Economy and Economic Policy, Burma Socialist Programme Party Era

   (1962-1988)

   Following the coup d'état of March 2, 1962, which put the Revolutionary Council (RC) in power, Burma's new leader, General Ne Win, promised to get the country moving along the "Burmese Road to Socialism," with the goal of eliminating economic exploitation. Brigadier Aung Gyi, who had argued for a moderate policy, including mixed public-private ownership and a role for private foreign investment, was purged from the RC in February 1963, and economic policy came under the control of Brigadier Tin Pe and U Ba Nyein, both doctrinaire, Eastern European-style socialists. They promoted nationalization of large and small enterprises, about 15,000 in all; Soviet-style industrialization; and elimination of foreign participation in the economy, which included not only nationalization of foreign-owned firms, such as the Burmah Oil Company, but also the economic disenfranchisement of Burmese citizens of Indian (South Asian) and Chinese ancestry, most of whom were forced to leave the country after their property was expropriated. State corporations were established to control all economic sectors, including the People's Store Corporation, a retail network that was responsible for making goods available to consumers. Most managers of these corporations were military officers. By the late 1960s, the inefficient and corrupt socialist system had caused substantial declines in living standards, especially in urban areas. Throughout the country, economic growth lagged behind population growth.

   Unlike the Soviet and Chinese Communist regimes, the RC did not ban private use of agricultural land (although the state asserted ownership of all land and abolished tenancy, meaning that farmers did not have property rights in land) or establish collective farms. The staterun Agricultural Corporation determined which crops farmers had to plant and bought their rice and other crops at artificially low prices. Cultivators preferred to sell their crops at much higher prices on the black market, meaning that rice delivered to the People's Stores or Cooperatives was scarce at the best of times and of inferior quality. In times of flood or drought, severe rice shortages caused social and political unrest, especially in the mid-1970s.

   Following the publication of "The Long-Term and Short-Term Economic Policies of the BSPP" at the first Congress of the Burma Socialist Programme Party in June-July 1971, socialist policies were modified to some extent: A realistic 20-year economic plan was drawn up, industrialization was abandoned in favor of development of the agricultural sector, and socialist self-sufficiency was repudiated. However, the plan's ultimate goal was to increase, rather than decrease, state control over the economy. Engagement with donors of foreign aid-especially Japan, West Germany, and multilateral agencies, such as the World Bank and the Asian Development Bankincreased. By the 1980s, official development assistance (ODA) was vital for the regime's economic survival. By the end of the decade, the country's burden of foreign debt-incurred through ODA loansapproached US$5.0 billion, mostly denominated in Japanese yen and German deutschmarks. But the Ne Win regime never carried out the liberalizing reforms that had been promised to international lenders, and its 1987 application to the United Nations for Least Developed Country status, to shield it from international creditors, was testimony to the ultimate failure of Burmese socialism.

   Despite improvements in agriculture following the adoption of high-yield varieties of rice in the late 1970s, the economy never achieved sustained growth, and Burma suffered a new economic crisis in the late 1980s, including inflation and shortages of rice, made worse by the ill-advised demonetization of September 1987. In 1988, the BSPP regime collapsed, and with it the "Burmese Road to Socialism."

   See also Currency and Exchange Rates; Economy and Economic Policy, State Law and Order Restoration Council /State Peace and Development Council Era; Investment, Foreign; Labor Strikes; Whole Township Extension Program.