Despite many attempts to industrialize and modernize, Burma remains an essentially agricultural economy. Attempts in the 1990s to encourage foreign investments,
Only 10,680 square kilometers (4,123 square miles) of the country's arable land was irrigated in 1993. Agriculture, for the most part, depends on the monsoon rains. Periodic droughts are a major problem. Similarly, natural disasters such as cyclones, earthquakes, floods, and landslides, especially during the long monsoon season, can have an adverse impact on agricultural production.
Until it became independent in 1948, Burma was a British colony. The colonial authorities promoted agriculture by encouraging the settlement of people in the delta regions. Roads, bridges, and ports were built to facilitate the movement of agricultural products. This development led to an internal migration from the dry northern regions to south of the country. The delta produced large quantities of rice. The British were not interested in encouraging industries in Burma. Foreign domination of the economy was complete.
During the 1950s, the capital of Rangoon was one of the commercial centers of Southeast Asia. At the time, the World Bank estimated that Burma would become one of the most prosperous countries of the region. But independence, democracy, and a free market economy failed to produce political stability or economic prosperity. In 1962, a military takeover of the government led to socialism and central economic planning. Foreign businesspeople—especially those from India, China, and Pakistan—were expelled and foreign investment in Burma stopped. The new rulers adopted a "Burmese road to socialism"—a policy of state socialism and isolationism (a policy of keeping foreign influence and involvement to a minimum so that a country can develop on its own). Economic conditions did not improve under the harsh rule of the generals; rather, they worsened. In 1987, the United Nations declared the country a "Least Developed Nation."
Many people in Burma remained antagonistic toward the military rule and the state-controlled economy. This opposition finally led to mass protests and violence in March 1988, which the government sought to suppress. The army chief of staff took control of the government, abandoned the 3-decade-old period of state socialism, and freed the market from most of the state controls.
Burma now has a mixed economy with a private, state, and a joint private-state sector. Agriculture, light industries, and other businesses are in the private sector . Heavy industries that require huge capital investment are in the state sector. The economic reforms of the last decade sought to promote joint ventures between private Burmese and foreign firms. Therefore, foreign investments were once again encouraged with modest success. The state sector continues to be inefficient, and attempts to privatize at least a portion of it remain on the books. External debt amounts to 10 percent of the GDP, and imports exceed exports by 2 to 1, causing a serious trade imbalance.
Burma is a top producer of illicit drugs and contributes 80 percent of all Southeast Asian production of opium. Most of the heroin available in the United States originates from Burma. The trafficking in drugs is illegal; thus, an accurate assessment of its contribution to the economy is impossible to gauge. A parallel black market , perhaps bigger than the state's economy, continues to pose problems for the authorities.
During the 1998-99 fiscal year , Burma received an estimated US$99 million in economic aid. In 1995, the figure was about US$157 million. Economic sanctions imposed by the United States, the European Community, and other nations have contributed to this decline. These sanctions are in response to continued political repression and human rights violations by the military regime. In 1990, the opposition National League for Democracy (NLD) had won a clear victory in the elections, but the generals refused to transfer power to the duly-elected representatives of the people. Moreover, the leaders of the NLD were harassed, detained, tortured, and even murdered by the regime.
Politically and economically, Burma remains a pariah (outcast) nation. Except for its membership in the Association of Southeast Asian Nations (ASEAN), the country is not befriended by most nations. In May 2000, U.S. president Bill Clinton imposed new sanctions on the military junta (a group of military personnel who overthrow a government) making it difficult for the Burmese authorities to get foreign loans, economic assistance, and foreign investments. Many American companies such as Apple Computer, Oshkosh B'Gosh, Eddie Bauer, Reebok, Levi Strauss, Pepsi Cola, and Liz Claiborne have withdrawn from the country. Therefore, the attempts of the military junta to revitalize the economy have been only partly successful.
Despite the introduction of banking and trade regulations in the late 1990s, Burma failed to achieve fiscal or monetary stability. Inflation continues to be high. Although poor and undeveloped, Burma is rich in natural resources. Nevertheless, the decline of the agricultural sector, regional economic crises, international sanctions, and shortages of electricity have all contributed to a slowdown in the economy since 1997.