Looking Toward a Free Burma

The hope is that the violent crackdown now taking place against demonstrators in the country once known as Burma is the last gasp of a vicious and corrupt dictatorship.

Today, security forces shot and killed at least nine on the streets of Rangoon, the main city in what its rulers call Myanmar, the BBC is reporting, citing state television. The crackdown, coming on the 10th day of huge street protests, is spurring international pressure on the military junta to make changes.

Should a democratic Burma emerge, it would not only lift an iron fist off its more than 54 million people, it could also ultimately herald the birth of a new economic power in the region.

Determining how much of potential Burma has, however, is difficult to estimate. The official government statistics are notoriously unreliable. For example, in 2005, the junta claimed that its economy grew 12.2 percent for the year - faster than even the red-hot, rapidly industrializing nations of China and India. (According to independent estimates, the Burmese economy actually grew at a rate of less than 3 percent in 2005, after shrinking the previous year.)

Nonetheless, Breakingviews.com points to the economic potential of Burma under a "decent government." Burma has an adult literacy rate of 90 percent, which is higher than India's. It has a strong agriculture base, and its population is growing steadily, at an estimated 2 percent a year. It has vast amounts of timber, and has gems and jade.

More important, Burma, a neighbor and ally of energy-hungry China, has large reserves of natural gas. Its offshore and onshore fields have attracted Chevron (through its acquisition of Unocal), Total of France, and PTT of Thailand. Its exports of natural-gas give the country a surplus in its balance of payments, even under a corrupt government, Breakingviews notes.

But history weighs heavily on Burma. Since 1962, the country has been ruled by a military regime in various forms. A weak socialist government ruled when Burma had a constitutional government after independence from Britain in 1948.

Unlike India, Burma has lost whatever was left from its British colonial domination in terms of a working bureaucratic and legal apparatus. Years of corruption and mismanagement by the military regime have caused widespread mistrust of the financial system. There is little if anything in the way of an entrepreneurial culture.

The conservative policy group Heritage Foundation has put Burma fifth from the bottom of countries ranked by economic freedom. Only Zimbabwe, Libya, Cuba, and North Korea fared worse.

Sean Turnell, an economics professor at Macquarie University in Australia and a co-founder of Burma Economic Watch, told a Senate Foreign Relations subcommittee last year that: "Important sectors of Burma's economy [are] starved of resources. Negligible spending on education and health have eroded human capital formation, and reduced economic opportunities."

In terms of reducing its reliance on agriculture, increasing its reliance on industry, and building a services sector, "Burma displays none of these structural dynamics," he said.

So while Burma may be rich in resources, its economy has been impoverished by the military regime. Burma may become the next Asian economic tiger some day, but it first has to emerge from a massive cage.

Jeffrey Cane