In 2004 Burma's economy was convulsed in a monetary crisis. Triggered by the collapse of the country's nascent private banking system the previous year, this latest drama has deeper roots in, and to some extent disguises, the longer-term malaise that has characterized Burma's economy for four decades.

Burma's economic stagnation, not readily identifiable from its official statistics, has a myriad of causes, including a policy-making process that is erratic, arbitrary, and usually counter-productive. Over and above policy, however, Burma lacks the fundamental institutions that history tells us are necessary for a functioning market economy. Principal amongst these institutional absentees is a regime of enforceable property rights.

In the following section, the state of Burma's economy in 2004 will be assessed, beginning with an exploration of some relevant “numbers” — data that highlights the damage wrought by Burma's latest monetary crisis, and data that casts doubt on the narrative of economic success suggested by the country's official statistics. Next, the author examines some of the ostensible causes of the latest crisis, highlighting macroeconomic and other policy failures. It is suggested that these are but symptoms of a more profound malaise which is founded in the failure of Burma's government to establish a credible regime of private property rights. The absence of these rights presents the principal obstacle to private capital formation in Burma, not least as a consequence of the extent to which “money” itself is compromised.

Burma's Economic Performance

Burma has not published a full set of national accounts since 1999. However the country's Central Statistical Office (CSO) does supply certain data, including its estimates of economic growth, to multilateral institutions such as the Asian Development Bank (ADB). Such data paints a rosy picture of Burma's economy, as Table 4.1 indicates.

If the CSO's numbers are indeed an accurate description of Burma's economy, then the country must assuredly be riding an economic miracle of epic proportions. Growth rates such as those shown in Table 4.1 are almost unprecedented, with the exception only of the (doubtful) experiences of China today and the Asian “tigers” of selected memory.