Economic System Myanmar

Since 1962, Myanmar's economy, as a political system has been under strict government control. The military government that followed the socialist regime of Ne Win was equally repressive, lonely, and vice versa. However, the centralized regime in power does not necessarily translate into economic stagnation. In fact, some of the most successful economies of Asia, such as Singapore and China have been characterized by a strong state is controlled by the denied many political and individual rights for his people. In addition, the state plays an important role in East Asia economic development model. This being so, the lack of economic growth Myanmar can not be simply attributed to state control of the economy. Myanmar inability to sustain economic growth is due to the lack of economic security and freedom of enterprise, and the large size of the formal economy. Add to this, any major economic reform is likely to fail due to inefficiency and corruption of the government. This problem, along with hyperinflation and negligent lack of natural resources, as well as legacy products Ne Win regime. The nationalization of the economy during the regime discriminates against Ne Win led to rampant corruption, the black market, and the suffering of the people.

One of the main reasons that Myanmar is one of the least developed countries and the most politically stable in the world is the giant black market economy. Other control over the economy

90 ineffective military commanders based in power, along with the co-existence of traditional primitive production with small modern sector of modern technology, leading to the development of a large informal economy and compact. It is estimated that the ratio of illegal trade volume is equal or greater than the official. Government is fully aware of the existence of this parallel economy and the problems it represents. However, it is in the best interest not only to the military leaders did not intervene, but to encourage it. In fact, government officials and the party has become the main beneficiaries of the formal economy and dynamic. Moreover, the economic and political survival of the military elite in power depends on the formal economy. Institutions tend to be created and maintained by the elite. This being so, it is very unlikely to want to change their party institutions. Therefore, ineffective institutional framework tend to survive and even thrive despite the negative impact on economic growth. For example, the heads of the military and party leaders and former military who have special access to articles that are distributed by the government, collecting large sums of money, whether participating in the black market organization or accepting bribes by capos black market. Therefore, the government has no incentive to find a way to legalize the black market economy.

Similarly, as the State Law and Order Restoration Council took office in 1988, Myanmar has become one of the world's leading producer of illicit drugs. The magnitude of drug production and expansion Myanmar Burmese heroin and methamphetamine in the growing Asian market for the drug placed as one of the most important exports of Myanmar. The prosperity of illicit drug trafficking in Myanmar has a great impact on a number of issues, such as AIDS and organized crime. To make matters worse, the report identified the former leaders of the Communist Party of Burma and prominent businessmen between retailers. Ironically, these distributors have invested in infrastructure in Myanmar.

Additional validity of the economy creates more problems of corruption According to De Soto, resources are managed in the informal economy can not be used to generate additional wealth. Economically more technical, assets under management in the black market can not be transformed into capital. The capital is an important element in the development of the capitalist economy. Therefore, without changing the institutional framework of labor resources and capital needed, Myanmar is not able to exploit the economic potential. For example, trade has been considered one of the main reasons behind the economic development of many Asian countries. Myanmar's strategic location, close to the main street and the neighboring Indian Ocean shipping with fast- growing economies such as China, Bangladesh and India, may be reason enough to calculate Myanmar among Asian countries successfully export oriented. Still, Myanmar is far from being listed. Myanmar exports has been estimated at about $ 2514000000 dollars. However, trade figures are very underrated Myanmar because the number of illegal trade. It has been estimated that fifty percent of goods entering and leaving Myanmar smuggled and distributed on the black market. This being so, about a trillion dollars in assets channeled into the formal economy, which can not be regulated not used to stimulate the production is new.

Another problem associated with the inability to distribute and produce capital of Myanmar's low- income sectors of the population, of the formal economy. For example, in public employment, business and personal loans distributed by the Myanmar Economic Bank sponsorship policy and loyalty to the regime. Therefore, only a few sectors of the population have access to capital. For example, if Burma wants to get a loan to improve your home, the loan will be determined by the number of years of service to the state. For example, you receive K90, 000 for fifteen years of service. The problem with these loans is that sometimes are not enough to cover all necessary

91 expenses for the rising cost of building materials, which, of course, set by the government. Therefore, the lack of funds and alternatives to achieve them, will have to resort to the black market to obtain the materials needed to complete the project. Unsuccessful economic system depends on how the individual additional legislation to meet their needs.

Similar plans have been provided by the officials of the state government to establish land mortgage banks and small credit unions to make loans in the short and medium term. However, the Burmese government would have to provide unprecedented sum of money if even a solution that is acceptable to the rural sector, lack of capital is to be achieved. However, without a new source of revenue, this is very unlikely. This situation leads to a vicious circle where there is no government voters have an incentive to break the legalization of the informal economy.

Myanmar is another example of the resource-rich country with a great potential for economic growth, but does not have the institutions necessary to produce and distribute capital. Myanmar limited economic growth took place outside the sphere of the market and the law. Burmese policies passed a strong anti-capitalist socialist movement has made it difficult to develop a strong and dynamic private sector. Add to this, the government's failure to meet the needs of constituents and generate revenue for itself has opened the door to extralegality client networks and patronage between businessmen and government officials.

Formal economy and the Government of Myanmar to life by 200 private companies and foreign UN agencies that fund. Attempts to justify the formal trade and economic liberalization was proposed in 1988 by the military regime of Ne Win replaced. However, the ideology of the post-socialist economy must be in government hands. This being so, except for some isolated practices, such as allowing foreign investors to form joint ventures with state enterprises, the Burmese economy has not changed significantly in the market economy. Since 1997, state enterprises continue to play an important role in macroeconomic activity with monopoly control of key sectors of the economy. Add to this, the economic reforms only improve the control of the military regime of the economy. For example, so-called state enterprises will be privatized as part of the reforms. However, most of them are just renamed and still remain under the control of the army. Indeed, trade reforms aimed at removing barriers to foreign trade, really just more restrictions and regulations on trade. The banking system and still highly centralized. The inability of reform to bring major changes in the current situation of economic reform suggests that the real goal is to capture currency, resource rent, cheap supply input for SOEs. Finally, all major foreign investment and joint ventures formed and controlled directly by the Ministry of Trade and Foreign Investment Commission. In fact, the largest and richest in Myanmar, known as the Union of Myanmar Economic Holdings Limited, a. Fully controlled and operated by military commanders An economic reforms with the conflict can not be taken as an effort by the government to move towards liberalization of the real economy. Myanmar has changed in the last five years due to weak governments and the private sector to promote and maintain the fundamental economic reforms.66

Thailand

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Maung Mya. 1998. The Burma Road to Capitalism: Economic Growth versus Democracy. Westport, CT: Praeger Publishers.

92 Thailand's inflation rate in 1996 of 5.6 percent Myanmar dramatically different with 21.8 percent in the same year. In order to find an explanation for the differences we have to return to the beginning of 1960. Thailand, through the early years of the 1960s, is a free and independent government that has very little interaction with the West. In 1955, Thailand's leaders decided it would be beneficial to establish trade and cultural exchanges with the West. They could not be more right. Therefore, the separation of Thailand ends with the establishment of relations with Britain through the signing of an agreement known as the Bowring Treaty. The provisions of the agreement gave British merchants the right to trade freely and stay in Bangkok. In addition, import duties and export is set in a fixed rate to facilitate trade. The terms of the agreement remain unchanged over the next seven years.Moreover, this agreement has been followed by similar agreements with other western nations transactions. These agreements have a profound impact on the economic development of Thailand. These agreements facilitate first step towards integrating with the global economy Thailand.

The main engine of economic growth in Thailand is rice production and export growth. During the period, rice exports account for 60-70 percent of total exports. Furthermore, eighty percent of the population was involved in the production and distribution of rice. However, the export of Thai rice is quite uncertain, as it depends on the ability of residents to produce their own rice. Thai rice exports are important only when combined with the lack in other areas. However, the increase in rice production change adaptation are very important to the Thai economy. Rice production has been aided and abetted by the Thai government. However, unlike the other major products produced in Thailand, such as copper and teak wood, most of the initiative and the responsibility is left to the people. Therefore, the increase of rice production accidentally put the economic system in the hands of the people and not the state.

However, the role of government in the development of rice production is very important. Government intervention in rice production has been manifested in legal fees and capital. The tax first, rice fields, in the form of a tax exemption for the new land, was designed by the government to encourage people to cultivate new land. For example, taxes are lower in the less fertile and undeveloped. Add to this, in the poorest regions, no taxes are collected. Tax relief has been completed with public infrastructure, such as irrigation and railways.

Similarly, the government has been actively involved in the development of trade in rice. However, the results of this intervention is quite controversial. Government control of the rice trade became more prominent after the Second World War. Thai Government to take advantage of the rice shortage in Asia after the war to create a monopoly on trade in rice. Government contemplates buying rice from farmers and then distribute it to the shipping companies. The sender is responsible for the costs incurred in the transaction that government spending on small and large profits. 89ingram This situation led to abuses of power and corruption by government officials. Also, in the long run, rice producers began losing money due to increased rice production to rice prices are still borne by the Government. Thus, manufacturers and shippers begin to produce less and reduce product quality in order to recoup their losses. Economic reform is a game of tradeoffs. In this case, the system, keeping domestic rice prices far below market prices, which helps to reduce the problem of Myanmar experienced inflation and the price of Thai rice exporters are still allowed to compete with Chinese, despite their limited capital and business experience. However, the overall effect of this is negative, as it reduces the prewar policy of giving tax incentives to farmers.

However, what separates the state of development under rice cultivation type Thai government intervention in Myanmar role of people in the economy through the production of rice. Rice

93 cultivation, plus a small charge to cover the necessary registration of land, which require little capital and land is available for anyone willing to raise. Government, as mentioned before, also to promote the cultivation of rice through tax incentives for new farmers. All conditions that promote the entry of the Thai population into the economy. Add to this, the cultivation of rice in Thailand enjoys a special status in other works. The reasons why the culture and history of rice cultivation in Thailand is very important, beyond the scope of this paper. However, relations, customs and institutions that have emerged from rice farmers communal life have a very important factor in the way the economic system in Thailand has evolved. For example, for generations, Thailand was willing to accept the risks, costs and hard work it takes to grow rice in the region mostly forested. This preference for rice farming and rural life in Thailand led to the development of highly specific and interesting system in Thailand and economic elite. Nonagricultural labor shortages that lead to increased agricultural wages and the need to bring labor from other countries. In fact, since the late 1960s, the farm work in most of Thailand was held by immigrants, particularly from China. Affairs of China, and others, have provided most of the labor and capital to develop other industries. Thai Public participation in the production of other major Thai exports such as copper, teak and rubber were minimal. Like wise, the Thai government's involvement in the use and distribution of these resources were very limited as well.

Historically, Thailand's economic system works as follows: Thai residents provide labor and capital for the development of the rice industry while Chinese immigrants dominated the Thai domestic trade and the supply of capital and labor to the development of other industries. This being so, two types of entrepreneurs has emerged in Thailand: Chinese and Thai. On the one hand, Chinese entrepreneurs have gained control of key industries in Thailand, including trade. Instead, Thai entrepreneurs have a more limited scope of action especially in the agricultural sector. This section has a major impact on the Thai regime of economic policy. Since 1948, the Thai government has tried to block foreign intervention in the economy by giving privileges to Thai entrepreneurs. For example, the supply of capital available to each group in different terms. However, the uncertainty of fixed capital and discriminatory policies of the Thai government has encouraged foreign businessmen operating in Thailand. In addition, the Thai economy has demonstrated its native elite persistent inability to take control of the Thai economy. Your investment in the industrialization and modernization of the Thai economy has been limited to the agricultural sector. However, it is one of the reasons why Thailand agriculture sector has generated a surplus that has helped the development of other sectors ..

The opening of the market economic system requires the availability and accumulation of capital. Thailand's economy is able to generate a surplus of investment in agriculture. However, the leadership of Thailand, until recent years, you can not use it to develop the manufacturing sector. These factors delayed the industrialization and modernization of Thailand. Add to this, regardless of nationality, an entrepreneur without capital is like a musician without a letter. To cope with the capital injection, the Thai government has been experimenting with creating different financial lending institutions. However, punctilious lending policies and the lack of adequate technical assistance from these institutions are not allowed to have a strong impact on economic development. However, a number of institutional arrangements, which will be addressed in the next section of this paper, offset the inefficiency of these institutions.67

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Mustcat, J. Robert. 1966. Development Strategy in Thailand: A Study of Economic Growth. New York. Frederick A. Praeger Publishers.

94 Comparison

As we have seen, in the 1960s Thailand and Myanmar economy very different paths. In a sense, Myanmar adopted a socialist and authoritarian. By contrast, Thailand choose to rely on market forces. However, one should be a warning before saying that the market economy is better for the economic development of a country. The role of the ruling elites is to seize the opportunity and as a result ensure that each model has the potential to foster the economic development of a country. Therefore, the inefficient regime to choose the most suitable model of severe economic development restrictions of a country. In the case of Thailand, the development of a market economy is a natural process and gradually supported by the elite. Moreover, the current regime of corruption and elite important sector in Myanmar Burmese leadership was able to adopt a development plan effective.

Institutional Framework

A discussion of institutions is an important part of any analysis of economic developments and policies. According to Douglas North, all economic and social activities outlined by the institutional framework that has a direct influence on their decision. We are present in the social and economic structures that made the rules, traditions, customs and write laws that govern our behavior. Therefore, each country has developed its own institutional framework. This explains why the same techniques, models and strategies for economic growth produces different results when used in different countries. In addition, North argues that some countries have developed, either by design, accident, or both, of an institutional framework conducive to economic development. That's why it's so important to compare and contrast the institutional framework Myanmar with Thailand, in an effort to understand why economic development is so different even though they have much in common. Neo-liberal ideas about trade liberalization and privatization have been working in