After a parliamentary government was formed in 1948, Prime Minister U Nu disastrously attempted to make Burma a welfare state and adopted central planning. Rice exports fell by two thirds and mineral exports by over 96%. Plans were partly financed by printing money, which led to inflation. The 1962 coup d’état was followed by an economic scheme called the Burmese Way to Socialism, a plan to nationalise all industries, with the exception of agriculture. The catastrophic program turned Burma into one of the world’s most impoverished countries. Burma’s admittance to Least Developed Country status by the UN in 1987 highlighted its economic bankruptcy.

After 1988, the regime retreated from totalitarian rule. It permitted modest expansion of the private sector, allowed some foreign investment, and received needed foreign exchange. The economy is still rated as the least free in Asia (tied with North Korea).All fundamental market institutions are suppressed. Private enterprises are often co-owned or indirectly owned by state. The corruption watchdog organisation Transparency International in its 2007 Corruption Perceptions Index released on 26 September 2007 ranked Burma the most corrupt country in the world, tied with Somalia.

The national currency is Kyat. Burma has a dual exchange rate system similar to Cuba. The market rate was around two hundred times below the government-set rate in 2006. Inflation averaged 30.1% between 2005 and 2007. Inflation is a serious problem for the economy. In April 2007, the National League for Democracy organised a two-day workshop on the economy. The workshop concluded that skyrocketing inflation was impeding economic growth. “Basic commodity prices have increased from 30 to 60 percent since the military regime promoted a salary increase for government workers in April 2006”, said Soe Win, the moderator of the workshop. “Inflation is also correlated with corruption.” Myint Thein, an NLD spokesperson, added: “Inflation is the critical source of the current economic crisis.”

In recent years, both China and India have attempted to strengthen ties with the government for economic benefit. Many nations, including the United States and Canada, and the European Union, have imposed investment and trade sanctions on Burma. The United States has banned all imports from Burma. Foreign investment comes primarily from People’s Republic of China, Singapore, South Korea, India, and Thailand.

The major agricultural product is rice which covers about 60% of the country’s total cultivated land area. Rice accounts for 97% of total food grain production by weight. Through collaboration with the International Rice Research Institute (IRRI), 52 modern rice varieties were released in the country between 1966 and 1997, helping increase national rice production to 14 million tons in 1987 and to 19 million tons in 1996. By 1988, modern varieties were planted on half of the country’s ricelands, including 98 percent of the irrigated areas.
The lack of an educated workforce skilled in modern technology contributes to the growing problems of the economy.

Today, the country lacks adequate infrastructure. Goods travel primarily across the Thai border, where most illegal drugs are exported and along the Ayeyarwady River. Railways are old and rudimentary, with few repairs since their construction in the late nineteenth century. Highways are normally unpaved, except in the major cities. Energy shortages are common throughout the country including in Yangon. Burma is also the world’s second largest producer of opium, accounting for 8% of entire world production and is a major source of illegal drugs, including amphetamines. Other industries include agricultural goods, textiles, wood products, construction materials, gems, metals, oil and natural gas.

The Union of Myanmar’s rulers depend on sales of precious stones such as sapphires, pearls and jade to fund their regime. Rubies are the biggest earner; 90% of the world’s rubies come from the country, whose red stones are prized for their purity and hue. Thailand buys the majority of the country’s gems. Burma’s “Valley of Rubies”, the mountainous Mogok area, 200 km (120 mi) north of Mandalay, is noted for its rare pigeon’s blood rubies and blue sapphires. Many U.S. and European jewellery companies, including Bulgari, Tiffany, and Cartier, refuse to import these stones based on reports of deplorable working conditions in the mines. Human Rights Watch has encouraged a complete ban on the purchase of Burmese gems based on these reports and because nearly all profits go to the ruling junta, as the majority of mining activity in the country is government-run.

Since 1992, the government has encouraged tourism in the country. However, fewer than 750,000 tourists enter the country annually. Aung San Suu Kyi has requested that international tourists not visit Burma. The junta’s forced labour programmes were focused around tourist destinations which have been heavily criticised for their human rights records. Burma’s Minister of Hotels and Tourism Maj-Gen Saw Lwin has stated that the government receives a significant percentage of the income of private sector tourism services. Much of the country is completely off-limits to tourists, and the military very tightly controls interactions between foreigners and the people of Burma, particularly the border regions. They are not to discuss politics with foreigners, under penalty of imprisonment, and in 2001, the Myanmar Tourism Promotion Board issued an order for local officials to protect tourists and limit “unnecessary contact” between foreigners and ordinary Burmese people.

The M9 gas field in Burma is expected to go online in 2012.