Operating within the parliamentary democracy system, the Myanmar Government intervened extensively in the national economy in the 1950s and introduced a strategy of import-substitution industrialization, based on an ambitious master plan known as the Pyidawtha Plan. However, the state-led industrialization effort soon ran into difficulties and faltered within a few years of its inception. Feeble attempts by the government to rectify the shortcomings of its industrial strategy and plans by reducing the state's role in industrial development foundered as political instability and economic uncertainty manifested in the late 1950s, brought about by a series of power struggles within the ruling party (see Chapter 3).

INDUSTRIALIZATION AND THE STATE

The leading role of the state in shaping and controlling the industrial sectors (mining, manufacturing, and power) through an import-substituting industrialization (ISI) strategy is an important characteristic of Myanmar's economy in the period under study.

Myanmar's industrialization was not only driven by a desire to ensure higher productivity and better living standards but also influenced by the trauma of losing its sovereignty to an industrial power. Furnivall made an observation that the success of the colonial economy was “chiefly due to European capital and Indian labourer”. In independent Myanmar, which vowed to do away with both alien capital and migrant labour, the imperatives to industrialize led to state action on a broad economic front. The Union Constitution of 1947 provided a general framework for the state to play an active economic role.

Industrial Strategy, Policies, and Plans

When the Two-Year Plan was announced in April 1948 by the Anti-Fascist People's Freedom League (AFPFL) Government, ISI was the standard recipe for “late industrializers”. The Two-Year Plan's industrial component was more a wish list of projects than a full-fledged plan.