Rich Periphery, Poor Center: Myanmar's Rural Economy under Partial Transition to a Market Economy∗

This paper looks at the case of Myanmar in order to investigate the behavior and welfare of rural households in an economy under transition from a planned to a market system. Myanmar's case is particularly interesting because of the country's unique attempt to preserve a policy of intervention in land transactions and marketing institutions. A sample household survey that we conducted in 2001, covering more than 500 households in eight villages with diverse agro-ecological environments, revealed two paradoxes. First, income levels are higher in villages far from the center than in villages located in regions under the tight control of the central authorities. Second, farmers and villages that emphasize a paddy-based, irrigated cropping system have lower farming incomes than those that do not. The reason for these paradoxes are the distortions created by agricultural policies that restrict land use and the marketing of agricultural produce. Because of these distortions, the transition to a market economy in Myanmar since the late 1980s is only a partial one. The partial transition, which initially led to an increase in output and income from agriculture, revealed its limit in the survey period. ∗ The authors are grateful to seminar participants at the North-East Universities Development Consortiu