Page 26 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.72, # 2, 2015, pp. 24-31

value-added primary commodities. On average, these two export items, which are
predominantly primary agricultural commodities, account for more than 60 percent
of total agricultural export earnings. Moreover, because of the sanction practiced by
EU and US, Myanmar‟ exports are concentrated particularly on only a few markets
of which Thailand is by far largest, followed by China, India, and Japan. Intra-
ASEAN trade is not so much in volume compared with trade of those countries.
Starting from 1980, with the growing integration of markets due to globalization and
trade liberalization, economies of the less developed countries face a more fiercely
competitive external trading environment. Myanmar is also not an exceptional
country. Myanmar continue to export a limited range of primary commodities that
are highly vulnerable to instability in supply, demand and a decline in terms of trade
before 1988 under the then centrally controlled Burmese socialist government.
Given the context of political and economic reforms, Myanmar could assess larger
and more affluent market like Japan favors growth and development through trade
after 1990 but still facing many internal supply side constraints associated with its
underdeveloped economy which renders its exports uncompetitive. But after 1980s,
globalization brought outward-looking policies in the world. Since then it became
popular policy prescription among economists and policy makers. Many developing
countries liberalized their trade and harvested the benefits of such openness. At the
same time, another hypothesis related to structural changes of exports and
diversification of the exports was used to debate in the trade literature. Many
economists have been argued that a more diversified export mix may enable a
country to be stable in economic growth (Ali and others 1991; Gutierrez de Pineres
and others 1997). In this context, Honma (2003) noted that for a small country, the
price elasticity of demand for exports of a homogeneous commodity is large and
there is a huge potential to be gained if it is successful in reducing the export price
by more efficient production. Therefore, least developed countries and/or developing
countries should create markets for their agricultural commodities with large price
and income elasticities of demand to achieve sustainable long-term growth by means
of export diversification. For many least developed countries and developing
countries, agricultural trade remains an important part of overall economic activity
and continues to play a major role in domestic agricultural production employment.
But greater reliance on a small number of primary exportable commodities for
export earnings is a challenging issue for those countries. Johnston and Mellor

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