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.

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. 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. 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. 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. 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. 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. 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. 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. Agricultural machinery and transport
rental businesses

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. 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. 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. 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. 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. 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. 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. 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. 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. 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.