In vogue after the success of China's growth and the critiques levelled at the Washington Consensus, could the Beijing Consensus be a model for Myanmar as it embarks on a historical opening to the global economy?
First, there may not be a consensus on the Beijing Consensus since the Chinese growth experience cannot be easily modelled. And there are many elements of China's marketisation process that are similar to the Washington Consensus - a model promulgated during the 1980s and 1990s that stemmed from the International Monetary Fund and US Treasury located in Washington DC. The Washington Consensus was premised on privatisation, financial and trade liberalisation. As developing countries failed to benefit from this version of reform and global integration - seen in the decade-long recessions of the former Soviet Union during the 1990s and the 1980s Latin American crises - the Washington Consensus fell out of favour and developing countries sought an alternative and turned to China.
Actually, China shared numerous elements of the Washington Consensus' market-oriented reforms; but it did so at a more gradual pace and with sequencing of key reforms. For instance, state-owned enterprises were slowly reformed and were not subject to mass privatisation. It also occurred after a non-state sector was established to absorb the laid-off workers, which enabled the state to honour "implicit social contracts" that prevented large-scale unemployment. But one consequence is that reforms are incomplete and state ownership persists.
China is not alone in growing rapidly in the region. The East Asian "miracle" economies of South Korea, Taiwan, Singapore and Hong Kong all did before it. As a model for China in some respects, they enacted targeted reforms to boost global integration into production and supply chains that allowed these countries to industrialise through plugging into worldwide manufacturing. State-directed credit also helped to avoid specialisation in less desirable areas, such as primary products. The East Asian tigers also enacted land reform and other forms of redistribution that allowed their growth to be accompanied by greater equity. By contrast, China's lack of such policies contributes to it having levels of inequality that has been described as causing worrying levels of social resentment.
As a model of development, the Beijing Consensus in emphasising gradual and managed opening to the world economy, slower reforms of the existing economic structures that honour implicit social contracts could be more appealing than the more rapid marketisation model. The key to the Beijing Consensus is industrialisation, which in China's case involves re-industrialisation since state-owned firms are reformed as well as the usual Lewis model route of moving workers are out of agriculture and into factories and the services economy.
For Myanmar, industrialisation could provide a significant growth boost since some 70 per cent of its population works in agriculture and the sector accounts for over half of its economic output. That shift to industry could launch the country into the rapid growth phase seen in East Asia. However, plugging into regional production chains that produce significant swathes of the world's consumer electronics will be key or else it risks specialising in resources and being crowded out by existing, more competitive foreign firms. It is in the right region to exploit that potential, including growing through its abundant resources and services given its sizeable domestic market.
In other words, Myanmar has the potential to grow in a diversified manner and could grow very rapidly if it industrialises successfully.
There is, though, another lesson to note from the growth experience of its neighbours. Growth can be achieved with equity if the state reallocates the factors of production and undertakes social transfers. A healthy market depends on a large middle class and not on a few wealthy consumers. For countries with fewer than a billion people, it is more pertinent than, say, for China during its earlier phase of growth. The World Bank estimated that had China grown more equitably, its poverty rate would be less than one per cent instead of about 10 per cent or over 100 million people. Just think of the additional growth potential and the lessening of social tensions.
For Myanmar, the Beijing Consensus perhaps offers a better set of guidance as it is derived from the remarkable growth experience of its East Asian neighbours. But, the bumpier roads of its immediate Southeast Asian neighbours suggest that success cannot be taken for granted. With pacing and sequencing of reforms, including learning the lessons of opening, the once brightest economy in Southeast Asia can again re-emerge and take its place in the fastest growing region in the world.
The author is Chief Business Correspondent, BBC World News
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
