Brief Economic History of Thailand

Thailand can be broken into four main regions. The North with its mountainous and fertile lands viable for growing rice and teak. Central Thailand home to Bangkok “City of Angels” and the fertile Chao Phraya basin. The North East (Essan), the driest, least productive and least modern place in Thailand. The South, with its moist atmosphere where many produce rubber, tropical crops, and tin. Thailand the “Land of the free” was a country living in the ideal of attaining a virtuous life by shaping their character to Buddhist principles where goodness was prized over personal wealth. Thailand has now changed from an absolute monarchy rule, to one of self-sustained Democracy. Buddhism has supplied cognitive and evaluative elements that have been integrated into every aspect of Thai identity, even If the individual is Thai or part of a Thai ethnic minority. Thailand is an extremely hierarchal society, If you are born into a ‘High-so’  family – as they are typically referred to here – your sense of identity is of course very different than if you are born into a ‘Low-so’ family. Individuals who are born into ‘High-so’ families often have a feeling of superiority over those that are born into ‘Low-so’ families.

 

 

 

Wetland agriculture has always played a significant role in Thailand’s economy. Known previously as Siam, Thailand opened to foreign contact in the pre-industrial era. Previously, Thailand was a feudal society mostly run by noble families. The Thai economy changed from one of subsidence to cash during the nineteenth century by the opening of the commercial rice market, during this time the power of the noble families was weakened as more rights were given to farmers by the King. (Jeffrey Hayes, 2008). Thailand slowly became one of the major trade hubs in Asia, mostly trading with Chinese merchants, many of whom migrated and attained high positions within the country. Later, deals with Europe increased, with treaties being created to guarantee the rights and privileges of European traders. Later amendments were made extending these opportunities to Americans also. Thailand’s economy eventually grew until it began to work on a global scale. During the time of the Vietnam war and the late 1980’s and early 1990’s Thailand began to grow at a level where the economy started to rival that of other developed nations such as Taiwan and South Korea. Growing steadily at eight percent per year between 1985 and 1995 and peaking at 13 percent in 1988. This growth continued until the great depression and then later the Asian financial crisis which originated in Thailand in 1997 because of the financial collapse of the Thai Baht. The crisis was the worst economic crisis ever to hit Thailand and was dubbed the Tom Yum Goong crisis (Spicy Shrimp Soup) due to the immense heat and stress that people felt at that time. There was action taken by many actors at the time, including the Thai monarchy. Bhumibol Adulyadej was the King at this time and had toured the country for years, especially in rural and impoverished regions such as Essan; considered to be the most impoverished region of the nation. King Bhumibol had significantly lectured on the benefits of following a sufficiency based economy. The focus being on an economy that would allow the Thai people to support themselves (UNDP report 2007). The sufficiency economy philosophy is made up of three main components these being: wisdom, moderation, and prudence. Sufficiency economy has much in common with Buddhist economics, a spiritual belief that gross national happiness is more important than gross domestic product. As Zsolnai Laszlo stated, Buddhist economics can be summed up as when “the marginal productivity of labor utilized in producing consumption goods is equal to the marginal effectiveness of the meditation involved in economizing on consumption without bringing about any change in satisfaction” (Zsolnai, Laszlo, 2011). The king among other members of the monarchy carried out a number of royal projects hoping to alleviate some of the effects of the Tom Yum Goong crisis.

 

 

Thailand’s focus for the next few years was recovery. After facing a number of natural disasters and political turmoil, Thailand was on its way to recovery. This was what led to the rise of Thaksin Shinawatra and his policy which was later named ‘Thaksinomics’ which had a focus on promoting greater infrastructure and development in rural Thailand. Thaksin was voted into office in 2001 and although the first year saw as little as 2.2 percent GDP growth, the following years saw positive growth from 2002-2004 with rates of 5.3, 7.1 and 6.3 (Aidan Jones, 2014). This again led to his party having another huge victory in 2005 where he was re-elected. There was much opposition to Thaksinomics amid reports of corruption, which later led to the military coup in 2006 while Thaksin was giving a speech at the United Nations general assembly in New York. This brought the GDP growth rate back down to 4.4 percent in 2006. Then in 2008, there was even more political turmoil between opposing groups, those who supported Thaksin and those who supported the leader of the military coup. The following years were filled with political and financial turmoil, never again having the steady growth of Thaksin Shinawatra’s Thaksonomics. In 2011 Thaksin’s sister, Yingluck Shinawatra was elected and was Prime Minister for a further three years until she was ousted in May 2014.The rice scheme was in many ways what led to her election in 2011 and subsequent removal in 2014. Yingluck promised to buy rice from Thai farmers at above market value. The rice was obtained and kept with the idea of selling it at the right time for a record profit. However, India then began to lift bans on rice exports as well as Vietnam lowering its costs of exports. Thailand could then not sell the rice that had been collected, and the rice started to deteriorate. There were immense amounts of rice in storage and Thailand was forced to sell it at a much lower price than intended. The total cost of the plan has been estimated at eight to twenty million dollars. The coup was led by military general Prayut Chan-o-cha who then established a Junta called the National Council for Peace and Order (NCPO) (Taylor, Adam; Kaphle, Anup 2014). Prayut is the current head of the NCPO and concurrently the Prime Minister of Thailand to this day.

 

 

 

It is clear that Thailand’s economic past has been littered with times of political unrest and financial turmoil. Thailand is a newly industrials country (NIC) and is not an entirely developed nation, yet has outpaced its other developing counterparts. With over 40 percent of Thais working in agriculture and 16 million rice farmers working in the country, it is essential that strong policies are put in place to support them. The tourism industry in Thailand is also almost double the world’s average. The average GDP contribution being 9 percent while Thailand is currently 17.7 percent. It is clear that Thailand also has a significant reliance on foreign investment. The ‘next step’ for Thailand as dubbed by the NCPO is Thailand 4.0. Thailand is currently in Phase 3.0 with Heavy-industry and energy accounting for around 70 percent of the Thai GDP. In the past, during Thailand 1.0 it was an agrarian economy. Then during Thailand 2.0, the focus was on light industry, textiles and food processing. Thailand 4.0 has three main principles:

  1. Make Thailand a high-income nation,
  2. Make Thailand a more inclusive society,
  3. Focus on sustainable growth and development.

Thailand 4.0 is an economic model without much basis on how to get over Thailand’s ‘middle-income trap.’ Thailand will need the support of foreign specialist to make 4.0 a reality. Professional associations in Thailand among others totally oppose this, however, wishing to keep professional jobs for Thais only. For the time being the Thai people must look towards the NCPO to lead them towards economic prosperity.

 

 

 

 

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