The intention to dismantle the colonial economy, the government of post-independence Burma heavily emphasised industrialization neglecting the importance of agriculture which was the main income source for the people of Burma. According to Ian Brown, the government policy made little attempt at such reconciliation, and thereby ruined its strategy (Brown, 2013). Moreover, because of Japanese war during the Second World War, Burma had to suffer devastatingly when the democratically elected government came to power in 1948. In the year 1948, the year of independence, Burma’s GDP was 66% of its pre-war level.
The average annual growth rate of GDP in the years 1948-1962 was 5.3 per cent. This overall performance was not quite satisfactory relative to that of 1939, of colony rule. As for per capita income, the level in 1962 was only 86% of 1939 (Thein, 2004).
Year GDP(Kyat million) Population(000) Per Capita Income(Kyat)
1938/39 4,945 16,145 302
1950/51 3,557 19,051 186
1959/60 5,600 22,200 269
Figure: Burma GDP before Independence and after independence
Economic Transformation of British Burma and Its Criticism
British transformed Burma’s economy to suit their own interest. Burma was intended for creating free wealth as much as possible in the context of larger set of external economic, imperial, strategic and political interests. This led to capitalist economy with the effect on inequality of wealth among the society. The key to the colonial government’s economic policies was to further strengthen the trade between India and Burma (Taylor, 1987). Accelerating rice production resulted in a huge surplus for export inviting investments in rice processing industries and infrastructure developments that automatically assisted timber and rice industries which were largely dominated by the foreigners. As a consequence, large quantity of consumer goods and foods were imported displacing traditional handicrafts and industries such as salt-boiling and weaving (Than, 2007).
The colonial introduced open immigration policy for Indians to meet the labour demand when the rice delta frontier was opened for cultivation. For commerce and trade grew rapidly, many Indian bankers, moneylenders, businessmen and professionals headed to Burma. Thus, Indians were well-integrated and they played important role in any sector, administrative and economics. Thus, the rapid increase of Indian population in Burma was a barrier toward economic benefit for the native Burmese and lead to communal tension (Hlaing, 1970). Although the nominal GDP doubled and the export quadrupled in the first two decades of twentieth century, the main beneficiaries were Europeans and Indians. According to Professor Aye Hlaing, the net transfer of income and profits to foreign countries in 1934 was estimated to be around 215 million rupees which was 15% of the total investment. The capitals mainly from India and Britain flowed in as investment and flowed out to foreign countries as profit and revenues for Indian central government (Than, 2007). Writers Fenichel and Huff (1971) criticised that the British seemed to have made Burma a colony of India plus Britain.
Lingering Notion and Its Effects
The post-independence economy of Burma was largely influenced by the idea and notion associated with socialism and economic nationalism of the nationalist leaders who came to power after independence. The colonial conjugation with exploitive economic policy prompted leftist idea among political activists group called Dobama Asiayone in 1930s (Maung, 1969). The Dobama Asiayone’s 1939 Manifesto promised ‘State-led industrialization to provide employment and the right of worker to have control over their industry. Nationalization and mechanization of all lands were also guaranteed. Many leftist political activists became political prominence and praised their perspective version of socialism; most of them were influenced by the foremost activist Aung San’s ideology of socialism.
Aung San’s principles of socialism for Burma’s economy generated legitimacy and credibility to socialist aspirations of the post-independence political elites. Aung San’s idea had been a root of economic policy of democrats, reformist socialists as well as the revolutionary democrats of Burmese armed forces which came to power after 1962 (Than, 2007). Aung San, the father of nation, criticised capitalism as exploitive and fascist. In his view, the expression of imperialism and fascism were the same phenomenon with different forms. For him: The State has to play major role in production, transit, and distribution and cooperative enterprise should also be encouraged. National enterprise and utilities must be run by the State. The State should also control trade, if not, the capitalist will exploit as they want and restart the old policy of monopoly and exploitation. Hence, Aung San’s ideology was based on socialism which restricts private sectors (Ibid.p 33).
On replacing the capitalist system, the prime minister U Nu declared that the country must turn left ‘Left-wing’ to achieve full freedom, a mere change of garb would make no difference, the system and policy must be overturned. The first president of Independent Burma also insisted the primary policy for economic development should pursue socialist system eliminating the capitalism and private ownership (Than, 2007).
Replacing capitalist system with socialist system discouraged the private sector and individuals. Individuals did not get rewarded for working harder. Nationalization of enterprises and other economic activity was one of the causes for the downturn economy (Thein, 2004).
Post-independence Economic Policy and Its Failure
When Burma was under British rule, the Burmese had two bitter experiences. One of them was the great loss of land by native Burmese to the Indians, mostly Chettiars. Nearly half of the total cultivated area was owned by non-native Indians after the rice price fall in 1930s (Thein, 2004). The British government then was deaf to take action against the increasing number of land-ownerships by non-agriculturists. Besides, the administration system was ‘plural society’ with Europeans at the top, Chinese and Indians in the middle and Burmese were left at the bottom (Brown, 2013).
The second is ‘free trade’ policy practised in the country. The basic principles of commercial policy of British rule in Burma were laissez-faire and competitive enterprise, two adjusts of Anglo- Saxon liberalism (Mali, 1962). Consequently, Burma was very much dependent on the production and export of simply paddy. Although this policy remarkably benefited foreigners and the overall economy, it excluded the native peasant from any important role in the process of modernization (Thein, 2004).Moreover, as Burma was a province of British India between 1986-1937, there was no restriction on immigration from India. The number of Indian immigrants to Burma was significantly increasing which the nationalists highly opposed (Brown, 2013).
When Burma got Independence from British in 1948, the new government attempted to overturn the colonial economy. The first was to remove foreign interests in the country. Thus, the Land Nationalization Act was introduced in 1948 to take back the agricultural land mostly owned by non-agriculturist Indians (Brown, 2013). The agricultural lands were nationalized and redistributed with the ceiling of 10 acres each. The new government also took control over foreign trade which were under the monopoly of foreign firms and introduced moderately high tariff wall. Timber industry and well-known foreign companies such as Irrawaddy Flotilla Company were also nationalized. The government emphasised on industrialization and the stare role for long-term development process. Most are in agreement that the emphasis on the role of the State in the economic development of Burma may be mainly attributed to the socialist convictions of its young leaders (Thein, 2004).
According to Burma expert economist Furnivall (1957), the foreign owned monopoly firms could not be granted much power under the new government. Socialist ideology showed that they needed to be taken over by the State. The firms could not be safely left in foreign hand, but the State could not take over without courting disasters. A renowned Burmese economist Dr Tun Wai (1965) also commented on the socialist ideology taken by the new government. In his view, the government attempted to Burmanize the economy by replacing foreigners who played monopoly role under colonial rule. As the Burmese did not have both financial and business experiences, the best option for the government was to follow a socialistic policy.
The government introduced an institution called State Agricultural Marketing Board (SAMB) which bough paddy from the farmers at fixed price and exported at higher price. Although the profit made from SAMB is a source of income for government, this policy reduced incentive for the farmers to supply exportable surplus. This approach weakened the production and cultivation of paddy which was the main source of economy during colonial rule (Brown, 2013).
Failures of Two-Year and Eight-Year Plans
The new government of Burma after independence formulated Two-Year plan and Eight-Year plan in 1948 and 1952 respectively, based on socialist ideology. The Two-Year plan was the first attempt of the new government at planning. It formulated the list of targets to reach back the level of colonial economy within the following two years after independence. Due to the insurrections of Burmese Communist rebels and ethnic Karen insurgency broke out to bring down the government soon after independence; the plan was not successfully implemented countrywide. The government had to focus on restoring law and order (Thein, 2004).
The Eight-Year plan was drawn by American scholars to double the GDP within eight years in 1952. The plan objectives were nationalization, burmanization and industrialization based on socialist policy. The plan was not satisfactory and abandoned in 1955. Instead of doubling the GDP, the actual GDP during these years was only 60% higher than the previous one (Ibid., p 21). Dr Mali (1962) observed the factor behind the failure of the plan was too much emphasis on industrialization and neglect of agricultural sector.
The Findings from Previous Studies
Some scholars like Dr Mali, Professor Myat Thein, Dr Tun Wai, Professor Ian Brown and Tin Maung Maung Than have done moderate research on the economy of post-independence Burma. They all have different views and ideas behind the failure Burma’s economy after independence in 1948.
According to Ian Brawn (2013), destroying the plural society with nationalization policy was one of the factors behind the failure of the economy. Professional and intellectual Indians had played very important role during British colony. However, they had to flee the country due to war and introduction of Land Nationalization Act because they had lost large number of land. Nationalist ideology was also one of the factors behind.
Dr Mali (1962) observed that the factor behind the poor performance of government was too much emphasis was given to industrialization and neglect of agricultural sector. The government did not give much priority to agriculture instead it gave all priority to industrialization.
Scholar Tin Maung Maung Than(2007) considered that replacing capitalist system with socialist system could be regarded as wrong approach. Private sector did not have any important role in the economic development. In most countries, private enterprises are the main sources of employment and development.
Dr Tun Wai, a renowned Burmese economist, insisted that the falling Burma’s economy after independence was due to lack of experience in commerce and lack of financial resources.
According to the findings and literature review of theories and previous studies, the possible factors which caused the failure of Burma economy after independence could be 4 factors: too much emphasis on industrialization and neglect of agricultural sector, policy of nationalization and Burmanization, replacing capitalist system with socialist system and lack of experience in commerce.
In conclusion, the researcher will undertake in-depth research on each of these factors and determine how badly individual factors effected the Burma’s economy in between 1948-1962. All these factors could have affected the post-independence Burma economy; however, there must be some particular factors which excessively affected the economy’s downturn.
REFERENCES
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Hlaing, A (1964), Trends of Economic Growth and Income Distribution in Burma 1870-1940, Rangon: University of Rangon.
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