FeelThailand

Over the past two decades, the national income has increased by approximately eight percent per year. Moreover, growth has been broadly based, with all economic sectors participating in the development process.

The fabric of the Thai economy remained virtually unchanged up to the late 1950s. In the early 1960s, the industrial and service sectors began supplementing agriculture as significant income and employment generators. Today, Thailand is still predominantly an agrarian country, with about 57 percent of its working population engaged in agricultural production and earning about 12 percent of the national income. Over the years, however, the industrial and service sectors have been increasing their shares of the total GDP.

Significant structural changes in the Thai economy have taken place since the early 1960s. Agriculture’s share of the national income declined steadily from about 40 percent in 1960 to 12 percent in 1993. At the same time, the manufacturing sector expanded very rapidly, increasing its portion of the national income from 13 percent in 1960 to 37 percent in 1993. Such a structural change does not, however, imply that agricultural output failed to rise during the period. On the contrary, it increased by about five percent per year. Moreover, a high degree of diversification took place, enabling Thailand to boost its export items from only three major commodities namely rice, teak and rubber in the early 1950s to more than 10 main agricultural products in 1993.

The industrialization process initiated during the 1960s was geared towards import-substitution. It was succeeded in the 1970s by a drive to produce export-oriented items. By the mid-1970s Thailand was exporting manufactured goods ranging from cement to watch parts, and including canned fruit, garments, chemical products, transport equipment and television sets. In 1993 manufactured exports accounted for about 81 percent of total export earnings.

International trade is vital to the Thai economy. Thailand’s entry into foreign markets in the mid-19th century enabled its economy to expand rapidly. Today, export and import transactions together account for about half of the national income. Although there were annual deficits in the balance of trade, the balance of payments recorded continuous surpluses throughout the 1960s and early 1970s, Sharp increases in oil prices since 1970, however, affected the balance of payments position severely. Large tourist earnings are foreign capital inflow put the balance of payments back into a surplus position.

The public sector supports the growth process by providing development facilities through the construction of basic infrastructure and by creating a conductive environment for the private sector to operate effectively.

Despite the steady increase in population, real per capital income has doubled over the past two decades. At current prices, it increased from 4,000 baht per head in 1970 to 53,215 baht per head in 1993. The proportion of the country’s population living at the subsistence level has declined from around half in the early 1960s to less than a quarter in recent years.

In short, the performance of the Thai economy over the past two decades has ranked high among developing countries. Some basic economic problems such as income disparity, the need to conserve natural resources, the uncertainty of export markets, and the need for improving administrative efficiency, remain to be solved but judging by past performance as well as from the present economic outlook, it is clear that Thailand has the potential to expand its economy and thereby improve the welfare of its citizens.