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Sojourn: Journal of Social Issues in Southeast Asia, Volume 29, Number

3, November 2014, pp. 691-720 (Article)
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DOI: 10.1353/soj.2014.0040

For additional information about this article

http://muse.jhu.edu/journals/soj/summary/v029/29.3.turnell.html

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SOJOURN: Journal of Social Issues in Southeast Asia Vol. 29, No. 3 (2014), pp. 691720
DOI: 10.1355/sj29-3f
2014 ISEAS
ISSN 0217-9520 print / ISSN 1793-2858 electronic

Sayagyi and Sage:

Hla Myint, Myanmars Classical Economist
Sean Turnell

Burmese economists have been unusually prominent contributors

to the evolution of economic thought. Looming over all of them,
however, is Hla Myint. An intellectual pioneer in the study of economic
development, trade and the institutions that drive growth, he could
have had a decisive influence on economic policymaking in Myanmar.
Effectively forced into exile via a misguided reaction in Myanmar
against the perceived economics of colonialism, he instead made
contributions that assumed a global importance. The principal ideas
of Hla Myint may be located then within the discourse of classical
economics, but they were also informed by the circumstances of the
country of his birth. In 2012, over seventy years after he first took
up his pen in Myanmars service, Hla Myints wise counsel was once
again heard, with immediate effect, and newfound hope.
Keywords: Myanmar economy, Myanmar economists, economic reform, development
economics, vent for surplus.

Fifty years of military rule in Myanmar brought many detrimental

effects to the countrys economy, but not the least of these was
the loss of human capital that it caused. This loss had many
manifestations, including the effective exile of many of Myanmars
best and brightest. Hla Myint stands in the first rank of these able
exiles, and his loss was grievous. As he was an economist whose
ideas were part of the intellectual framework for the economic policies
of Asias tiger economies, it is no little irony that his ideas were
dismissed as synonymous with colonial policies, and that Myanmar
so comprehensively went in other directions.

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Sean Turnell

In February 2012, Hla Myint made a triumphant return to

Myanmar as the honoured guest at a public celebration at the
Yangon Institute of Economics, an institution that, although subject
to countless transformations across the decades, was the direct
descendent of the economics department that he re-created out of
the wreckage of the Second World War.1 To many in the audience
on that occasion, his eminence would have been a revelation, itself
something of an articulate commentary on how far Myanmars
education system had declined.2 Notwithstanding, and not pausing
for regret for what had been wasted, Hla Myint urged confidence in
pushing ahead with reforms political and institutional as well as
economic as the best way to surmount the anxiety that Myanmar
lacked the administrative capacity to change its circumstances. Hla
Myint addressed this concern in a way that was a microcosm of
his thinking across the decades: administrative capacity, like that of
national productive possibilities more broadly, is not immutably fixed.
Openness, exchange, growth such attributes could take Myanmar
forward, just as they had transformed many of the countrys peers
and neighbours.
The purpose of this paper is to present the ideas of Hla Myint
in their broadest sense, to locate these across his life and times and
to outline his vision for Myanmars economic future. The paper
begins, accordingly, with an account of Hla Myints origins and
formative years, his role as a policy advisor and as an educator
and his eventual effective exile. Overseas, Hla Myint went on to
make extraordinary contributions to the discipline of economics,
but especially to that part of the discipline which we would now
label development economics. These contributions are outlined
with an eye to their relevance to Myanmars situation, both in the
past and now. Turning to present day concerns, the paper outlines
Hla Myints current thinking and advocacy for reform in Myanmar.
The paper concludes with the argument that it will be through the
embrace of home grown reforms, and of the legacy of its greatest
economist, that Myanmar will be best placed to redeem its once,
and future, promise.

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693

Life and Times

Hla Myint was born in 1920, in Bassein (now Pathein), the port
city and capital of Myanmars Ayeyarwady region, and long a hub
for rice milling and export. Hla Myints father died young, and his
mother thereafter ran a small shop in order to ensure that the family
survived.3 Possessing a certain degree of business acumen, she was
later to expand the shop, and eventually moved to Rangoon. She
was later remarried, to a government official of modest rank named
U Hla Tin. The latter was the younger brother of U Tun Shein,
a prominent politician from Mandalay who, with U Pu and U Ba
Pe, had been part of a delegation from the Young Mens Buddhist
Association that visited London in 1919 to call for constitutional
reform in Burma (Taylor 2008, p. 163). U Tun Shein had died the
year Hla Myint was born, however, minimizing the leverage of the
only real connections that the family enjoyed.
Notwithstanding his relatively humble beginnings, Hla Myints
promise did not take long to be noticed. Accelerated through his
schooling, Hla Myint was encouraged by the headmaster of the
school that he attended to apply to the University of Rangoon to
study economics while still just fourteen years old. Waiving the
customary minimum age for new undergraduates of fifteen, the
university admitted Hla Myint to its economics programme in 1934.
At the University of Rangoon, Hla Myint came under the influence
of Harro Bernadelli, an Austrian economist of Italian extraction who
had been a student of Joseph Schumpeter in Vienna (Donoghue 2007,
pp. 2527).4 Bernadelli was amongst that cohort of scholars forced
to flee the Nazis in the early 1930s. He initially found refuge at the
London School of Economics (LSE), where he worked alongside
such luminaries as Lionel Robbins, John Hicks and significantly
for Hla Myint later Friederich Hayek. Robbins, who was central
to the programme of rescue and sanctuary of academic refugees from
the Third Reich, recorded at the time that Bernadelli was by far
the most distinguished of the younger men who have come under
our observation (quoted in Howson 2011, p. 243). In the late 1930s

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Sean Turnell

Bernadelli was appointed to the Department of Economics at the

University of Rangoon, where, apart from teaching, he researched
the motivation for and impact of Indian migration to British Burma
(see, for instance, Bernardelli 1941). Bernadelli introduced Hla Myint
to leading continental European thinkers on economics (rather than,
as might have been expected, to British economists), and especially
to those of the Austrian school who (severely to simplify matters)
favoured the spontaneous outcomes of markets over government
planning. Curiously, at the University of Rangoon Hla Myint had
very little exposure to the practical economics of his own country,
including its critical agricultural sector. According to Hla Myint,
speaking nearly eighty years later, agricultural economics was
taught out of text books on Indian agriculture, which had little
relevance for Burmese conditions.5 It was, he noted, only much
later at Oxford that he was able to explore in a meaningful way
the economic problems of Burma.
In Cambridge, at the LSE

In 1939 Hla Myint received a Burmese government scholarship to

pursue postgraduate study at the London School of Economics. Then
as now, the LSE loomed large within the economics profession, but
within the British colonial system a more usual choice for a budding
young scholar from Burma would have been Oxford or Cambridge.
Under the influence of Bernadelli, however, the LSE became Hla
Myints institution of choice. Of course, for a young man of no
great means and who had lived his whole life in the tropics of
Southeast Asia, the idea of London with its winters was not
a little intimidating. Assistance, material and financial, in acquiring
clothing suitable for England came courtesy of Bernard Swithinbank,
then a district commissioner in the colonial administration of British
Burma who had, prior to his service there, been a close friend of the
economist John Maynard Keynes and other members of the famous
Bloomsbury literary set.6 This kind gesture, recalled by Hla Myint
with warmth up to the present, started a friendship that was to last
until Swithinbanks death in 1958.7

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War disrupted Hla Myints journey to the United Kingdom, with

his ship forced to detour around the Cape of Good Hope rather
than travel the shorter distance to Europe via the Suez Canal. War
would also have a dramatic impact upon his studies in England. By
the time Hla Myint arrived in London the LSE had been evacuated
to Cambridge, while many of its (British) staff had been recruited
for war service.8 Lionel Robbins, whom Hla Myint was initially
assigned as his supervisor, decided, after seeing Hla Myints work,
to waive the usual requirement that he complete a masters degree
before enrolment in a doctoral course. But Robbins call-up to serve
the British government in financial diplomacy and on post-war
reconstruction issues brought Hla Myint under the wing of Friederich
Hayek. Hayek was at that time putting the finishing touches to The
Road to Serfdom, the book that would make his name and ensure
his legacy. Hla Myint liked Hayek, finding him a genuine liberal.
Finally, and of no little personal import, Hla Myint met his wife,
the then Joan Morris, whilst at the LSE. She was studying economic
history, a subject that she would teach at the University of Rangoon
from 1946 to 1949.9
Hla Myints doctoral thesis was extraordinarily well received. His
principal examiner, John Hicks, not only passed it, but on its strength
invited Hla Myint up to the University of Manchester, where Hicks
then served as professor of economics, on a post-doctoral fellowship
so that he could then turn the thesis into a book.10 Published in 1948,
Hla Myints Theories of Welfare Economics is today regarded as a
seminal work in the field. It set the intellectual foundations for all
his subsequent work.
Back at Rangoon University and Advising Government

In 1946 Hla Myint returned to Myanmar in response to a call to

become professor of economics at Rangoon University, and to
re-create a functioning economics department in one now largely
denuded of the foreign academics that had once constituted its core
teaching and research staff. Hla Myint arrived at a university, and
in a country, devastated by war. What serviceable buildings that

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Sean Turnell

remained were primarily being used to house soldiers recovering

from the wounds of war. For the first few months after he arrived,
the economics department consisted of little more than a desk in
a corridor of a student hostel, while the first post-war classes took
place in hastily constructed bamboo huts. Hla Myint himself did
not come to the university empty-handed, however. Before leaving
London he had been given 500 by the British government to spend
on books to restock the departmental library, a sum he thought
well-spent on resources that provided the basis of the education of
successive generations of economic honours students at Rangoon.11
Hla Myint greatly enjoyed his time rebuilding the physical
and intellectual resources of the University of Rangoon. Creating
an academic institution more or less from scratch was not an
everyday opportunity for a fledgling 26 years old professor, even
if it involved working harder than he had worked ever before, or
he recalled ever would work again.12 Part of this work involved
recruiting new academic staff, but within a year he managed to snare
U Tun Wai, a newly minted graduate of Yale who would later go
on to prominence at the International Monetary Fund (IMF), and
R.M. Sundrum, then a fresh graduate of Rangoon University who
likewise would end up a distinguished economist far from home
in his case, ultimately at the Australian National University in
Canberra. Thus in place, this triumvirate formed the basis of what
would become for but a brief shining moment one of the
most significant economics departments in Asia.
Hla Myints institution-building idyll was spoilt by his drafting
into (officially part-time) service as economic advisor to Burmas
new government soon after the country achieved independence in
January 1948. His spell as an economic adviser to the government
of U Nu, independent Burmas first prime minister, was not a happy
one, however, and it would soon lead to Hla Myints departure from
Myanmar once more. Frustrated by long and fruitless meetings,
Hla Myint came to feel that he was utterly out of step with the
governments economic policymaking, and that he had little to
contribute towards its vision of a state-led economy. More in tune

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697

with this vision was the team of economic advisers from Robert
Nathan and Associates, the firm employed by the Burmese government
to engage in long-term economic planning for the country.13 Hla
Myint got along well personally with these American advisors, and
especially with Nathans chief economist on the ground, Louis
Walinsky, but was sceptical of the giant engineering report that
they drew up to propel Myanmars industrialization, the Economic
and Engineering Development of Burma, Comprehensive Report,
1953. Containing too much American organisation and requiring
an administrative framework that Burma neither possessed nor could
support, he regarded the reports proposals as doomed to failure.14
In this view, as in much else from the period immediately following
Burmas independence, Hla Myint would be proved prescient.
During his time as economic advisor to U Nu, Hla Myint was
especially troubled by the State Agricultural Marketing Board
(SAMB), a body set up to serve as Burmas monopoly rice exporter
and one whose profits from paying farmers a price for their crop
below the world market price were the primary funding vehicle for
state-led industrialization and other schemes (Turnell 2009, pp. 191
92). Matters came to a head in 1950, when Hla Myint approached
Prime Minister U Nu to explain that Burmas rice export industry
was being strangled to death both by the government policy and
by the dead weight loss from the sheer inefficiency and corruption
of the SAMB.15 Hla Myint told U Nu that the only way to save
Myanmars rice export sector was to abandon the SAMB, and allow
both private and foreign investment to re-enter the industry. This
advice was totally unacceptable to U Nu, whom it struck as a return
to the much hated Colonial system of Laissez faire. Soon after
this encounter, Hla Myint decided to return to the United Kingdom,
dejected and confirmed to my belief that I had no future as an
economic adviser in [Burma]. Reflecting on the episode many years
later, Hla Myint believed that it was possible to trace the misguided
economic policies that followed from this point to the reaction against
a caricature of colonial economic policies that held firm in the minds
of that first generation of his countrys post-independence leaders.

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Sean Turnell

To such leaders, free international trade and an open-door policy

towards foreign investment and immigrant labour were synonymous
with the colonial order. The reaction against these policies combined
to bring about the countrys isolation from the world economy, and
the beginning of its modern tragedy.16
Oxford

Hla Myints return to the United Kingdom saw him take up a position
in 1950 as lecturer in colonial economics at the University of
Oxford.17 Even at the time, it was an anachronistic job title. But
Hla Myint would soon turn the curriculum of his teaching and
research into what would become development economics, and the
name of his position to lecturer in underdeveloped countries. The
sub-discipline of development economics did not then exist, and to
the extent that consideration was given to questions of growth and
development, much of the existing literature was fixated on China
and India, countries suffering from acute population pressure and
material poverty, but countries that Hla Myint regarded as not at all
representative of the situation elsewhere. Hla Myint also found that
much of the approach of universities to the teaching of development
was either geared towards the training of colonial officials, intended
to make a case for increasing international aid (Hla Myint 1973,
p. 17), or both. Accordingly, Hla Myint turned to the classical writers
on economics. As he would remark to the author in 2012, I looked
for alternatives and found them in Adam Smith.18
Rector of the University of Rangoon

In 1958, Hla Myint returned to Myanmar for one final time to serve
as rector of the University of Rangoon, out of a residual sense of
obligation to his home country.19 He was confident that he might be
able to do good reasoning that, if he lacked the political abilities
to be an economic advisor, then at least education was something on
which his own priorities and that of the Myanmar government should
be in accord. Alas, his time as rector was to be no happier than his
earlier stint as an advisor. In 1958 the University of Rangoon was

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699

in turmoil, roiled by student strikes, declining academic standards,

soft marking and other maladies that Hla Myint tried hard to lean
against, but in opposition to which he felt isolated and besieged.20
Hla Myint was especially set against U Nus plans to expand the
Universitys annual intake of new students to 5,000. Hla Myint
regarded 3,000 as an upper limit, determined both by the need to
require acceptable qualifications and the maximum number of students
that could be physically accommodated within the universitys
lecture halls. U Nu won out, as did the students who appealed to
the prime minister against the poor grades that they received under
Hla Myints administration. The augurs for a lengthy stay as chief
of the University of Rangoon were not promising.
The cause of the end of Hla Myints tenure as rector of the
University of Rangoon came from an unexpected angle, however,
when in 1962 the chief of Burmas armed forces, General Ne Win,
took power in a military coup. Quickly establishing a programme
of extreme nationalism and doctrinaire state socialism, all under
the rubric the Burma road to socialism, the new regime made
one of its first acts moving against foreigners in the country. Most
significantly, the population in question included substantial numbers
of ethnic Chinese and Indians, many of whom had lived in Burma
for generations (Holliday 2011, p. 50). Of import for Hla Myint
individually was the fact that these expulsions followed that of
grand old man of Anglo-Burmese letters, J.S. Furnivall (Taylor
1995, Pham 2005).
Hla Myints disappointment over Furnivalls removal festered.21
The economic advisor to U Nu at the time of his ejection from
the country, Furnivall had been brought back to Burma after his
retirement from the Indian Civil Service and a life otherwise devoted
to the country by Hla Myint personally in 1948. At that time, Hla
Myint recalled, there was little common ground between us in
terms of economics, but I was attracted to him because of his deep
love for old Burmese culture. Later, their thinking on economics
was to converge too. Hla Myint was impressed that Furnivall, the
author of the term plural society for the way in which the British

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had created in Burma a society in which foreigners and Burmese

people lived side by side but separately, not united for common
welfare or any common end, was yet concerned that nationalists
look outside their little world.22 Along with Hla Myint, throughout
the 1950s Furnivall urged an outward looking policy, not just on
trade but also in adopting an inclusive approach to immigration,
in which all those partly or wholly of foreign origin who elect to
enrol themselves as citizens [of Burma] should find a home in the
country. Prior to Furnivalls expulsion Ne Win had made known
his suspicions that he as well as Gordon Luce, another venerable
Burma scholar who was then the professor of history at the University
of Rangoon were CIA spies. This accusation, for Hla Myint,
was the last straw. I resigned from my Rectorship to return to
Oxford, never to work again in [Burma or Myanmar].
Scholar in Exile

Hla Myint taught and researched economics at Oxford until 1965,

when he returned to his old stomping ground of the LSE. Appointed
professor of economics, he remained at the LSE until his retirement
in 1985, whereupon he was appointed professor emeritus. For some
years he consulted for the World Bank, while keeping up a vast
output of scholarly publications (see for example Hla Myint 1964,
1971, 1972, 1975, 1985, 2001; Hla Myint and Lal 1996). In 2005,
and upon the death of his wife, Hla Myint settled in Bangkok.
Contributions to Economic Theory

During his tenure at Oxford and at the LSE, Hla Myint was to
make an array of lasting contributions to economics. Many of these
centred around the question of how openness to trade and exchange
contributed to economic development. Hla Myint worked very
much within the classical tradition in asking the big questions
of what brought about the wealth and prosperity of nations. In his
first book in 1948, which as noted above was an extension
of his doctoral thesis, he addressed his conception of these larger
questions, and the classical approach to them, in this way:

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The central principle, which unifies the various classical

economic doctrines from Adam Smith to J.S. Mill, embodies the
following fundamental proposition: viz. the economic welfare of
society can be more effectively promoted (i) by increasing the
physical productivity of labour, and (ii) by increasing the total
volume of economic activity, rather than by tamely accepting
the given quantity of productive resources and making refined
adjustments in allocating them among different industries. From
this follow the two major canons of classical economic policy,
(i) free trade which extends the scope of division of labour
and brings fresh resources into the productive framework, and
(ii) capital accumulation which enables society to maintain a
greater quantity of labour. (Hla Myint 1948, p. 12, emphasis
added)

Hla Myint was to be no mere celebrant of the classical tradition,

however. He would also extend this literature, and in profound
ways. Most prominent was his extension of the concept known as
the vent for surplus, a notion of great relevance to the Burma in
which he had grown up. But his work also included contributions
on what now would be labelled institutional change, a field that
would later become a prevailing discourse in development economics.
Along the way, his research would include insights into all manner of
significant practical policy areas too, from foreign aid and education
to the dangers of credit subsidies and the virtues of giving farmers
rights and freedoms.
A full accounting of Hla Myints vast contributions to economics
is beyond the scope of the discussion here, but some of the following
areas of his scholarship might be usefully highlighted, not least for
their relevance to Myanmars problems and possibilities past,
present and future.
Vent for Surplus

Hla Myints extension of Adam Smiths concept of vent for surplus

is, quite correctly, often referred to in the literature as SmithMyint vent-for-surplus, for it is his most celebrated contribution
to economics. Recasting the traditional comparative-costs theory of
the patterns and benefits of trade, which posited the more efficient

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702

allocation of fully employed resources in an economy via a new set

of relative prices available thanks to trade, Hla Myint opened the
analysis to countries hitherto isolated from trade and characterized
by unemployed or surplus capacity. In short, what his vent-forsurplus idea described was the possible gains from trade to an underdeveloped country such as Burma when it first came under British
control and was therefore newly exposed to international commerce
and even, to some extent, in Myanmars situation today. Under
the more relevant scenario that Hla Myint introduced, the function
of trade is, as he put it in his seminal article on the topic, not so
much to reallocate the given resources, as to provide new effective
demand for the output of the surplus resources which would have
remained unused in the absence of trade (Hla Myint 1958, p. 321).
Institutional Change

The nexus between trade and economic development was the dominant
theme throughout Hla Myints writings. Over time, however, it went
well beyond vent-for-surplus notions of the bringing into production
of erstwhile surplus resources, and deeper into ways in which
institutional change could be stimulated. The role that institutions
play in economic development is now mainstream. Indeed, the idea
is behind the awarding of more than one Nobel Prize in economics.
But Hla Myints emphasis on it was pioneering at the time that
he advanced it.23 Here he is, for instance, writing in 1973, with a
sceptical eye on the then fashionable Rostovian staged take off
model of development (Rostow 1960).
although there is much discussion about providing the
underdeveloped countries with the material infrastructure such
as transport systems and power stations, there has been little
discussion of the problems of providing them with the social and
institutional infrastructure as necessary preconditions for the
take-off. On the contrary, much of the discussion proceeds on
the implicit assumption that all the underdeveloped countries are
ready for the take-off, as though a sufficiently long runway had
already been built and that what is needed is a final spurt of speed
on it. (Hla Myint 1973, p. 14, emphasis added)

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Hla Myint dug deeper into the processes of institutional change (he
mostly used the expression organisational framework) throughout
his work across the 1960s and into the 1990s. Summarizing it all in
1996 in a book that he co-authored with Deepak Lal, but in which
the passage quoted below was his own, he outlined the ways in
which (once again), a developing country could use the opening
of its agricultural sector to restructure its economy by transforming
its institutional arrangements. As a first step this process would
involve vent-for-surplus gains by bringing small farmers into the
light of international exchange, and yielding scale economies and
improvements in infrastructure, both physical and otherwise.
the expansion of peasant exports, leading to the development
of the market system by drawing the peasant households into
the exchange economy, would be a powerful factor in reducing
the marketing and organizational costs of the traditional sector.
This would pave the way for further economic growth through
a greater degree of specialization and division of labour by
widening the size of the local market through improvements in
transport and communications and joining them together into
a more articulated market system extending over the whole
economy. (Hla Myint and Lal 1996, p. 194)

These developments would continue until finally a countrys

organizational framework (its institutions) was transformed, and its
growth set in motion. Using the first and most successful Asian tigers
as examples, Hla Myint and his co-author described the process thus.
The remarkably rapid expansion of labour-intensive
manufactured exports from Taiwan and Korea could not have
been possible without the improvements in the organisational
framework to support the process, and these improvements
spread spontaneously from the agricultural sector. The widening
of the domestic market, and the sharing of common facilities
such as transport, electricity, and the marketing and credit
network, between the small industrialists and the small farmers
in a decentralised pattern of industrialisation, would then reduce
the general level of transactions costs for the whole economy.
Last but not least, the close human contacts between the small
industrialists and small farmers would help to bring out latent

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704

entrepreneurial talent among the latter, stimulating a steady

stream of minor technical improvements adapted to local
conditions. (Hla Myint and Lal 1996, p. 342, emphasis added)
International Aid, Subsidized Credit and Other Assistance

For much of his professional career Hla Myint was writing at a

time when, amongst development economists and the governments
that they advised, planning of various forms and scope were the
order of the day. This was certainly the case in Myanmar, in a mild
and democratic form under U Nus Pyidawtha Plan, implemented
starting in 1952, and then disastrously so under the attempt at
complete central planning of Ne Wins road to socialism.24 Both
variants were, in Hla Myints view, symptomatic of an affliction that
he often described, with respect to Myanmar but elsewhere too: of
an over-reaction against colonial laissez-faire.25 As this article
makes apparent in these pages, however, Hla Myint was writing in
a very different tradition, that of classical economics, and with a
very different mindset. In 1964, at a time when planning was still
in the ascendency, he wrote,
direct bureaucratic planning by the government is a very
cumbrous and inefficient method of rationing scarce resources
and coordinating the plans of different sectors of the economy.
Beyond a certain point the difficulties and delays in coordinating
the different types of direct controls tend to paralyze economic
activity, even in countries with a well-developed administrative
system. (Hla Myint 1964, p. 144)

Likewise rejecting the idea that governments were needed to take

a pioneering lead in the early stages of economic development,
when, allegedly, the private sector was reluctant to invest in new and
potentially risky areas, he opined that in practice, the expansion of
the public sector in some underdeveloped countries frequently takes
the opposite pattern of nationalizing or taking over the concerns
which have already been successfully operated by private enterprise
(Hla Myint 1964, p. 145; emphasis added). At the time Hla Myint
wrote these words, such nationalizing was hitting its stride in
Burma. The state was expropriating all manner of enterprises, from

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the commanding heights of industry to local stores (Mya Maung

1991, p. 122; Turnell 2009, p. 229). The pattern was to be sadly a
familiar one in the decades ahead.
Hla Myints approach to the question of international aid was
one marked by scepticism. Writing in 1964, he acknowledged that
advanced countries had both the ability and, in many cases, the
political desire to provide aid, but they shirked the main contribution
that they could make to development. This contribution would be
simply to remove the various trade obstacles (Hla Myint 1964,
p. 150) that they had put in place against the exports especially
the agricultural exports of developing countries. Against this
failure, he argued, the conventional preoccupation with the problem
of increasing international aid to the underdeveloped countries
frequently distracts attention from some of the more important
problems of economic development (ibid.).
Hla Myints attitude to aid was consistent with his broader
economic philosophy of course, as was his approach to what
might be called corporate welfare, whether for foreign or local
business. Regarding the former, Hla Myint always argued that foreign
investors were less influenced by the hand out of tax concessions
than by the factors which affect the total business environment
(Hla Myint 1972, p. 101). The latter were, in essence, elements
of the institutional environment discussed above. They included,
in Hla Myints formulation, not only the bureaucratic controls
and administrative inefficiency which hinder day-to-day running of
business, but also, the longer-term sense of security and freedom
from political uncertainties which enable them [business people] to
make long-term business decisions (ibid.). The latter virtues were
long in gestation, of course, but Hla Myint was far from pessimistic
about inculcation a view that allows some optimism, perhaps,
for the situation in Myanmar today.
Some of the Southeast Asian countries already have achieved
high reputations in this respect, based on their past records.
Others may be induced to follow the path when it is realized that
this intangible asset of confidence and goodwill is essential for
the expansion of foreign investment. To build it up, a country

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706

should follow a policy of enlightened self-interest and refrain

from snatching at short-run gains for the sake of the more
important longer-run benefits. (Hla Myint 1972, pp. 1012)

Similarly, assistance to local business as, for example, in the form

of subsidized credit was, in Hla Myints calculation, to be avoided.
In Burma, state-subsidized credit brought about the gradual decline
of the countrys financial sector, which would collapse completely
following its full nationalization under military rule from 1962. With
this experience in mind, he wrote:
This type of policy has been tried in some countries in the past to
promote industrialisation, with very unfortunate consequences.
Firstly, those who are able to obtain loans at artificially low rates
of interest are tempted to employ excessively capital-intensive
methods of production using too little labour. Secondly, by
keeping down the rate of interest below the level which equates
the demand with supply, an excess demand for credit is generated,
and government agencies have to take an increasing part in
rationing loans among the borrowers. By accident or design,
such a mechanism tends to favour bigger enterprises, if only
through the fact that the small man is unable to cope with the
complexities and delays of administrative procedures. Finally,
artificially low rates of interest discourage saving, especially
where the real value of savings is quickly eroded by inflation.
(Hla Myint 1971, p. 49)
No Ideologue

To the reader primed to identify the whiff of doctrine, it might be

worthwhile at this stage to point out that Hla Myints championing
of the market over the plan was no reductive impulse on the
part of a free-market ideologue. He was long, and remains today,
critical of neo-classical abstraction, and of the idea that free
markets alone are sufficient.
Formal international trade theory tends to assume that once
trade distortions are removed, a countrys potential comparative
advantage emerges automatically through the workings of a wellcoordinated market system and a fully-developed institutional
framework. But before a developing country can convert its
abundant labour supply into a comparative advantage in laborintensive manufactured exports, two crucial assumptions must be

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707

fulfilled. First, agricultural productivity has to be raised to keep

wages down and to release labour for manufacturing. Second,
productivity in manufacturing, relative to the low wages, must be
increased, to gain a competitive advantage in the world market
for labor-intensive manufactures. Both conditions require great
improvements in the domestic institutional framework. (Hla
Myint 2001, p. 523)

As we have seen, improvements in the domestic institutional

framework will, in Hla Myints conception, come about in part
from the opening of an economy to trade, but there is also a crucial
role for government. To illustrate this point, Hla Myint once again
employed the examples of South Korea, and Taiwan, in which he
argued that less well appreciated active government policies had
raised the productivity of all factors in rural areas.
by improving social infrastructure and by building up
organizations and institutions designed to cater for the needs of
small farmers and small industrialists widely dispersed over the
countryside. These policies are not only important for Korea and
Taiwan, they are also relevant for the application of economic
theory to developing countries. (Hla Myint 2001, pp. 52425;
emphasis added)
Practical Consequences

Hla Myints theoretical contributions formed part of an intellectual

framework that, as briefly noted already, was set against an erstwhile
dominant discourse favouring state-directed planning as the vehicle to
deliver growth and development. In Burma, Hla Myints framework
gave both context and direction to the study of economics at the
University of Rangoon, where from 1948 to the mid-1960s, when
many scholars were forced to flee Burma a cohort of first-class
economists steeped in the best scholarly traditions emerged in his
wake. Ronald Findlay, Khin Maung Kyi, Mya Maung, U Thet Htun,
Aye Hlaing, Myo Nyunt, U Myint were all of this school.
With the aforementioned U Tun Wai and R.M. Sundrum, all would
pit their convictions and intellects against the prevailing ideology
of Burmas and then Myanmars governments from the 1950s into
the twenty-first century. 26

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In contrast to what happened in Indonesia, a country that has at

times been something of a role model for Myanmars military leaders,
this cohort of highly capable economists would not gain the ear of
government in the manner of a Berkeley mafia.27 Indeed, most
would be vilified and forced to leave the country. The economics of
dirigisme would continue, even as Hla Myints ideas formed part of
the intellectual armoury with which other Southeast Asian nations
pursued export-led growth models (Mya Maung 1991; Tin Maung
Maung Than 2006; Myat Thein 2004; Dutt 2005).
The Return of the Economist

On 12 July 2013, the New Light of Myanmar published a full-page

letter warning of the dangers of a new Farmers Protection Bill
then before the countrys parliament. The letter was written by Hla
Myint, and published in a newspaper that had been the mouthpiece
of successive Myanmar governments in the public interest (Hla
Myint 2013). It was Hla Myints first public intervention into the
public-policy debate in Myanmar for fifty years.
Of course, that such a letter could appear in the New Light of
Myanmar at all was a sign of how much, in certain respects at
least, the Myanmar of 2012 was a different place to that of just a
few years earlier. Ruled now by a quasi-civilian government headed
by President Thein Sein, the hand-picked successor to the previous
military ruler General Than Shwe, Myanmar was still well short
of being a functioning democracy. Human rights abuses continued
in the country, political prisoners (albeit a smaller number than
previously) remained locked up, and ethnic conflict was increasing.
The latter was partly stirred up by groups within the governing
apparatus, not least to throw a spanner in the reformist works. And
yet some political reform had advanced, economic reforms were at
last partially being rolled out, and, of most relevance here, the press
was largely free to talk about all of this.
Hla Myints letter, written at the urging of old friends and
colleagues inside and outside of the country, appeared in the context

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709

outlined above. More specifically, he penned it in response to a law

that threatened to derail Myanmars economic reforms, more or
less from the outset. At the centrepiece of the Farmers Protection
Bill (FPB) was a scheme under which the state would guarantee a
minimum rice-price for Myanmars cultivators, to be made manifest
by purchases of the crop by the government itself. The objective of
the scheme, as the name of the bill implied, was to protect Myanmars
farmers by establishing what was, ostensibly, a minimum income
scheme delivered through state procurement.
The FPB and the minimum rice-price arrangements that were at
its core seemed unpleasantly familiar to Hla Myint, however wellintentioned its sponsors may have been. In so many ways, they
resembled both the basic propositions of the old SAMB and, in a
contemporary twist, a very similar scheme in Thailand. Even as the
FPB was being tabled in Myanmars parliament, that latter countrys
rice pledging scheme was placing in jeopardy not just Thailands
rice sector, but its financial stability.28 The FPB, Hla Myint reasoned,
threatened to have similar consequences for Myanmar, and he
reminded his readership of past experiences with such arrangements,
of corruption, inadequate storage and crop spoilage. He wondered in
his letter whether the new state purchasing apparatus had mastered
more efficient buying and storage arrangements than those of the
past. If not, he declared, I shudder to think how it would cope with
the vastly larger amounts of rice which would be pouring into the
government buying stations (Hla Myint 2013).
As an alternative to state purchasing, Hla Myint characteristically
advocated in his letter market liberalization as the solution to decades
of exploitation of Myanmars farmers. In a private memorandum
for policymakers written to bolster the arguments of his published
missive, he celebrated the way in which the beans and pulses sector
had been reinvigorated through market reform.
we should liberalize the rice marketing system to allow private
traders to compete in buying rice from the farmers. This will
result in the farmers receiving a price related to the world market
price for rice to give them the necessary economic incentive to

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Sean Turnell

expand rice exports. The stimulating effect of giving the farmers

the economic incentive under free market conditions can be seen
in the phenomenal growth of the exports of pulses and beans
after 1988. This was the only agricultural product left alone
without government intervention. By the 1990s, the exports
of pulses by value had overtaken rice exports and become the
largest agricultural export of the country.29

Given the degraded state of rural infrastructure in Myanmar, however,

and the lack of support farmers received, Hla Myint added that
liberalization on its own was not enough.
The reform in the rice marketing system should be followed up by
various measures to increase rice output, ranging from measures
to raise agricultural productivity, better provision of credit
facilities for farmers, and the increased investment in irrigation,
flood controls, and rural transport and communications.30

According to Hla Myint, the FPB was a populist appeal that

left out what his published letter described as the poorest section
of the agricultural population. This group, which Hla Myint
noted was estimated to be as high as 10 million, consisted
primarily of landless agricultural labourers. For these people, such
a policy guaranteed only that the prices that they would pay for
food would rise; their poverty would deepen as a consequence
(Hla Myint 2013).
Most significantly of all, Hla Myint argued in his letter to the
New Light of Myanmar that the FPB ignored the real problem of
Burmese agriculture. This problem was not low crop prices or the
oft-abused attribution of exploitation of the peasant farmers by the
moneymen, but rather unnecessary government regulations and
out-dated laws causing delays and providing opportunities for
bribe taking and pushing up transactions costs. The solution the
liberalization of the economy, abolishing unnecessary regulations,
is a costless way of reducing transactions costs and improving
Myanmars marketing and credit system. Such policies may not
have the populist appeal of a minimum guarantee rice-price policy,
but, if successfully carried out, the policy to lower the transport

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711

and transaction costs would not only increase the price which the
up-country farmers would receive for their paddy, but would also
have favourable effects on the country at large (Hla Myint 2013).
Finally, in his letter Hla Myint worried that such a policy as the
FPB could unwittingly undermine the newly available comparative
advantage that the country had in labour-intensive manufacturing
that is, its low-cost base, centring upon lower labour costs than its
peers in Southeast Asia. Such an advantage was especially critical
in this new age of manufacturing, in which trade did not just
take place amidst finished products, but as inputs into vast supply
chains of intermediate goods, the production of each of which was
predicated operating in the lowest-cost location (Hla Myint 2013).
Again, in a later private memorandum written to support the letters
contentions, he outlined the compelling logic of what was possible.
In the post-war period, the rise of the Asian Tiger economies
such as Taiwan and South Korea had demonstrated how poor lowwage countries could launch themselves into rapid and sustained
economic growth by expanding labour-intensive exports of
manufactures. By the 1970s these countries had become labourscarce countries, and with rising wages at home, they sought to
relocate the more labour-intensive type of manufacturing in the
Southeast Asia countries with lower wages, such as Thailand
and Malaysia with stable economic conditions which welcomed
foreign direct investment. Thus Thailand and Malaysia were able
to diversify their exports, producing both primary products and
manufactured products, starting with the simpler manufactures,
gradually moving up to the export of more complex goods.31

The campaign against the FPB, waged both in public as through

Hla Myints letter to the press and behind the scenes by economists
and other reformers within the Thein Sein government, was largely
successful.32 In September 2013 the FPB was substantially rewritten
to replace the certainty of a system of state purchases of the rice
crop with a more modest provision stating that such an arrangement
may be put in place at some time. The FPB was also renamed.
It became the Protecting Rights and Enhancing Economic Welfare
of Farmers Law. Under that name, the bill was promulgated by

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Sean Turnell

Myanmars parliament, the Pyingdaungsu Hluttaw, on 3 October

2013 (Su Phyo Win and Kean 2013).
Beyond the FPB

Hla Myints letter on the FPB marked his most public intervention
in the arena of policy advocacy in Myanmar since the establishment
of the Thein Sein government. As noted above, however, Hla Myint
has also been active in providing advice to policymakers and advisors
in Myanmar via a series of private memoranda and other forms of
correspondence. His advice has ranged across many areas, but it
has all been in line with his time-honoured and consistent counsel
in favour of greater openness and economic freedom. Encouraging
foreign direct investment (FDI) has been a focus, but on this score
Hla Myint has sought to emphasize that what the country needs is
FDI with the maximum spread effects. He defined such effects as
broadly to include the Keynesian multiplier effect, the development
of the linkages between the up-stream-downstream stages in
the chain of manufacturing, and the indirect educative effect of
contact with the outside world economy.33 FDI in labour-intensive
manufacturing, tourism and agriculture had the greatest spread effects.
FDI that brought with it minimal spread effects was especially
concentrated in such extractive sectors as energy, mining and logging,
despite the fact that they were Myanmars largest foreign-exchange
earners. Despite that distinction only a virtue if the resultant
revenues were used in socially productive ways the extractive
industries brought with them not insignificant problems. Based on
the exploitation of exhaustible natural resources, they were often
environmentally damaging and dangerous to work in. Further, in
Hla Myints analysis, they had a limited spread effect on the rest
of the economy.34
Institutional Framework and Time

Of course, and corresponding to the stress that he has placed on

the issue throughout his professional life, Hla Myint has continued
to emphasize that Myanmars economic development will hinge
ultimately upon the development of its institutional environment.

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Sayagyi and Sage: Hla Myint, Myanmars Classical Economist

713

Noting that rebuilding roads, bridges and other physical infrastructure

was slow and difficult enough, he has argued that the task of
rejuvenating the institutional framework required for an efficient
market economy was immensely harder, especially after decades
of being repressed and undermined by the military governments
misguided policies. Moreover, it
cannot be relied on to take place according to a set timetable. It
involves the improvement in the administrative capability of the
government and judicial system, the general level of education
of the people and changes in their mental habits, including their
attitude towards bribe giving and taking.35

On this and many other aspects of Myanmars reform programme,

Hla Myint has written that he does not share the wild optimism
of some who think that [Myanmar], with the advantage of a late
comer, would leapfrog into rapid growth, catching up with the more
developed Southeast Asian countries in a relatively short time.36 Yet
neither is he a counsellor of despair. He takes, he has written, an
attitude of cautious optimism, and has hope that through a process
of learning by doing and technical assistance from abroad, [Myanmar
will] progress slowly but sufficiently enough to carry her beyond the
dangers of reverting to her previous economic isolation.37 But all
of this will require patience. As he warned in 1973, and at a time
when current events in Myanmar must have seemed inconceivable,
during economic reform
tensions can arise both from low material incomes and from
the discontent created by the revolution of rising expectations,
impatient for quick results. Economic development plans,
however, are generally of a long-term nature, involving a
considerable time-lag before their fruits are ready. In the
meantime, they may create a considerable amount of dislocation,
discomfort and deprivation for the people without producing
quick benefits. Contrary to public belief, the vigorous pursuit
of economic development policies designed to raise the level
of material income in the future may frequently intensify, rather
than reduce, the existing level of discontent. (Hla Myint 1973,
p. 16)

Wise counsel then. Even wiser now.

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714

A Coda

As will be apparent from the preceding discussion, Hla Myint is held

in the highest esteem in the global economics profession, to which
he has been a leading contributor for over seven decades. He is held
in equal esteem by that small cohort of Myanmar economists who,
down the decades, have tried to keep alive the idea that the country
can redeem past mistakes and resume its rightful place amongst its
peers in Southeast Asia. In 2000 a group of these latter produced a
Vision and Strategy for their country which, apart from deserving
to be far better known, extolled an outward-looking policy regime for
Myanmar, one much like that being fitfully tried today. In so doing,
they paid tribute to Hla Myint, and to the what might have been.
[Hla Myints] writings on economic development established
him as one of the great pioneers of the field. In particular, he
consistently advocated, long before it became an accepted part of
the conventional wisdom, the role of export-oriented strategies as
the most powerful engine of growth for developing countries
in South-East Asia and throughout the world. Burma today
would be a vastly more prosperous country had she only heeded
the advice of this distinguished native son at the very outset of
her rebirth as an independent nation in 1948. (Khin Maung Kyi
et al. 2000, p. 103)
Conclusion

Fifty years of military rule in Myanmar brought with it many

deleterious effects to the countrys economy. Not the least of these
was the loss of human capital. This loss had many manifestations,
including effectively sending many of Myanmars best and brightest
into exile. Hla Myint stands in the first rank of these exiles, and his
loss to Myanmar was great. His ideas were part of the intellectual
framework for many of the policies subsequently adopted by Asias
tiger economies, and it is thus no little irony indeed a cruel irony
that Myanmar so comprehensively ventured in other directions.
Now, amidst great political change, and the prospect of more to
come, Myanmar may be in a position to redeem its past promise,

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715

an outcome that, not least, the embrace of the ideas of its greatest
economist will hasten.
Sean Turnell is Associate Professor in the Department of Economics, Building
E4, Macquarie University, Eastern Road, North Ryde NSW 2109, Australia; email:
sean.turnell@mq.edu.au.
NOTES

1. Much of this paper is based on interviews with Hla Myint undertaken by

the author since 2011, both in person and via email correspondence, and
on private memoranda prepared by Hla Myint, both for the author and
for others, across the same period. These endnotes cite such sources.
2. Most media coverage of this event focussed on the appearance of
Joseph Stiglitz in Myanmar, winner of the 2001 Nobel Memorial Prize
in Economics, and the only non-Burmese member of the panel (see, for
example, Deed 2012).
3. The account of Hla Myints early life draws on the authors interview
with Hla Myint, 20 August 2012, Bangkok.
4. There is, sadly, very little information on the life and times of Harro
Bernadelli. The best source we have on him is an entry by Mark Donaghue
in a biographical dictionary of Australian and New Zealand economists. As
with most foreigners, he was forced to flee Myanmar during the Japanese
invasion in 1942, and never returned to the country. Ultimately he ended
up at the University of Otago in New Zealand (hence the dictionary
entry), where he continued to work on a great range of issues. He died,
in Auckland, in 1981.
5. Authors interview with Hla Myint, 20 August 2012, Bangkok.
6. For more on Swithinbank and his impact on Keynes and other members
of the Bloomsbury group, see Skidelsky (1983, pp. 16869, 265).
7. Authors interview with Hla Myint, 20 August 2012, Bangkok.
8. For a feel of what life was like at the LSE during the period of its
evacuation to Cambridge, see Howson (2011, pp. 34286).
9. Hla Myint, personal correspondence with the author, 16 April 2014.
10. Amongst Hla Myints colleagues at Manchester was a young native of
Breslau called Heinz Arndt (19152002), later professor and head in
the Department of Economics, Research School of Pacific Studies, the
Australian National University, and a well-known scholar of economic
development and a trailblazer in the study of the economies of Indonesia
and Southeast Asia more generally.

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11. Authors interview with Hla Myint, 20 August 2012, Bangkok.

12. Hla Myint, personal correspondence with author, 2 July 2012.
13. This is not to say the Americans had an easy time of it either. For more,
see Walinsky (1962).
14. Authors interview with Hla Myint, 20 August 2012, Bangkok.
15. Hla Myint, personal correspondence with the author, 2 July 2012. The
following three sentences also quote this same source.
16. Hla Myint, personal correspondence with the author, 1 August 2013.
17. While at Oxford in this period Hla Myint returned to Burma briefly in
1955 to serve as a part-time visiting adviser, a post created by U Nu
in the context of his new found celebrity as the author of a significant
UN study (United Nations 1951) on international economic stability.
That study, as Hla Myint told the author, re-established [his] credibility
with the Burmese government. Matters were little changed, as regarded
the reception of his advice, and rather worse as regarded the countrys
underlying economic circumstances. It was suffering from low rice export
prices, which exposed the more ambitious elements of the governments
plans while at the same time wreaked havoc with its budgets. Hla Myint
soon returned to Oxford.
18. Hla Myint, personal correspondence with the author, 2 July 2012. In 1994
Gerald Meier celebrated Hla Myints efforts to employ the classical tradition
in the field of development by publishing the lecture outline for Hla
Myints Introduction to the Economics of Underdeveloped Countries,
taught at Oxford in the Michaelmas and Hilary terms, 1952. See Meier
(1994, pp. 18891).
19. Hla Myint, personal correspondence with the author, 2 July 2012.
20. The section on Hla Myints experience is informed by the authors interview
with Hla Myint, 20 August 2012, Bangkok.
21. In a personal memorandum sent to the author on 22 June 2012, entitled
simply J.S. Furnivall, Hla Myint referred to Furnivall as the man I most
admire. This same memorandum is the basis for most of the information
in the entirety of this section.
22. Furnivalls idea that there existed in Burma a plural society structured
along racial and economic lines was first given formal expression in
Furnivall (1931), but more fully explored in Furnivall (1948). The quotations
here and in the remainder of the paragraph are from Hla Myints memo
on J.S. Furnivall.
23. The seminal work on what is usually referred to as New Institutional
Economics is North (1990). The underlying ideas in this book, a
compilation of Norths work over many years, share many traits with
those of Hla Myint more or less across the same period. Hla Myint did
not formalize his thinking about institutions in a stand-alone way, with

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24.
25.
26.

27.

28.
29.
30.
31.
32.
33.
34.
35.

717

the result that in the view of this author his contributions to the
field have been given insufficient attention from economists. The Nobel
Prizes alluded to here are those awarded to North himself, in 1993, and
perhaps even to Stiglitz, in 2001.
For more on each of these episodes of state planning, see Tin Maung
Maung Than (2006), Myat Thein (2004), and Turnell (2009, pp. 18285,
19192, 21619).
For more on the responses in different countries to the legacy of colonial
economic policies and Hla Myints analyses of those responses, see Hla
Myint (1967).
Ronald Findlay would go on to fame as a member of the Department
of Economics at Columbia University and figures with Hla Myint as
Myanmars other economist of truly international renown. Mya Maung
(Boston College), Khin Maung Kyi (National University of Singapore)
and Myo Nyunt (Edith Cowan University, Western Australia) would all
be forced to leave Burma to pursue their academic careers. U Thet Tun
would head the countrys statistical service, before joining its diplomatic
corps. U Aye Hlaing soldiered on at the University of Rangoon, where he
produced a series of important works on Myanmars economy (notably Aye
Hlain 1964). U Myint would go on to work in various UN agencies, and
would be one of the leading players in the economic reforms enacted by
the Thein Sein government starting in 2011. A subset of these economists
are celebrated in Brown (2013), which places insufficient stress on the
extent to which they disagreed with the policies of the governments that
they tried to serve.
The name given to that group of U.S.-trained Indonesian economists
which included Widjojo Nitisantro, Mohammad Sadli and Ali Wardhana
who edged Indonesian President Soeharto in the direction of market
reform (McCawley 2011).
One of the best analyses of Thai policy appears in Hla Myints published
letter to the New Light of Myanmar (Hla Myint 2013).
This memorandum, entitled Two Important Policies for the Economic
Development of Burma and dated 1 August 2013, was furnished to the
author by Hla Myint in personal correspondence, 1 August 2013.
Ibid.
Ibid.
For a taste of the public campaign, see Soong (2013).
Hla Myint, personal correspondence with the author, 2 July 2012. Hla
Myints work had long placed emphasis on these three effects, which are
best summarized in Hla Myint (2001).
Ibid.
Ibid.

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36. Hla Myint, personal correspondence with the author, 20 August 2012,
on which the discussion that follows also draws.
37. Hla Myint, personal correspondence with the author, 20 August 2012.
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