To : Dr. Thinzar Win, thinzarthinzarwinaung@gmail.

com

From : Aung Kaung Myat, IMPA.2, aungkaungmyataccm@gmail.com

Date : 23Dec'2023

Assignment _ Industrial Agglomeration in Myanmar

No of pages : Total 5 ( from page2 to 6)

 Industrial Agglomeration in Myanmar

The research paper delves into an examination of the advantages derived by private
manufacturing enterprises in Myanmar from operating within industrial zones, with a specific
focus on labor productivity and working conditions. A key finding of the study is the observation
that firms situated in industrial zones exhibit higher labor productivity. However, this productivity
enhancement does not correlate with an improvement in working conditions or an increase in the
labor share of value added. An noteworthy revelation from the research is the identification of
additional benefits associated with planned industrial zones in comparison to naturally formed
industrial clusters. The study underscores the distinctive context of Myanmar's economic and
political reforms, emphasizing its uniqueness in contributing to the limited literature on
agglomeration economies within the developing world. To support its findings, the paper relies on
a combination of data sources, including a nationally representative enterprise survey and
qualitative interviews. This dual approach adds depth to the research, allowing for a
comprehensive analysis that combines quantitative insights with qualitative contextualization.The
overarching conclusion drawn from the study is that while Myanmar's industrialization policies
appear to have effectively increased productivity, they have not significantly impacted the working
conditions experienced by employees. This leads to the identification of potential implications for
the formulation of place-based policies, emphasizing the need for policymakers to consider the
broader development context. Furthermore, the study highlights the imperative of directing
attention and investments toward human capital to foster improvements in working conditions,
thereby ensuring a more comprehensive and equitable impact of industrialization policies in
Myanmar.

The research delves into the nuanced dynamics of industrial agglomeration in Myanmar,
placing particular emphasis on the benefits associated with operating within industrial zones. By
scrutinizing the effects on manufacturing firm productivity and working conditions, the study
provides a comprehensive analysis that extends to a comparison with outcomes observed in
naturally formed industrial clusters. This comparative approach is instrumental in shedding light
on the unique economic and political landscape of Myanmar, especially in the wake of notable
reforms. The research seeks to go beyond a mere exploration of agglomeration effects by
intricately examining the distinct contributions of industrial zones and their services in the
Myanmar context. Furthermore, the study is positioned to offer valuable insights into the
intricacies of agglomeration economies, aiming to augment the existing body of literature,
particularly in the realm of developing countries. By considering the specific circumstances of
Myanmar's industrial landscape, characterized by economic reforms and political transformations,
the research endeavors to unravel the factors that contribute to the overall productivity and working
conditions within industrial zones. This contextualized approach not only provides a more nuanced
understanding of the subject matter but also serves as a foundation for potential policy implications
tailored to the unique challenges and opportunities of the Myanmar industrial sector.

The paper presents firm-level evidence on the relationship between agglomeration and
productivity in the context of China and focuses on the role of clustering in rural industrialization,
drawing insights from the footwear industry in Wenzhou. The authors also explore the impact of
agglomeration on the internationalization of Chinese firms and discuss theories related to
increasing returns, economic geography, and the nature and sources of agglomeration economies.
The study in Myanmar is based on the Myanmar Enterprise Monitoring Survey (MEMS) 2017
data and examines differences in key characteristics of enterprises in and out of industrial zones.
The findings reveal that enterprises in industrial zones exhibit higher labor productivity compared
to those outside the zones. Moreover, the research provides evidence on the association between
industrial zones and clusters and employee outcomes, emphasizing the significance of
agglomeration in influencing working conditions and productivity.

In addition to investigating the impacts of industrial agglomeration, the paper offers a

thorough analysis of Myanmar's industrial landscape. The authors employ both quantitative and
qualitative data to delve into various facets, including the working environment, the prevalence of
different industries, and the geographical distribution of enterprises throughout Myanmar. This
multifaceted approach allows for a holistic understanding of the country's industrial setting. A key
focal point of the analysis is the examination of the characteristics of industrial zones and naturally
formed technical and garment clusters. By doing so, the authors aim to provide a nuanced and
comprehensive overview of the industrial landscape in Myanmar. This involves assessing the
unique features, challenges, and opportunities associated with both planned industrial zones and
naturally emerging clusters. The juxtaposition of these two types of industrial concentrations
contributes to a more thorough understanding of the diverse economic activities and industrial
structures within the country. The inclusion of both quantitative and qualitative data enriches the
analysis, enabling a deeper exploration of the working conditions, industry types, and geographical
dispersion of enterprises. This comprehensive approach enhances the scholarly contribution of the
paper, offering valuable insights into the intricacies of Myanmar's industrial ecosystem. The
findings from this analysis not only contribute to the academic understanding of industrial
landscapes but also provide practical implications for policymakers, businesses, and stakeholders
involved in the development and management of Myanmar's industrial sector.

To reinforce the empirical findings, the study incorporates a robust set of evidence and
methodological considerations. Tables and figures are strategically employed to visually represent
crucial aspects of the research. These visual aids include depictions of average production worker
wages, the prevalence of various industries, the proportion of enterprises distributed across
different regions and states, and the spatial arrangement of industrial zones and natural clusters.
By presenting this information graphically, the paper enhances the accessibility and clarity of the
empirical evidence, allowing readers to discern patterns and trends effectively. In addition to
quantitative analyses, the study undertakes a qualitative approach through in-depth interviews.
These interviews provide valuable contextual insights into the nuances of the industrial landscape
in Myanmar. By incorporating qualitative data, the research enriches its empirical foundation,
offering a more holistic perspective on the experiences and perspectives of stakeholders within the
industrial zones and clusters. Furthermore, the paper goes beyond a single measure of productivity,
showcasing estimations with various metrics. This methodological diversity not only strengthens
the robustness of the findings but also underscores their consistency across different analytical
approaches. The use of multiple measures of productivity ensures a more comprehensive
understanding of the relationship between industrial agglomeration and firm performance. Overall,
through the integration of visual representations, qualitative insights from interviews, and diverse
measures of productivity, the study not only contributes empirically to the understanding of
industrial dynamics in Myanmar but also ensures methodological rigor and a comprehensive
exploration of the research questions.

Overall, the research contributes to the understanding of industrial agglomeration in

developing countries, particularly in the context of Myanmar, and offers valuable insights into the
effects of agglomeration on labor productivity and working conditions in industrial zones. The
findings underscore the importance of agglomeration economies in shaping firm outcomes and
provide implications for policy and future research in the field. The paper examines the impact of
industrial agglomeration on the productivity and working conditions of manufacturing firms in
Myanmar. The study uses data from a nationally representative enterprise survey conducted in
2017, which includes 2,496 non-state enterprises and 6,722 of their employees from all 15 regions
and states in Myanmar.

The study finds that operating in an industrial zone in Myanmar is associated with higher
labor productivity of manufacturing firms after controlling for the agglomeration level in a
particular location. The result is robust to different measures of productivity and model
specifications, and the study finds additional benefits associated with planned, as opposed to
spontaneously agglomerated spaces for industrial activity. However, the study finds no significant
effects on the labor share in value added, employee wages, benefits, working hours, or female
labor share. These results suggest that industrial zones have not played an important role in
changing working conditions in manufacturing firms in Myanmar.

The study brings to the forefront a comprehensive understanding of the challenges

confronting industrial zones in Myanmar. It underscores key issues such as inadequate
infrastructure, insufficient investments, regulatory shortcomings, and operational inefficiencies.
Notably, the study emphasizes the critical problem of inadequate and inconsistent electricity access
and supply, a vital aspect for industrial operations. Many industrial zones are observed to operate
significantly below their full capacity, with a substantial number of plots within these zones
remaining vacant or repurposed for activities like warehousing rather than active production. The
findings of the research suggest that these challenges may signify a lack of compelling incentives
or potential benefits for businesses to operate within these industrial zones. Moreover, the study
points to issues of land grabbing and elevated land prices driven by speculative activities. The
combination of these challenges paints a complex picture of the industrial landscape in Myanmar,
signaling obstacles that hinder the optimal functioning and development of industrial zones. In
contributing to the literature on industrial agglomeration, the study not only highlights the positive
aspects, such as enhanced firm productivity, associated with industrial zones but also sheds light
on the considerable hurdles these zones face. This nuanced understanding is vital for policymakers
and stakeholders, as it emphasizes the need for targeted interventions to address the identified
challenges and promote the sustained growth of the manufacturing sector in Myanmar. The study
serves as a call to action, advocating for policy measures that can enhance infrastructure, provide
regulatory clarity, and create a conducive environment for industrial development, thereby
fostering a more robust and resilient manufacturing sector in the country.