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Myanmar’s Rural Economy: A Case Study in Delayed Transformation

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CGIAR Research Program on Policies, Institutions, and Markets Workshop on Rural Transformation in the 21st Century (Vancouver, BC – 28 July 2018, 30th International Conference of Agricultural Economists). Presentation by Nilar Aung, Duncan Boughton, Ben Belton, Mateusz Filipski and Ellen Payongayong.

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Myanmar’s Rural Economy: A Case Study in Delayed Transformation

  1. 1. Myanmar’s Rural Economy: A Case Study in Delayed Transformation Nilar Aung, Duncan Boughton, Ben Belton, Mateusz Filipski and Ellen Payongayong Workshop on Rural Transformation in the 21st Century Vancouver, BC July 28, 2018
  2. 2. Introduction • Political & economic reforms from 2011 • Agricultural sector contributes to 38 % of GDP • Population: 51.5 million • 70% of total population live in rural areas • Poverty rate: 32% • World Bank (2016) reports low rural wages, surplus agricultural labor, poor rural infrastructure, lack of access to long-term capital by farmers, low levels of agricultural mechanization. • BUT situation changing very rapidly
  3. 3. Framework for analysis 1. Enabling conditions 2. Markets for factors and services 3. Changes in agriculture 4. Changes in the rural non-farm economy 5. Rural income composition
  4. 4. Dry Zone Delta Rural Economy and Agriculture Dry Zone Survey, 2017 (1600 HH)+ 300 communities Myanmar Aquaculture- Agriculture Survey, 2016 (1100HH)+74 communities Sources of Data
  5. 5. Levels of investment in infrastructure significantly increased since 2011. 0 10 20 30 40 50 60 70 80 90 100 1917 1919 1921 1923 1925 1927 1929 1931 1933 1935 1937 1939 1941 1943 1945 1947 1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Primary Lower secondary Upper secondary Roads Electricity Cumulative share of schools, roads and electricity connections established in surveyed communities, by year (1917-2017).
  6. 6. Accelerating migration Cumulative share of all long-term migrants by year first migrated (%) 1995-2014/15 0 10 20 30 40 50 60 70 80 90 100 Urban Rural Delta 0 10 20 30 40 50 60 70 80 90 100 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Domestic International Dry Zone
  7. 7. Migration is driving large rural wage increases +20% +15% 0 500 1000 1500 2000 2500 3000 3500 4000 4500 2012 2014 2016 +8% +32% 0 500 1000 1500 2000 2500 3000 3500 4000 4500 2011 2013 2016 Realdailywages(MMK) Delta Dry Zone Change in real daily wages for male casual workers
  8. 8. Labor shortages driving rapid mechanization, facilitated by growth of rental services 0% 10% 20% 30% 40% 50% 60% 2008 2013 2017 2008 2013 2017 2008 2013 2017 2008 2013 2017 2WT 4WT Combine Harvester Thresher Shareoffarmhouseholds(%) Own Rent Share of farmers using machinery, by machine type, year and ownership status (READZ)
  9. 9. Agricultural machinery and transport rental businesses
  10. 10. Gradual Technological Change (Delta, 2006-2016) 11% 42% 13% 55% 22% 70% 0% 20% 40% 60% 80% 100% Monsoon Dry season Percentage of households using herbicides 2006 2011 2016 10 1.5 1.8 1.4 1.61.6 2.4 0.0 0.5 1.0 1.5 2.0 2.5 3.0 Monsoon Dry season Average rate of applied urea (bags/ac) 18% 20%19% 30% 16% 37% 0% 20% 40% 60% 80% 100% Monsoon Dry season Percentage of households using improved varieties 2006 2011 2016
  11. 11. Paddy yields (kg/ha) 2685 3408 2789 3615 2685 3822 0 500 1000 1500 2000 2500 3000 3500 4000 Monsoon Dry Season Paddyyields(kg/ha) 2006 2011 2016
  12. 12. Gross margins by crops (Dry Zone) -500 0 500 1000 Monsoon paddy Median $187/ha -400 -200 0 200 400 600 800 1000 Dry season paddy Median $249/ha -600 -400 -200 0 200 400 600 Groundnut Median $75/ha -600 -400 -200 0 200 400 600 800 1000 Seasame Median $25/ha -1000 -500 0 500 1000 1500 Green gram Median $1/ha
  13. 13. Rural non-farm economy growing rapidly +233% +50% +44% +67% 0 5 10 15 20 25 Motor transport Retail Personal services Food services MEANNo.ENTERPRISES/VILLAGE Delta 2011 2016 +200% +57% +33% +56% 0 5 10 15 20 25 Motor transport Retail Personal services Food services Dry Zone 2011 2017 Mean numbers of non-farm enterprise per village by type, 2011 & 2016/17 (MAAS & READZ)
  14. 14. Share of villages with credit access by source, 2011 & 2016 (MAAS) 0 10 20 30 40 50 60 70 80 %ofvillageswithaccess 2011 2016 Sources of credit diversifying
  15. 15. Credit becoming much cheaper as sources diversify -0.1% -0.4% -1.3% -1.3% -1.7% -3% -5.2% 0 2 4 6 8 10 12 Monthlyinterestrate(%) 2012 2017 Monthly interest rates from informal lenders and microcredit providers, 2012 & 2017 (READZ)
  16. 16. Household Income Components (HHs with ag land) 52% 1% 7% 11% 6% 2% 4% 10% 7% Delta Crops Livestock Fishing/aquaculture Ag wages Non-ag wages Salaried employment Resource extraction Non-farm business Remittances $373 Median total income per capita 48% 7% 17% 3% 5% 1% 8% 12% Dry Zone $287
  17. 17. Household Income Components (landless HHs) 2% 2% 44% 17% 5% 7% 16% 8% Delta Crops Livestock Fishing/aquaculture Ag wages Non-ag wages Salaried employment Resource extraction Non-farm business Remittances Median total income per capita $259 2% 3% 45% 13%5% 1% 18% 13% Dry Zone $280
  18. 18. Conclusions • Big increase in investment in infrastructure, but from very low base • High levels of rural-urban migration & rising real rural wages • High rates of agricultural mechanization (scale neutral due to rental service provision) • Growth of some parts of rural non-farm economy, but few jobs created apart from self-employment • Access to formal finance improving and borrowing becoming cheaper • Slight increases in chemical input use and improved varieties in farming, but little yield response, low returns
  19. 19. Implications for Policy • Need investments in ‘soft’ infrastructure (e.g. well trained teachers and health professionals) to complement hard infrastructure. • Support & training needed to make migration safer, less risky, higher quality. • Expand rural financial services ,insurance and business management skills for productive rural non-farm enterprises and non-farm job growth. • Improve pulse, oilseed and paddy varieties, and strategies to multiply and distribute improved seed.

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