Thailand Economy

Question 1

Thai Agriculture in 50-60s

Answer 1

Strategy: Expansion of Agri
Significant diversification of crops but little intensification of production
Availability of land enabled large % of population to stay in Agri

Effect:
Sustained growth of Agri sector 3 - 5% GDP growth
Main engine for growth

Question 2

Thai Industrialisation 50-60s

Answer 2

Strategy: ISI from state capitalism
Heavily protected
1957 Severe restrictions on foreign trade and monopolies international transactions
1959 BOI set up to promote investment
1960 Investment Promotion Act; through tariff protection and tax reductions
1960 Tariff barriers
Close links of industrial groups to Bureaucracy

Effects:
Export industries barely existed
Manufacturing only 10% GDP
Mostly growth of inefficient undertakings due to lack of incentive
But laid substantial industrial base, intermediate components could be produced locally

Question 3

Thai Industrialisation 70s

Answer 3

Strategy: Increase ISI
Despite advocation by technocrats for EOI, many refused due to fear of exposure
Tariffs increased in 53 categories and reduced in 19
Lack of EOI led to excessive BOP deficit and worsened by US withdrawal in 69-70
Investment Promotion Act Revision 1977; provided investment incentives to foreign and domestic
1979 EPZs; gave operators special incentives and privileges including right to own land, work permits and tax reductions.

Effects:
Growth was debt sustained; 20.2 billion in debt
GDP growth rate of 7%
Also reflecdted growth of dynamic export sector, which doubled export volume

Question 4

Thai Industrialisation 80s

Answer 4

Strategy: EOI promotion
Greater involvement of FDI and TNCs
BOI liberalised its investment promotion criteria; attracting more investments

Effects:
Manufactured exports 65% by 1993
Textiles and garments 30% of exports
50% of industrial output attributed to Foreign investment

Question 5

Thai Economy 90s

Answer 5

8-12% export growth rate

Question 6

Thai financial sector

Answer 6

Thai banks dominated with over 90% of all deposits
Bangkok bank owned 1/3 of total bank assets and actively promoted financial sector

Question 7

Thai Equity

Answer 7

Food prices kept low
Minimum wage introduced but not strictly adhered to
Regional inequalities existed

Question 8

Chinese in Thai economy

Answer 8

Significant proportion of economic activity were JVs with Thai Chinese companies
Large amounts of cash injected into Chinese owned Bangkok Bank

Question 9

Flaws of Thai Economy

Answer 9

Heavily dependent of foreign investment; percentage of foreign investment flowing into manufacturing was 54%
Uncontrolled growth led to poor environmental and living conditions
Actually deterred growth after that
Lack of government intervention in financial sector also led to price bubble assets and AFC