Digital investment and structural sector shift are two of the four main areas that Myanmar should consider to contribute to its growth and development, according to McKinsey Global Institute's report on "Myanmar's Moment: Unique Opportunities, Major Challenges".
Digital leapfrogging. This was highlighted as the first area, based on
the correlation among technology, innovation and economic growth. In a
study of 120 low- and middle-income countries, the World Bank found that
a 10-per-cent increase in broadband penetration from 1980-2002 added
1.38 percentage points to growth in gross domestic product. Today,
Myanmar has one of the lowest averages of schooling in the world, at
just four years. Technology allows e-education.
Structural sector shift. Myanmar's economic mix has remained unchanged for decades. The first step in the structural shift undertaken by many emerging economies is usually into manufacturing. Myanmar could consider developing its manufacturing in stages, focusing in the short term on cost advantages. It can also set a course to draw more investment and innovation in areas like automobile parts and assembly, chemicals and refineries. McKinsey estimates demand for higher-skilled employees at 26 million in 2030.
Urbanisation. The number of locals living in large cities could rise from 13 per cent today to 25 per cent in 2030. This means two new cities the size of Yangon or 10 new cities the size of Mandalay. These large cities could contribute 54 per cent of GDP growth by 2030. Myanmar can learn from other countries' experiences.
Globally connected economy. Based on the experience of other Asian countries, Myanmar could need about US$650 billion (Bt19.8 trillion) in investment to realise its growth potential. In the early years of transformation, it may need to rely heavily on foreign capital and trade to drive growth. Myanmar could potentially need to attract foreign capital of more than $170 billion to close the gap between required investment and potential domestic savings.
"This foreign capital could also help transfer capabilities and ideas. To bring in these high volumes of foreign capital, Myanmar would need to develop a targeted investment attraction strategy led by a dedicated agency, and to prioritise improving its business environment."
To boost trade, Myanmar should maximise the opportunities available to it as a member of Asean. It should also assess the ways to fit into the global supply chain and invest in needy infrastructure services to facilitate people flows.
"After years of isolation, welcoming a steady stream of foreigners into the country and sending its own citizens abroad to study, conduct business or simply explore other parts of the world could help Myanmar build up its skills and stimulate the transfer of knowledge and technology - all important elements that need to be in place as the economy develops.
"Tourism may be not only a major economic opportunity, but also a way to reinforce a positive image of openness and connection to the world."
To achieve this, the country needs support from both the public and private sectors, the report said.
Structural sector shift. Myanmar's economic mix has remained unchanged for decades. The first step in the structural shift undertaken by many emerging economies is usually into manufacturing. Myanmar could consider developing its manufacturing in stages, focusing in the short term on cost advantages. It can also set a course to draw more investment and innovation in areas like automobile parts and assembly, chemicals and refineries. McKinsey estimates demand for higher-skilled employees at 26 million in 2030.
Urbanisation. The number of locals living in large cities could rise from 13 per cent today to 25 per cent in 2030. This means two new cities the size of Yangon or 10 new cities the size of Mandalay. These large cities could contribute 54 per cent of GDP growth by 2030. Myanmar can learn from other countries' experiences.
Globally connected economy. Based on the experience of other Asian countries, Myanmar could need about US$650 billion (Bt19.8 trillion) in investment to realise its growth potential. In the early years of transformation, it may need to rely heavily on foreign capital and trade to drive growth. Myanmar could potentially need to attract foreign capital of more than $170 billion to close the gap between required investment and potential domestic savings.
"This foreign capital could also help transfer capabilities and ideas. To bring in these high volumes of foreign capital, Myanmar would need to develop a targeted investment attraction strategy led by a dedicated agency, and to prioritise improving its business environment."
To boost trade, Myanmar should maximise the opportunities available to it as a member of Asean. It should also assess the ways to fit into the global supply chain and invest in needy infrastructure services to facilitate people flows.
"After years of isolation, welcoming a steady stream of foreigners into the country and sending its own citizens abroad to study, conduct business or simply explore other parts of the world could help Myanmar build up its skills and stimulate the transfer of knowledge and technology - all important elements that need to be in place as the economy develops.
"Tourism may be not only a major economic opportunity, but also a way to reinforce a positive image of openness and connection to the world."
To achieve this, the country needs support from both the public and private sectors, the report said.
source: The Nation
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