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The Coup in Burma is a Tragedy for Democracy— and for Economic Growth

With Burma’s fragile democracy hanging in the balance, the country also risks backsliding economically, impacting its future and the futures of its young people.

Article by Kristin Kent Spanos, Michael Bailey, and Nicholas Saliba March 16, 2021 //   5 minute read
Taunggyi, Myanmar - 20 Feb 2021: Myanmar people took to the streets to protest against the military coup

The recent coup in Burma has jeopardized the country’s fragile democracy, as well as the innovation and economic opportunity that would provide fruitful opportunities for all citizens.

On February 1, Burma’s military seized control of the country’s government and has increased threats and use of violence against its people. In response, countless protestors have peacefully demonstrated against the military takeover. The leader of the National League for Democracy Aung San Suu Kyi, senior officials, and over 1,000 innocent citizens have been detained and arrested; over 130 people have been killed.

With Burma’s fragile democracy hanging in the balance, the country also risks backsliding economically, impacting its future and the futures of its young people, including alumni of the Bush Institute’s Liberty and Leadership Program.

A lack of rule of law to protect individual, political, and economic rights stifles opportunities for a more prosperous tomorrow.

Using data from the Global Competitiveness Scorecard, The Bush Institute-SMU Economic Growth team examined the effects of limited democratic freedom on economic outcomes by analyzing nations with weak institutions. Burma is not included among the 101 countries on the Scorecard due to inconsistent data.

There is a strong relationship between a nation’s score on the Scorecard’s Legal System and Property Rights indicator, which measures the effectiveness and integrity of a country’s government, institutions, and judicial system and GDP per capita (a common proxy for standard of living).

In fact, among the Scorecard’s six key indicators, Legal System and Property Rights is the most highly correlated with GDP per capita. This demonstrates that nations with weak legal systems often struggle to attract the investment needed to grow their economies and sustain a high standard of living for their citizens.

Nations that have stronger economic outcomes tend to foster innovation and new business creation, supported by a strong and fair legal system. Patent protections, business incorporation, sound dispute resolutions, and due process generally are all key protections offered by countries with robust institutions. When these protections do not exist, it becomes risker for businesses to operate and incentives for innovation and economic growth are stripped away. Moreover, in nations with very weak property rights and high levels of corruption, business owners may face the prospect of having their assets seized by the state.

In addition, data from Freedom House’s 2021 Freedom in the World Report demonstrates that free countries are more prosperous than nations that are “partially free” or “not free”. The average GDP per capita of nations that are designated as “free” by Freedom House is $41,284, over two and a half times the average GDP per capita of nations that are “partially free” or “not free” ($15,687).

The military coup and subsequent human rights violations in Burma have placed the country at a terrible tipping point. For Burma to transition to a more free and prosperous society, democracy must be restored. Additionally, American leadership is needed to condemn the military’s actions, champion the necessity of democratic institutions and values in facilitating economic growth, and support the will of the Burmese people.