A regional perspective on poverty in Myanmar - United Nations ...

Poverty in Myanmar 29
Conclusion: poverty in Myanmar
As there are many reasons for poverty, so does Myanmar have many options to lift people out of
poverty. As the poor are less productive, and their existing productive capacity is also used to a lower
extent, poverty hampers the current and especially long term productive potential of the country. It
is therefore not only in the humanitarian but also economic interest to reduce poverty.
According to the national poverty line, Myanmar reduced its overall poverty, its food poverty, and its
poverty gap, but the real improvements since 2005 in terms of purchase power were rather small.
There are also indications that the uniform national poverty line is grossly misrepresenting the
situation at S/R level: in 12 out of the 17 observed regions, the actual poverty rate might partially
significantly be higher.
50,000 Kyat per year are needed to lift one (median) poor out of poverty. This can be achieved
through reducing the cost of goods and services the poor require or through increasing that person’s
income by that amount. Compared with India’s 100-day programme for the poor, Myanmar would
only require in average about 30 paid days per poor.
Assuming perfect allocation and no transaction cost, it would annually cost Myanmar 850 billion Kyat
in cash transfers, or 2.3% of GDP, to lift all people out of poverty, and about a tenth of this to avoid
food poverty. The budget allocation for the individual S/R can serve as benchmark for the assessment
of poverty relevant projects.
Notably apart from Chin State, poverty inertia is mostly low. This means that there is usually a
comparatively high churn, and a comparatively low chronic poverty. Measures that reduce the
chance of people entering into poverty (usually the more cost-effective way) would therefore have a
higher development impact as directly addressing the poor. From cost efficiency <strong>perspective</strong>, the
focus should therefore be more on the vulnerable than the poor, which would automatically reduce
the poverty rate as well.
Myanmar’s poverty is larger, but shallow, with the median income only 25% above the poverty line.
Small improvements can thus bring a large number of people out of poverty, but already small
shocks can also bring an even larger number of people into poverty. Because Myanmar is exposed to
many natural –but in principle preventable- calamities, costing annually 8% of agricultural output, it
needs to invest into mitigation and adaptation strategies. And because the country’s economic
development depends strongly on natural resources with volatile prices, it needs to diversify its
production and export base.
Myanmar’s inequality is extremely low. GDP increases in countries with low income (or consumption)
inequality have high impact on poverty reduction. But GDP growth is also likely to temporarily
increase Myanmar’s inequality. As Myanmar starts from a low inequality level, its concern should be
focused on GDP growth, while trying to keep inequality growth in limits.
The problem of Myanmar’s labour market is neither unemployment, nor underemployment. Rather,
the work is not equally distributed and paid for. In fact, as a whole the Myanmar people do work
weekly 60 million hours too much, i.e., if the workload would be perfectly distributed, Myanmar
could provide jobs for additional 1.34 million people.