Myanmar’s Manufacturing Exports After the Lifting of Economic Sanctions

AuthorThet Mon Soe,Hiroyuki Taguchi
Publication Date01 May 2021
Date01 May 2021
Manufacturing Exports
After the Lifting of
Economic Sanctions
Hiroyuki Taguchi1 and Thet Mon Soe1
This article aims to evaluate Myanmar’s exports of manufacturing products by
using a gravity trade model for emerging ASEAN economies. The main focus of
this study is to assess whether Myanmar’s manufacturing exports have recovered
in terms of the gravity trade standard of the other emerging ASEAN countries
for the post-sanction period of 2013–2018. Unlike the previous studies, this arti-
cle contributes to the literature by targeting the post-sanction period and by
applying both in-sample and out-of-sample estimation methods to ensure the
consistency and robustness of their results. The main findings from the gravity
trade model estimation are summarised as follows: first, Myanmar’s manufactur-
ing exports for the post-sanction period are still significantly below the level of
the gravity trade standard. Second, the downward deviation from the standard
could be explained by the two Myanmar-specific factors, that is, the low institu-
tional quality and the Dutch Disease effect in Myanmar’s exports to Western
countries, but not fully in those to Asian countries. The additional factor for the
deviation against Asian countries might come from Myanmar’s sluggish participa-
tion in the international production networks.
JEL Codes: F14, O53
Myanmar’s manufacturing exports, lifting economic sanctions, gravity trade model,
in-sample and out-of-sample estimations, institutional quality, Dutch Disease
1 Graduate School of Humanities and Social Sciences, Saitama University, Sakura-ku, Saitama, Japan.
Corresponding author:
Hiroyuki Taguchi, Graduate School of Humanities and Social Sciences, Saitama University, 255 Shimo-
Okubo, Sakura-ku, Saitama, 338-8570, Japan.
Foreign Trade Review
56(2) 147–164, 2021
© 2021 Indian Institute of
Foreign Trade
Reprints and permissions:
DOI: 10.1177/0015732521995160
148 Foreign Trade Review 56(2)
Myanmar has entered into a new regime of market-based economy with open
door policies since March 2011 under the civilian government led by President
Thein Sein and the subsequent government headed by State Counsellor, Aung San
Suu Kyi. During the previous military-ruled regime before 2011, the Myanmar
economy had suffered from the long-lasting stagnation under the control-oriented
and inward-looking policies. In particular, the economic sanctions imposed by
Western countries due to the suppression of human rights under the military-ruled
regime were a serious factor to have made the economy stay at a stagnant posi-
tion. To be specific, the USA and Canada imposed general import bans from
Myanmar in July 2003 and December 2007, respectively. The European Union
also exercised import bans on specific products in February 2008. These eco-
nomic sanctions have been lifted under the new regime controlled by the civilian
government since 2011: Canada suspended the sanctions in April 2012; the
European Union lifted the general import ban in April 2013; and the USA eased
the import ban in November 2012 and lifted it in September 2016.
In accordance with the regime transformation, the economic performances in
Myanmar have showed remarkable improvements under the new regime. Through
the economic growth process, Myanmar economy has promoted its economic sta-
tus from ‘low income’ to ‘middle income’ since 2014, according to the World
Bank Classifications.1 Among all economic indicators, the level and growth of
exports is the most important economic indicator for Myanmar, since the exports
of manufactured goods were seriously affected by the imposition and lifting of
economic sanctions by Western countries. Figure 1 illustrates the trends in the
export values of Myanmar’s total and manufacturing products and indicates that
the exports of manufacturing products have jumped up during the post-sanction
Figure 1. Myanmar’s Exports (million US$).

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