Abstract: "This paper compares the development of the rice economy in Myanmar with Vietnam?s. The rice economies in the two countries show a stark contrast in terms of productivity. To account for the yield gap between them, this paper considers the impacts of not only price policies but also production technology. As there is no clear deterioration or improvement in the terms of trade for rice producers in the two countries, the widening yield gap might be attributable to differences in technological changes. It is implied that Myanmar needs more public investments in agriculture, especially in irrigation and breeding of high-yield varieties seeds, in order to upgrade production technology. The insufficient public investments in the agricultural sector in Myanmar might be due to lower marginal return to such investments, which in turn is related to the allocation mechanism of the state budget; the higher the delegation of budget to local governments, the higher the marginal return to public investments could be. A policy recommendation is more delegation of agricultural budget to local governments..."