ERI Working paper No.02
A perspective on Philippine Economic Performance and Development Strategies

July 1991
Somchai Jitsuchon
(Thailand Development Research Institute)


Among most developing countries, Thailand has been performing quite well if one concentrates on her economic growth. The average growth rate between 1970 and 1990 is fairly high at 6.7 percent per annum. Although official macroeconomic data before 1970 has not yet been updated, it is widely agreed that Thai economy also enjoyed considerable expansion as early as since 1950s. Among high and steady growth, instabilities did occur, however. Like other countries, Thailand has undergone several economic shocks, most of them were transmitted from outside the country but some emerged form the internal factors.

To the question upon assessment of the government's role in development process, the answer varies from positive side to negative side, depending on the area in which the questions are made, and also depending on the analyst's philosophical standpoint. For example, while the recent boom of Thai economy pleases most economists and government officials, there remain others blaming for its emphasis on overall growth while leaving the distribution of benefits from growth less attended. The dispute between the two ideologies is, however, beyond the scope of this report. The major objective of this report is to analyze and evaluate the macroeconomic performance of Thai economy since around 1960 from the viewpoint of positive economics rather than from the viewpoint of normative economics.

The paper is divided into five chapters. The first chapter describes the basic structure of Thai economy as well as the development of economic and political thoughts before 1960s. Chapter two describes the Thai economy and policies implemented during 1960-1990. These two chapters aim typically at providing facts for further analyses. More analytical discussions upon industrialization process in Thailand as well as its consequences will be available in the third chapter. The fourth chapter takes a look at the constraints and prospects of future economic development. Included is the global and regional opportunities facing Thailand, the internal fundamental problems which may obstruct further growth, and the recent progress of economic management in Thailand. Together with summary, the fifth chapter mentions some lessons that can be drawn form Thailand case.

Although many evidences or even arguments demonstrated in this report are those initiated in other documents by other analysts, the author still takes responsibilities to all possible errors and mistakes. Also, the views appear in the report need not necessarily correspond to either those of the author's affiliation or the Economic Planning Agency of the Government of Japan.

Structure of the whole text

  1. Introduction
  2. page1
    1. Thai Economy Before 1960s
    1. page1
      1.1 Natural Resource Wealthiness and Domination of Agriculture
    2. page4
      1.2 Changes in Political and Economic Ideologies
    3. page7
      1.3 National economic planning and movement toward modern economy
  3. page11
    2. Thai Economy and Policies Implemented During -1990
    1. page11
      2.1 Steady and Stable Growths during 1960-1972
    2. page15
      2.2 Economic Difficulties of 1973-1985
      1. page15
        - Ups and downs of agriculture
      2. page16
        - The two oil shocks and the twin deficits
    3. page18
      2.3 Stabilization and Adjustment Policies of 1980s
    4. page22
      2.4 Economic Prosperity during 1986-1990
  4. page25
    3. Thailand's Industrialization
    1. page26
      3.1 The Early Stages of Thai Industries
    2. page28
      3.2 Industrial Development since 1960s
    3. page32
      3.3 Consequences of Industrial Development in Thailand
  5. page38
    4. Constraints and Opportunities of Future Developments
    1. page39
      4.1 Prospects on the Global and Regional Environments
    2. page43
      4.2 The Constraints from Fundamental Problems
      1. page44
        - Production imbalance, labor market segmentation, and education problem
      2. page46
        - Regional disparities and Bangkok's primacy
      3. page47
        - Worsening income distribution
      4. page48
        - Technological dependency
      5. page49
        - Inadequate domestic saving
    3. page50
      4.3 Progress of Thailand's Economic Management
      1. page52
        - Export promotion strategies
      2. page53
        - Rationalizations of energy price controls
      3. page54
        - Financial deregulations
      4. page55
        - Reduction of domestic industries protection
      5. page56
        - Lowering government's economic role and privatization
    4. page57
      4.4 The Desired Long-term Development Policies
  6. page58
    5. Summary and Lessens from Thai Economic Development
    1. page58
      5.1 The Factors of Success
    2. page60
      5.2 The Weaknesses of Development
    3. page61
      5.2 Some Lessons from Thai Economic Development
  7. Annex: Financial Deregulation Measures
  8. Tables and Figures
  9. References
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