Why we need cooperation? Dr. Myo Thant 30 January 2016 Nilar Yatu Hall, University of Economics, Yangon

Why we need cooperation? Dr. Myo Thant 30 January 2016 Nilar Yatu Hall, University of Economics, Yangon

Background ASEAN established in 1967 Myanmar joined in 1997 AEC established 2015

Rationale for Cooperation Shared opportunities Self interest Expanded opportunities

Scope of Cooperation Political (reduce conflict) Economic Social and environ.

Economic Cooperation A. Trade based/ liberalize B. Structural/ facilitate

Trade Based Cooperation i. Origins: Jacob Viner 1949 ii. iii. iv. Mechanisms: tariff reduction Rules: heavy with formal institutions Expected benefits...static and dynamic gains v. Scope: entire country vi. Examples: EEC, CARICOM, NAFTA, ASEAN, Mercosour vii. Extensions.. free trade area, customs union, economic union

Static Benefits Trade creation(diversion): trading more with a partner country which is efficient producer)

Dynamic Benefits i. Larger market leading to economies of scale (average costs decline as output expands) ii. Increasing intra bloc competitiveness iii. Tech. transfer and FDI (integrated market place within which division of labor/ production takes place) iv. Structural policy change and reform ( behind the border reforms)

Structural Cooperation i. Origins: Singapore/ Myo Thant 1991 ii. iii. iv. Mechanisms: trade facilitation and reducing costs of international business transactions by provision of physical infrastructure, policy and administrative changes, local institutions, border management Rules/institutions: 'lite', 'pragmatic', 'bottom up Scope: interested areas/ parts of countries only v. Expected benefits: multiple (trade, investment, border development, test policies) vi. vii. Examples: growth triangles (IMT-GT, GMS, Tumen, China, ZMM, Baltics, Bimp-Eaga, Carec, Bcim) Extensions : Economic corridors

Greater Mekong Sub Region (GMS) Example Transport Power Telecom HRD Tourism Trade and Investment Agriculture

Economic Corridors i. Origins: Myo Thant 1998 ii. iii. iv. Mechanism: diversified cooperation along specified geographical area to facilitate international business transactions Components: defined space or area, physical infrastructure, nodes/ growth areas, policies and institutions Expected benefits: accelerate economic cooperation, provide access to markets, provide access to raw materials or ports Scope: transnational eg East West Economic Corridor covers 1450 km, four countries, Mawlamyine to Danang v. Examples/ extensions: GMS, Carec, North America, Africa, Pan Beihu, Silk Road

Costs of Cooperation Regional cooperation is NOT free! Costs include - i. Information ii. Incentives iii. Capabilities/ coordination iv. Adjustments/compliance v. Resources: skills and capital vi. Actual competition vii. Loss in tariff revenue viii. Trade diversion

Where are we in 2016? A. Economic cooperation has evolved greatly since 1949( and esp.1991) B. Third type of cooperation already here: private sector driven global and regional production chains C. Potential benefits are high but costs are not low D. Myanmar's neighbourhood has changed dramatically E. Myanmar will have to deal with ALL (3.5) types of cooperation simultaneously F. Huge set of opportunities as well as challenges G. So...Act NOW! H. Basic principles I. Maximize net benefit to the country II. Ensure that benefits are inclusive (region, ethnic, income class) III. Government needs to take leadership and provide vision as well as short term action plan on ASEAN

Annex 1 Further Reading - 1. Development, Geography and Economic Theory, Paul Krugman, MIT Press 1995 2. Growth Triangles in Asia, ed Myo Thant et al, Oxford University Press 1994 3. IMT-GT: from theory to practice, Myo Thant, ADB 1995 4. Growth Triangles in Asia, second edition, Myo Thant et al, Oxford University Press 1998 5. Preinvestment Study for the GMS East West Economic Corridor, (six volumes), Myo Thant et al, ADB 2001

Annex 2 What to study A. MA economics Sound macro/ micro Development economics Myanmar economic history Economic geography Project appraisal Intl relations: China, India and Southeast Asia B. MBA Finance and capital markets Project financing Intellectual property rights Intl taxation Global and regional production chains International relations: China, India and southeast Asia

Thank You