in agriculture as well-this however, is in its nascent stages, waiting for the big push to come from government policies.

Globalization is a process of worldwide integration economically, socially and culturally. It removes borders and makes the world a more unified whole. It began in the early 20th century when borders and distinct divisions among nations had proved to be detrimental to economic activities. Myanmar may have started late, but the process has set in and has ensured that the country can gain access to the latest technology and expertise the rest of the world has to offer. The biggest example is that of the telecommunication revolution by Norwegian multinational telecommunications company, Telenor, and Qatar based Ooredoo, besides the local MPT collaborating with Japanese KDDI Corporation. Multinational companies from Japan, China, India, Thailand, Korea, Singapore and other countries have set up offices and exploring opportunities for greater involvement.

The road ahead seems long since much needs to be done and as the rest of the world waits and watches, policies need to be formulated and implemented to push for industrialization, so that imports of finished goods are reduced and indigenous produce meets market demand. This would be possible by encouraging and providing incentives to SMEs (small and medium scale enterprises). The rural sector needs an impetus so that urbanization and overcrowding of cities is prevented, especially since agriculture related industries can easily provide employment opportunities. Local handicrafts can be encouraged and cottage industries set up. This will help in tapping local talent and preserving the skill passed on from generations. Vocational training to the youth after basic secondary level education has been completed, can make them fit to join the work force. Poorer states can be encouraged to utilize their resources more effectively and special incentives may help to lift them to the level of other states. A reduction in regional disparities is beneficial in maintaining peace.

Capacity and capability building desperately needed as much as a revamping of the education system. While graduates pass out in thousands each year, but they lack the skills needed to be absorbed in the work force. Vocational training and the skill set required to deliver what a job requires, is a big need. For this, the assistance of neighbouring countries like India with good education systems, can be sought. Till all this takes concrete form, Myanmar will see economic growth as indicated by its GDP, but real economic development, that shows improvement in the quality of life of its people, will take time to show.