Long-Term Growth Model in Myanmar Based on the Growth Trajectory of Vietnam

Abstract

The purpose of this study is to identify major drivers of Myanmar’s long-term economic growth and draw implications to implement development policies. This study investigated Myanmar, as the country is the most recently opened economy in Southeast Asia. This study conducted simulation analysis based on scenarios by applying World Bank’s Long-Term Growth Model, Penn World Table 9.1, and World Development Indicator data. This study makes extensive use of LTGM and the LTGM-TFP extension to improve the validity of models for data calibration. This study confirms the validity of the model with data calibration and specifies scenarios for simulation analyses by setting the growth trajectory of Vietnam due to common geographical, political, and economic conditions. Main findings include that Myanmar’s economic growth rate will continue to fall below 3% in 2040 without proper improvement of growth drivers. The results of this study also provide that total factor productivity growth and female labor participation are key factors for Myanmar’s long-term economic growth. This study advises policymakers in Myanmar to strengthen human capital, which is crucial for total factor productivity growth in Myanmar’s context and directly affects economic growth. Further, labor market policies to promote female labor participation is important to sustain economic growth.