You might call it a reverse coup. In March 2011, former general Thein Sein was sworn in as the president of Myanmar’s first elected government in almost 50 years. His inaugural address astonished experts both inside and outside the country by sketching out a vision of democratic rule and economic management that represented a 180-degree turn from the preceding decades of military rule.
President Thein Sein further confounded sceptics and critics by actually taking concrete steps toward achieving this vision. The two most dramatic steps in 2011 were initiating a dialogue in August with opposition leader Aung San Suu Kyi that led to her election to a seat in the legislature six months later, and suspending construction in September of a dam at the head of the Ayeyarwady River designed to supply electricity to Yunnan Province in China.
The most dramatic steps in 2012 are not as easy to select, but the one most likely to top the list of any economist is abandoning (on 1 April) the country’s grossly overvalued official exchange rate and adopting a marketbased exchange rate system. These policy reforms and many others produced a tsunami of foreign visitors to initiate aid programs and reap the early fruits of an improved investment climate.
I think blended finance, development finance, is what’s needed, is the future. The U.S. is using a model that was created 40 years ago and I think it’s way past time for modernizing our capabilities.