The Integration of Thailand in the Global Economy

Abstract

The discussion in the previous chapter led to two important conclusions. Firstly, economic growth has been comparatively rapid in Thailand. With an average growth rate of real GDP of around 7.5 per cent per year over the last three decades, Thailand ranks among the fastest growing economies in the world. The second conclusion was that short-term and medium-term fluctuations in the growth rate have been strongly influenced by external factors. In particular, the growth booms, as they occurred over the years, could all be traced to external impulses. In the 1960s and early 1970s, when agriculture was still the dominant sector, such external impulses often came from shifts in international prices of Thailand’s main primary commodity exports. In later years, the share of the agricultural exports declined and external price shocks became less important. Increasingly important among external impulses in these later years, has been international finance. The growth booms of 1976–78 and the one since 1987 have both been supported by foreign capital. This observation leads to the hypothesis that Thailand can grow rapidly, i.e. at above average rates, only if external finance is available. This hypothesis will be explored in more detail in Chapters 4 and 5.