A Comparative Assessment of Industrial Policies under East Asian Economic Integration : Policy Implications for MyanmarA Comparative Assessment of Industrial Policies under East Asian Economic Integration : Policy Implications for Myanmar
This study assesses the possible policy initiatives for Myanmar in promoting its industries under regional economic integration through East Asia Free Trade Area (EAFTA), using the Global Trade Analysis Project (GTAP) model for general-equilibrium policy simulations. A comparative study of industrial policies selected from the Association of Southeast Asian Nations (ASEAN) is conducted to draw implications for designing initiatives of industrial promotion with Myanmar’s economy in mind. In designing general-equilibrium policy simulations in the GTAP framework, the GTAP 9 database and policy environment and initiatives based on the most recent Myanmar data collected by the author’s field survey are utilized. Impacts of hypothesized policy initiatives on welfare levels, macroeconomics, sectoral outputs, and changes in export and import bundles are scrutinized in order to select suitable policies for Myanmar. The results show that i) Myanmar’s welfare level can be easily undermined due to adverse trade diversion effects, if it seeks narrow regional Free Trade Area (FTA) only with ASEAN members; ii) Myanmar tends to secure positive welfare gains if the ASEAN Free Trade Area (AFTA) expands to include China, Japan, or South Korea; iii) capital and technology augmentation through regional Foreign Direct Investment (FDI) is essential for Myanmar to achieve industrialization; and iv) productivity improvement in key industries will produce a large advancement in its industrial transformation, leading to sizable welfare gains.