Assessment Of Economic Progress In Thailand, 1985-95 Assessment Of Economic Progress In Thailand, 1985-95 ASSESSMENT OF ECONOMIC PROGRESS IN THAILAND, 1985-95 Here is a list of the main measurable indicators of economic growth and structural change for Thailand to be observed by World Bank staff members who are visiting there. To ensure a successful tour of business meeting between the World Bank representatives and the Thai government and their business executives, I feel that a thorough understanding of the Southeast Asia’s (although the main focus will be Thailand’s) economic growth is necessary. Economic growth is simply a long-term increase in real output per capita and measuring it often involves an unbiased and theoretical assessment of national performance. The following are the key signs of economic growth: 1) Agricultural Modernization and Agricultural Diversification 2) Industrial Transformation 3) Growth of Service Industry 4) Improvement in Quality of Life (including social, environmental, and economic variables) 5) Growth of Trade and Foreign Investment 6) Improvement in Technology and Infrastructure Note that in comparison to other Southeast Asian countries (except Singapore), Thailand has a relatively better performance in agriculture and service industries during the mid and late 80 s. For example, the cultivation, processing, and export of agricultural products, especially rice, was traditionally the mainstay of the Thai economy. Although Thailand has long been among the most prosperous of the Asian nations, its dependence on a single crop made it extremely vulnerable to fluctuations in the world price of rice and to variations in the harvest.
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The government has diminished this vulnerability by instituting a number of development programs aimed at diversifying the economy and by promoting scientific methods of farming, particularly controlled flooding of the rice fields, so that the rice harvest might remain stable even in years of few rainfalls. In the early 1990 s, Thailand annually produced approximately 18. 5 million metric tons of rice, up from about 11. 3 million metric tons per year in the 1960 s (Dutt, 1992).
Another example of its notable success was the increase in tourism during the late 1980 s that boosted the economy of Thailand’s service industry. There are many ways to explain the economic development of Thailand and other Southeast Asian countries.
Three things come to mind that is associated with the rise of their economic success in the 1980 s to mid 1990 s. The first is the increase of foreign direct investment (FDI).
In the mid 1980 s, there was an average $676 million dollars in FDI and by 1995, FDI flowing into Thailand’s economy had an average $2, 300 million dollars. Second, the stock market grew in size between 1980 and 1996; Thailand’s market grew from a mere $1. 2 billion dollars to a staggering $99.
8 billion dollars (before the crash in 1997).
Third, the people’s incomes in many Southeast Asian countries rose dramatically between 1980 s and early 1990 s. In Thailand, the gross domestic product per person rose from $444 in 1980 to $6, 900 in 1996. Beginning in the early 1980 s, huge amounts of investments began pouring into Asian countries, lured by high returns, stable governments and currencies pegged to the dollar.
The foreign money paid for factories and skyscrapers, and a booming export economy created a newly comfortable middle class that in turn stimulated more consumption. Other explanations of economic development in Thailand include: 1) Removal of Regional Economic Disparities 2) Diversification of the Economy 3) Industrialization 4) General Economic Development are conceived as the goals of the country Now I will look at the individual sector of Thailand’s economy and try to show the reasons for each sector’s success in its economic development. Agriculture accounts for 16% of Thailand’s gross national product. As mentioned above, rice is the principal crop and the leading export in Thailand. The second most important crop in value is rubber, which is produced mainly on plantations on the Malay Peninsula. In the early 1990 s approximately 1.
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4 million metric tons of rubber were produced each year. Other important crops included cassava, sugar-cane, maize, pineapples, coconuts, and kenaf. Fishing was also important, but commercial logging was banned in 1989. Thus, the agricultural diversification in Thailand is a recent achievement that is specific to its economic development.
Another important sector in Thailand’s development is manufacturing. Manufacturing accounts for about 24% of the country’s gross national product. Thailand’s increasingly diversified manufacturing sector is a central component of the nation’s economic expansion, growing by 9. 4% annually during the 1980 s and early 1990 s. Food-processing industries, especially rice milling and sugar refining; textile and clothing manufacture; and the electronics industry predominate. Other important manufactured goods included cement, motor vehicles, cigarettes, and various chemicals and petroleum products.
Manufacturing employs about 8% of the labour force. In the early 1990 s, Thai exports were valued at about $28. 4 billion annually, and imports were valued at about $37. 6 billion (Dutt, 1992).
Principal exports were agricultural and manufactured goods, such as electronics, clothing and footwear, and rubber.
Thailand’s primary trading partners were Japan, the United States, Singapore, Germany, Hong Kong, and South Korea. Assessment of Costs and Benefits of Economic Growth: BENEFITS 1) Increase people’s incomes 2) Expansion of cities or the rise in urbanization: (a) Creating employment opportunities, many rural peasants (locally or from abroad) migrate from rural areas to cities where there are better opportunities to earn more money. (b) Access to education (c) Access to health care and other welfare needs 3) Poverty-alleviation. People have more money to spend on food and still have change for other basic needs, such as toilet paper, tooth brushes, etc.
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4) Gains from trade, investment, technical and other mutual assistance, access to global economy 5) Improvement in transportation and infrastructure, better roads and highways, access to public transit, building of public facilities; hospitals, schools, police stations, etc. 6) National stability COSTS 1) Over population, especially in major cities where crowding is a problem 2) Pollution associated with households and industries, including toxic discharges, such as pesticides and automobile fluid; air pollutants, such as smoke stacks from lumber mills; 3) Threat of species contamination or extinction from pollution 4) Inadequate resources: (a) for self-sufficiency (b) for industrialization (c) for exports 5) Sociological dualism, ethnic tensions, for example, the oppression against ethnic Chinese in Indonesia for their “wealth’ 6) Technological dualism, too much development in industrial sectors and not enough for agriculture, education, etc. , may induce corruption in government 7) Vicious cycles: (a) poverty trap (b) cheap labour trap 8) Overvalued currency, governments try to stay competitive in the world market regardless of everything else 9) Excessive bureaucracy 10) Foreign debt trap Concluding remarks: At first glance, the benefits and costs of economic growth is on a pretty even scale. For example, the problem of “poverty trap’ associated with the cost of growth can be offset by government assistance programs like the welfare system, which is established by the benefit of growth. However, there is an unfair advantage for developing countries to involve too much in economic growth.
For one thing, these countries are very vulnerable to world price fluctuations and their economy (since most are only a tiny fraction of the world’s economy) heavily depended upon foreign speculators. Therefore, the fragile economy of the developing countries can collapse easily under the slightest of economic slow-down. Unfortunately, if an economic crisis took place in these countries, the cost of fixing the crisis would be too high to imagine.
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In 1992, America was under economic distress and uncertainty as a country. America had experienced high unemployment, big deficits, high interest rates, low productivity gains and falling real wages for average Americans. After twelve years of national drift and economic decline, President Clinton charted a path to growth with the "New Directions" economic plan designed to create jobs, boost ...
