General Overview
Economic Overview
Thailand is primarily an agrarian society with approximately three-quarters of her 54 million population residing in rural areas. The total geographic size is approximately 513,000 square kilometres, of which five regions are recognizable by their characteristic land forms: the Northern ranges and valleys, the Central fertile plain, the Southeast coastal sea board, the arid North-east plateau and the southern humid peninsula. The tributaries draining water from mountain ranges in the North merge to form major rivers which feed the rice-producing area of the Central plains. The climate of Thailand is tropical, and much influenced by the powerful South and Southeast Asia monsoons resulting from the seasonal differences in temperatures between the land mass and oceanic body. The rainy season is usually during June to October and summer lasts from March until May with a cool-dry period in between.
The Thai race is generally considered to be one of the oldest in Asia. Their emergence as a nation began during the 13th and 14th centuries when the Thais rejected the authority of Khom (presently Khmer or Cambodia) and created the first independent Thai Kingdom of Sukhothai. Since then the Thai nation and her successive monarchs have existed without interruption for more than 700 years and have never been conquered by any major colonial power. In 1350, King Ramathibodi established a new dynasty and Ayutthaya, a new capital, which was the capital of Thailand for the next 417 years before it was burnt down by the Burmese in 1767. King Taksin, who liberated the Thai from the brief Burmese conquest moved the capital to Thonburi, the west bank of present Bangkok. King Phuttayodpha (Rama I), who succeeded King Taksin and established the present Chakri Dynasty, moved the capital across the river to Bangkok for strategic reasons in 1782. Since the last of a series of battles with the Burmese during his reign, Thailand has enjoyed a relatively peaceful political and economic development. It is interesting to note that during the past two centuries, Thailand has been the only country in Asia where people have not suffered greatly from internal turmoil, raging wars, and natural disasters, though there have been many bloodless coups d'etat. The absolute monarchy came to an end in 1932 with a bloodless revolution and King Rama VII accepted a constitutional monarchical status with a democratic government. The present King, His Majesty King Bhumiphol (Rama IX) acceded to the throne in 1946.
Thailand is relatively homogeneous with respect to ethnicity and religion. More than 80% of the population are ethnic Thai, with about 10% of the population of Chinese descent. Malay ethnic groups inhabit the southern peninsula, and a number of hill tribes dwell in the northern mountain ranges. Buddhism is the most common religion; over 90% of Thais identify themselves as Buddhist. The Islamic religion is the second most common (6%) followed by Christianity and others.
The government administrative body consists of thirteen ministries and the office of the prime minister. The country itself is divided into Bangkok Metropolis as the capital and 72 additional provinces which are further divided into 704 districts, 7871 tambons or sub-districts and 62,373 villages. Governors and chief district officers are appointed by the central Government, apart from the Governor of Bangkok who is elected by popular vote. Village headpersons (pu-yai-ban) are elected directly by the public while tambon chiefs (kam-nan) are elected by village headpersons residing in their respective administrative areas. Neither village headpersons nor tambon chiefs are civil servants. The chief district officers are directly responsible to their provincial governors. Since governors are career civil servants appointed by the King on the recommendation of the Interior Ministry and cabinet approval, the Ministry of the Interior holds the overall administrative power, but at present the governors are very powerful decentralized decision makers at the provincial level. However, the governor must ensure that central government policies are carried out by supervising the operations of personnel from all ministries, departments and agencies within his jurisdiction. Thus, overall government policies are channelled through the Interior Ministry while other line Ministries are responsible for implementing sectoral policies and plans.
Thailand is, at present, no longer an agricultural economy. In less than thirty years, Thailand has been transformed from a subsistence agrarian society into a rapidly industrializing free-market country. Due to an industrial and export-oriented agricultural development policy, the economy has undergone rapid and sustainable growth and has been cited as one of the most successful countries in the developing world over the past two decades. Under the six Economic and Social Development Plans (NESDP) put into operation over the past 30 years, the economic level of the country and the standard of living of the population have clearly risen. The GNP has increased 18 times in real terms from about 58.9 billion baht in 1961 to 1,047.5 billion baht in 1985, while at the same time per capita income rose almost 10 times from 2,150 baht per person in 1961 to 20,420 baht per person in 19852.
2. Summary, the Sixth National Economic and Social Development Plan (1987-1991). The National Economic and Social Development Board, Bangkok, Thailand, 1991.Recent trends of some major economic indicators are presented in Table 1. During the 1980's, Thailand's economic performance has been impressive especially during the last quarter of the decade. The GDP kept rising in real terms at 1972 levels from 299.5 billion baht in 1980 to 574.2 billion baht in 1989. Gross national saving has shown a healthy trend from approximately one fifth at beginning to one-quarter of the GDP at the end of the decade. Thailand devalued her baht twice, by 8% in 1981 and 14.8% in 1984 to boost exports. Since the second devaluation and floating of the Thai baht in 1985, the exchange rates against major currencies have been quite stable and Thai exports have dramatically increased. The value of Thai exports in 1989 was three times that of 1980. It is also fair to say that Thailand has not had any foreign debt and borrowing problems either in the private or public sector. The amount of foreign debt and the debt service ratio have been relatively low compared to other developing countries. The rapidly diversifying economy, low budget deficits and later surplus at the end of the decade, and a good borrowing rating for foreign capital have helped Thailand's economy to adjust to internal and external shocks and maintain solid growth throughout the decade.
In the past two decades household income has steadily increased in real terms and there is no doubt that continuous economic growth has "trickled down" some benefits to the poor. The prevalence of poverty i.e. the proportion of population living below the poverty line has substantially declined from 57% in 1962-63 to 39% in 1968-69, to about 31% in 1975-76 and to 24% in 1981. The decline occurred in all regions and in both rural and urban areas but the very large urban/rural income differential diminished only minimally and gradually3. However, Thailand's income distribution and poverty profiles are of major concern. The Gini Coefficient, i.e. an index indicating disparity of wealth, has widened from 0.414 in 1962/63 to 0.426 in 1976, to 0.473 in 1981 to 0.500 in 1986 and the percentage of the population below the poverty line showed no sign of improvement in the early half of the 1980's4.
3. Meesook OA. Income, Consumption and Poverty in Thailand, 1962/63 to 1975/76. World Bank Staff Working Paper No. 364. Washington DC: The World Bank. 1979.Furthermore, the agricultural sector especially rice farming which is still the nation's cultural and economic foundation has been increasingly falling behind. The 62% of the Thai population who engaged in agriculture contributed only 15.1% of the GDP whereas the non-agricultural sector (38%) contributed 84.9% in 1990 (Table 2). During the six NESDPs, the ratio of average annual income between those who were in the non-agricultural and the agricultural sectors has kept on widening from 5.8 in 1962 to 9.2 in 1990. Gross regional product differential has been a major concern. The North and North-eastern regions where approximately 20% and 35% of Thai's reside shared only 12% and 14% of the GDP respectively during 1977-1987. On the other hand, Bangkok and vicinities, which had approximately 15% of the population, controlled 43% of the GDP in 1977 which further increased to 48% in 1987. More and more people have moved from the agricultural sector to other sectors for better economic opportunities. The expeditious introduction of predominantly capital intensive, large scale technology has failed to benefit those semi-subsistence farmers who are the majority, and also those urban poor who have moved from rural areas hoping for a better life. The future economic outlook is also more likely to benefit the already better-off households which contain people with non-agricultural occupations. This is mostly due to foreign capital inflows which largely finance development in non-agricultural activities. Moreover, since world agricultural production is expected to be as high as usual, lower international prices and demand will limit Thailand's agriculture exports5, and thus negatively affect those who are already worse-off agricultural households. The recent recession in 1990-91 in the USA which has already spawned the protectionism mood will certainly have a negative impact on Thailand's export-oriented economy if the US government decides to pursue this course. Likewise, as Thailand is an oil-importing country with limited natural energy resources, she may face difficulty in reducing trade deficits, taming inflation and sustaining economic expansion in the decade to come. This causes some anxiety amongst health experts since it has become clearer that health and nutrition go hand in hand with economic and social development.4. Hutaserani S and Jitsuchon S. Thailand's income distribution and poverty profile and their current situations. Thailand Development Research Institute, 1988.
5. Macroeconomic Policy Program. The Outlook for the Thai Economy. The 1989 TDRI Year-End Conference "Thailand in the International Economic Community", December 1989.
