Comment on “Fundamentals of Myanmar's Macroeconomy: A Political Economy Perspective”

• Published date: 01 June 2011
• Author: Marcus NOLAND
• Date: 01 June 2011
• DOI: http://doi.org/10.1111/j.1748-3131.2011.01191.x

Comment on “Fundamentals of Myanmar’s

Macroeconomy: A Political Economy

Perspective”

Marcus NOLAND†

Peterson Institute for International Economics and the East-West Center

JEL codes: O53, O11

Turnell’s (2011) is a highly informative and eminently readable paper that characterizes

the Burmese economy as one in which there are few if any property rights protections and

policy is implemented in an arbitrary and capricious manner. The predictable result is low

investment, low growth, and capital outflow, as even politically connected elites, fearing

expropriation, movetheir mone y,some of it ill-gotten, abroad. In short, Burma is depicted

as a poor country that exports capital as the masses are immiserized – even before Cyclone

Nargis hit in 2008.aepr_1191154..155

Professor Turnell argues that increasing net exports have accounted for more than half

of growth in the last 5 years (p. 138), and that the government budget is in substantial

surplus (p. 140) (though this depends importantly on how gas exports are accounted for),

which would be supportive of the maintenance of positive net exports. If correct, this

suggests that in recent years, domestic absorption has been growing more slowly than the

population, and that in all probability, private consumption has been lagging population

growth by an even greater margin. These results suggest that the natural gas bounty is not

being widely shared (p. 145).

Sadly, due to the poor state of Burmese statistics, all of these claims must be hedged.

The author acknowledges that a substantial share of Burma’s international trade is illicit

and not properly recorded either by Burma or its trade partners (p. 146). Similar argu-

ments could be made with respect to alleged nonrecorded Burmese trade in military

equipment and consulting services with North Korea. So how confident are we about

Burma’s balance of payments or its national income accounts? One of the attractions of

these accounting frameworks is that they impose adding up constraints. By carefully

constructing confidence intervals on the relevant aggregates, these constraints may imply

that some estimates of the nature or magnitude of certain categories of transactions are

internally inconsistent and may be suggestive of exaggerations or misinterpretations.

Indeed, one can imbed this kind of analysis into formal Bayesian systems (Noland et al.,

2000). It would be nice to get a sense of how confident we ought to be about the

macroeconomic aggregates reported for Burma. Table 1 (as cited in Turnell, 2011) is not

reassuring on this score.

†Correspondence: Marcus Noland,Peterson Institute for International Economics, 1750 Massachu-

setts Ave., NW, Washington, DC 20036, USA. Email: mnoland@piie.com

doi: 10.1111/j.1748-3131.2011.01191.x Asian Economic Policy Review (2011) 6, 154–155

© 2011 The Author

Asian Economic Policy Review © 2011 Japan Center for Economic Research

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