Applying the long-term growth model to Myanmar based on the growth trajectory of Vietnam
Since the launch of wide-ranging economic reforms in 2011, Myanmar has achieved robust economic growth. However, in consideration of existing development challenges such as lack of hard and soft infrastructure and depletion of natural resources, Myanmar’s sustainable growth will not be possible without constant reforms. In this regard, the purpose of this study is to simulate the patterns of long-term economic growth and Total Factor Productivity (TFP) growth in Myanmar based on various scenarios by utilizing the World Bank’s Long-Term Growth Model (LTGM) to provide policy implications. As for scenarios, this study benchmarks Vietnam, which has shown remarkable economic performance two decades ahead of Myanmar with a similar geographical and economic background.
The results of simulation analyses show TFP growth is the most decisive factor for Myanmar’s long-term economic growth, followed by increasing female labour participation. However, to achieve a long-lasting economic growth rate of more than 6%, Myanmar is required to improve all the growth engines, including investment and human capital. Meanwhile, as to TFP growth, increasing an education index shows the most significant impact on TFP growth in Myanmar. According to the results of analyses, policy makers in Myanmar are advised to strengthen policies improving human capacity for sustainable economic growth. This will not only contribute to TFP growth but will also directly affect economic growth. In addition, labour market policies to promote female labour participation is also significant to economic growth until it reaches its target.
In addition to draw policy implications, this study contributes to secure the validity of simulation analysis using LTGM through data calibration. Furthermore, the approach in this study applying LTGM and LTGM-TFP extension could be a reference to policy makers and researchers to utilize the models effectively.
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