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Thailand as a viable place for Investment

1.1 History

Thailand begin to experience democracy during the mid-1970s and by 1988, the democratic political institutions slowly begin to gained greater authority especially when Chatichai Choonhaven become the first democratically elected prime minister. However, Chatichai Choonhaven term ended in 1991 as a result of a bloodless coup. The next prime minister appointed is Suchinda Kraprayoon which is a fomer army commander. However, the election of Suchinda was protested and the military suppressed the demonstrations by using violence which in the end causes the death of 50 protestors. However, Suchinda was forced to resign and by September 1992 a new election is held.

In January 2001, Thaksin Shinawatra, a telecommunication billionaire and his new Thai Rak Thai (TRT) party become victorious on a populist platform of economic growth and development and are elected as the prime minister. During his reign, he manages to produce a confident foreign policy, limiting the freedom of the press and the war on drugs on 2003. Because of his contribution, Thaksin was re-elected again as the prime minister in February 2005. However, the peaceful anti-government mass demonstration grew and hundreds of thousands demanded Thaksin to resign his post. The parliament was then dissolved by Thaksin in February 2006 and a snap election was called in April. The polls were boycotted by the main opposition and the elections were subsequently annulled by the judiciary.

Both the houses of parliament was dissolved in September 2006 as a result from the overthrowing the caretaker Thaksin administration before new elections can be held. The coup leaders promulgated an interim constitutions and Surayud Chulanont was selected as the interim prime minister. A multi-party elections were held by the interim government under the new constitutions and pro-Thaksin People’s Power Party (PPP) won the elections in the lower house of parliament and Samak Sundaravej official took office as the prime minister in February 2008 and form a coalition government. However, Samak was force to resign because of violating the constitution’s interest due to hosting a televised cooking show. Somchai Wongsawat, Samak successor and also the brother in law of Thaksin was also forced to leave the office because PPP has violated the election law in December 2007. PPP was split into two and Democrat Party leader Abhisit Vejjajiva was elected as the prime minister on 15 December 2008.

In 2008, anti-government or also called as yellow-shirt protester occupied the government house and this has forced Bangkok’s airports to be close for few days and in early 2009, red shirt protested against Abhisit government which led to a disruption of a major Asian summit in Pattaya and riots in Bangkok in April 2009.

1.2 Geography

Figure 1.1: Thailand Location


Source: www.pattayavillaholidays.com/images/thailand-.

Thailand has an area of 513,115 sq. km which is located between 6 and 21 degrees north latitude and 97 and 106 degrees east longitude, Thailand is surrounded in the north by Myanmar and Laos, in the west by Myanmar, in the east by Cambodia and Laos and in the south by Malaysia. The longest north-south distance is about 1500 km and the longest east-west distance is about 800 km. The topography is flat alluvial plains intersected by winding rivers and streams in central Thailand, a highland in the northeast, forest-covered mountains and hills in the north and mostly hills in the south. Thailand is divided into five natural regions, the Central, North, Northeast, Eastern Seaboard, and Southern regions.

1.3 Government and Political Conditions

Thailand is a constitutional monarchy and democratic society with a written constitution that guarantees the rights of the people and classifies the structure of government. The government of Thailand includes four branches which are the Monarchy, Executive Branch, Legislative Branch, and Judicial Branch.

Thailand is divided into 76 provinces or changwat with a governor at their head, assisted by one or more deputy governors, an assistant governor, and officials from various central ministries, except for the Ministry of Foreign Affairs. The governor supervises the overall administration of the province, maintains law and order, and coordinates the work of ministerial field staffs.

Furthermore, every province is divided into districts or amphoe. District administration is under the charge of a district officer or named as nai amphoe which is equivalent to a mayor. The district is usually the main point of contact between the central authority and the populace, the central government has no appointed civil service officials below this level. Besides that, each district comprises of sub-districts or tambon and below the villages or moo ban have their own administrations.

Thailand has a large number of political parties and it common for governments to be formed by party coalitions. The main political parties are the Democratic Party (Prachathipat Party), the New Aspiration Party, the National Development Party (Chat Phattana), the Thai Nation Party (Chat Thai), and the Thai Rak Thai Party. Thailand’s current government is formed by a coalition of the Thak Rak Thai Party and The New Aspiration Party. In Thailand, the political parties tend to be dominated by business tycoons and lawyers and there is a strong flavour of the country being run by an established cabal of political families.

1.4 Economy Condition and Reasons in choosing Thailand

Thailand is one of the fastest growing economies in Asia and also in South East Asia. Thailand heavily depended on its export and in 2010, the exports of its goods and services is equivalent to nearly 70 percent of its GDP. In 1985 to 1996, the growth rate of Thailand was very high which with an average of 10.4 percent however the average of 10.4 percent of Thailand growth rate did not last and in the middle which approximately after year 1996, the growth rate or Gross Domestic Product (GDP) of Thailand began to decrease especially in 1997 and 1998. Thus, Thailand is picked because we wanted to analyze the reasons that responsible in decreasing the GDP in Thailand and the reasons that are preventing Thailand to grow fast. Besides that, we would like to do analysis on the other macroeconomic indicators which could impact the GDP of Thailand severely. Another reasons is because Thailand is the top ten emerging economies thus it is beneficial to study Thailand.

Apart from that, the political crisis in Thailand has brought significant impacts to the tourism industries. The ongoing political crisis in Thailand in form of a conflict between the People’s Alliance for Democracy (PAD) and the People’s Power Party (PPP) governments of Prime Ministers and later between the Democrat Party government of Prime Minister Ahbisit Vejjajiva and the National United Front of Democracy Against Dictorship (UDD). It is a continuation of the 2005 to 2006 political crisis, where the PAD protested against the Thai Rak Thai (TRT) party government of Prime Minister Thaksin Shinawatra. Hence, we chose Thailand because we would like to find out the economics effects and consequences of the political crisis that started on 2008 in Thailand.

2.0 The Trend of GDP in Thailand

Figure 2.1: Trend of GDP in Thailand from 1970 to 2009

Source: World Development Indicators, World Bank, Various Issues

From Figure 2.1 above, it can be seen that Thailand GDP has been growing substantially over the last decades. The GDP trend in Thailand is linearly related although the GDP of Thailand in certain years encounter fluctuations which causes it to decrease but regardless of that, Thailand has an uptrend GDP. In overall, the Gross Domestic Product (GDP) of Thailand had increase in value from US$ 7086 million in 1970 until US$ 263772 million in 2009. Between 1970 and the Asian Financial crisis of 1997, GDP annually grow between 5 and around 10 percent per year. However from 1988 to 1990, GDP growth was higher with more than 10 percent per year. This is shown from the figure above that the increasing trend from the period 1988 to 1990 is steeper compare to the previous years.

The Asian Financial crisis in 1997 caused the first drop that send the GDP growth into a negative territory as shown by the drastic drop of the GDP in the graph above. After the crisis in 1997, the overall growth seems to trend around 5 percent per year. However, the political and global crisis in 2008 to 2009 caused the second dip into the negative territory in which from Figure 2.1 it is shown by the sudden drop of the GDP in 2009. The reasons and impact of the sudden drop would be discussed in section 3.1, 3.2 and 3.3. Whereas, the development plan implemented in Thailand will be discussed in section 4.0.

3.0 Trend Analysis on GDP of Thailand

The uptrend GDP in Thailand mainly related to the sector that they emphasizes along the years. This is shown by the significant structural changes in Thailand economy that have taken place since the early 1970s. From Figure 3.1 below, it is shown that the value added of agriculture share from GDP declined from about 26 percent in 1970 to about 9 percent in 1993 although from 1994 to 2009 onwards the value added agriculture share from GDP increase again to about 12 percent but the share is still lower compare to when it is in 1970.

At the same time, while agriculture sector share is decreasing, industry sector began to expand rapidly which is shown in Figure 3.1 that the value added of industry share from GDP increase from about 25 percent in 1970 to 43 percent in 2009 in which manufacturing sector an important subsector of the industry sector in Thailand contributed about 16 percent in 1970 to about 34 percent in 2009. Although the value added share of agriculture to the GDP decreases but the value added agriculture output still increases from 1970 to 2009 which is shown by the increasing trend in Figure 3.2.

Moreover, a high degree of diversification took place which enables Thailand to boost it three major commodities particularly rice, teak and rubber in the early 1950s to more than 10 main agricultural products in 1993. Due to the structural change from agriculture to industry sector which lead to the development of the manufacturing sector where in 1970s it successfully produces export-oriented items. Thailand is becoming a centre of automobile manufacturing for the Association of Southeast Asian Nation (ASEAN). Moreover, instead of decreasing in the value or output in the agriculture sector it actually increases thus both of these sectors lead to an increasing trend towards the GDP of Thailand.

Figure 3.1: Composition by Sectors in Thailand from 1970 to 2009

Source: World Development Indicators, World Bank, Various Issues

Figure 3.2: Agriculture Sector Output from 1970 to 2009

Source: World Development Indicators, World Bank, Various Issues

Figure 3.3: FDI Net Inflows, Imports and Export from 1975 to 2009

Source: World Development Indicators, World Bank, Various Issues

In addition, from Figure 3.1 it is understandable that in term of sectors, services sectors is the main contributor to the GDP in Thailand since 1970s and up until now services sector still contribute a lot to GDP of Thailand although as stated previously that industry sector is contributing more to the GDP as year goes by. On the other hand, international trade contributes more to the GDP of Thailand compare to investment of FDI from other countries and this could be proven in Figure 3.3 above that shows exports and imports curve is higher than FDI inflows in which by 2009, exports and imports share in GDP of Thailand are 68 percent and 58 percent respectively that in overall implied that trade is a more important driver of growth for the Thailand economy so as imports and exports fall drastically, Thailand GDP can be heavily impacted.

However, this is exceptional to the case from year 1997 to 1998 in which although GDP drop a lot but exports still rises due to the depreciation of Thailand exchange rate which cause Thailand exports to be cheaper so instead of decreasing exports it is actually rising. The reasons that caused the GDP in year 1997 and 1998 to drop will be discuss in the next section. A good example of decreasing export and imports could lead to drop in GDP of Thailand is from year 2009. From Figure 3.3, a sudden drop of exports and imports can be seen in year 2009 and at the same year GDP of Thailand also decreases drastically.

Next, the GDP of Thailand is then analyzed in term of its competitiveness. Competitiveness is highly related to a country’s productivity. As the country is more productive then it becomes more competitive globally. The analysis is done using the GDP from year 2007 to 2009. This period is selected as 2007 and 2008 mark the years where GDP of Thailand is still rising and it is then compare to year 2009 where the GDP decreases. The three years are compared based on their competitiveness to see whether the GDP of Thailand reflect its global competitiveness.

Table 3.1: Global Competitiveness Index Rankings and 2007-2008 Comparisons

Country / Economy

GCI 2008-2009

GCI 2007-2008 rank















New Zealand












Saudi Arabia
















United Arab Emirates








Czech Republic








Source: The Global Competitiveness Index 2008-2009

Table 3.1 above shows the Global Competitiveness Index Ranking and 2007 to 2008 Comparisons. From the table, it is seen that Thailand global competitiveness index drops six places which is from rank 28 for 2007-2008 to rank 34 for 2008-2009. As a result from the political turmoil experienced on 2009, the overall ranking of Thailand for its Global Competitiveness decline and this mainly happened because of the weak assessment of government institutions together with the increasing concerns on the transparency of policy-making and public-sector efficiency that causes riot to happen.

From a survey done where respondents were asked to select five most problematic for doing business in Thailand, the number one problem is identified as the government instability with 21.5 percent, then the second falls to policy instability and third to inefficient government bureaucracy with 13 percent and 12.1 percent respectively (Schwab and Porter, 2008). Thus, this show that because of the political unrest in 2009 that lead to the instability of the government, it causes the foreign companies do not wish to do their business in Thailand which in the end led to the decrease in Global Competitiveness of Thailand, As foreign companies do not wish to do business in Thailand, the government lose one of their important source of revenue thus caused the GDP in 2009 to decrease. This illustrate that Global Competitiveness of Thailand is related to the country’s GDP. When Thailand is not competitiveness enough to attract foreign investor or companies to invest or do business with them then productivity will decrease which could impact the economy in this case GDP negatively.

Tourism activities such as restaurants, hotel, airline, and leisure and recreation services that deal directly with tourists could also directly give impact to the GDP. There are direct contribution from the calculations of travel and tourism which originate from the total internal spending by ‘netting out’ the purchase made by the different tourism sector. There are several items in tourism activities that could contribute towards GDP in Thailand. Firstly, travel and tourism investment spending such as purchase of aircraft and the new construction hotel. Next is the government collective spending that includes tourism marketing and promotion, security services and administration. Then, tourist’s domestic purchases of goods and services for example services of travel agents, hotels, purchase food and thing.

Figure 3.4: Total Contribution of Travel and Tourism to GDP from 2005 to 2010

Source: World travel tourism council

Figure 3.4 above shows the total contribution of travel and tourism activities towards GDP. Tourism in Thailand plays the important role to the economic activities especially contribution in term of GDP. For year 2005 and 2006, the total contribution of travel and tourism to GDP for these years is about THB 1, 115.3 billion and THB 1, 312.5 billion respectively. Then, for the following years after 2006 the total contribution keeps on increasing. However for 2009 the total contribution decreases to THB 1, 420.8 billion. This is because of the political crisis that happens on 2009 in Thailand that would later be discussed further in the other section. From here, it is seen that, as total contributions of tourism activities increase the GDP of the country also increases and when it decreases in 2009, the GDP for Thailand in 2009 also decreases which could prove that tourism activities could impact the GDP of Thailand.

Employment is another indicator that can give impact to GDP in Thailand although not in a direct way. Employment indirectly could contribute to GDP in term of productivity and as each sector is develop; it can provide sources of new job creation. The services industries in Thailand have expand about 2.6 million jobs from 2000 until 2006 in Thailand. Thailand creates a lot of jobs for their citizens that can help in decreasing the unemployment rate of the country. The figure below shows the unemployment rate in Thailand.

Figure 3.5: Unemployment Rate in Thailand from 2003 to 2010

Source: CIA world fact book

Unemployment rate in Thailand at 2008 is about 1.4%, but it increase on year 2010 about 1.5%. However, it did not has heavy effect to GDP in Thailand, this is because other indicators that have been discussed previously contributed more and give larger impact on the GDP of Thailand. The graph above is just to shows that unemployment rate in Thailand is above 2%. However, it is consider good in regards of the economic condition.

As mention in the previous section from 1988 to 1990 GDP growth was higher than the average 5 to 10 percent annual GDP growth however from 1991 onwards GDP growth decreases and this is because of the impact received by the war in the Middle East, problem with AIDS and also the failed August Coup of 1991. Besides that, the political crisis after the March election and also the tragic events that happen in May which known as Black May also causes a strong impact to the economy of Thailand. Black May also refer to the incident in May 1992 stated earlier in the history of Thailand. In addition, in 1991 also import had decline which is shown in Figure 3.3 due to the introduction of value added tax system (VAT) to replace the business tax. Next, this section will be divided into three subsections which would analyze based on the years the GDP of Thailand decreases rather drastically.

3.1 Financial Crisis in 1997-1998

The Asian Financial Crisis that happens in 1997 had caused the first drastic drop in the GDP of Thailand. This crisis started when the currency of Thailand, Baht was devaluated. Then, a lot of speculators who had seen the slow growth of Thailand, bank run and decreasing Balance of Payment (BOP) as a sign of unprofitability to their investment so they sell their domestic assets and claimed back their foreign assets. This caused the balance sheets of bank deteriorated thus lead the economy to encounter severe impacts. The situation became worst when government of Thailand failed to save their country’s largest finance company, Finance One (Laplamwanit, 1999). This crisis happen because of the rising interest rates and cost of imports that lead to the difficulty in obtaining commercial loans that in the end lead to bankruptcies and widespread of unemployment.

Figure 3.6: Balance of Payment of Thailand from 1995 to 2000

Source: International Financial Statistic, IMF, Various Issues

Figure 3.6 shows the balance of Payment (BOP) of Thailand and from the figure, it is noticeable that the BOP of Thailand decrease drastically in 1997 compare to 1996 due to Asian financial crisis. This drastic decrease mainly cause by the large negative value of the financial account shown by Table 3.2 below in which lead to the large negative value in BOP. This situation shows that the company is in a huge debt especially when the total liabilities are more than the total assets of a company.

Moreover as it is difficult to obtain commercial loan that time and this caused the companies do not have any other financial means to pay back their debt and in the end it led to the bankruptcies of a lot of company. As a lot of companies went bankrupt, the productivity of Thailand decreases drastically as there are lesser companies could contribute to the country’s income or in other words the factor of production used in order to increase country’s GDP decreases which led to the decrease of GDP in 1997.

Table 3.2: Financial Account of Thailand from 1995 to 2000


Financial Account (US$ million)













Source: International Financial Statistic, IMF, Various Issues

As discuss in section 3.0, exports and imports are not the main reasons that causes GDP in these two particular years to decrease. Given in Figure 3.7, the currency of Thailand, Baht depreciate in 1997 which causes its goods and services to become cheaper thus this encourage other country to export more from Thailand especially its top trading partners US and Japan thus it boosted the exports of Thailand instead of decreasing it during this period crisis.

Figure 3.7: End of Period Exchange Rate from 1970 to 2009

Source: International Financial Statistic, IMF, Various Issues

Figure 3.8: Total Unemployment rate of Thailand from 1985 to 2009

Source: International Financial Statistic, IMF, Various Issues

Moreover, the Asian Financial Crisis also caused an increase in the unemployment rate of Thailand. However, the unemployment rate only increases a year after the crisis. In other words, the effect of the crisis towards unemployment can only be seen after one year which is shown in Figure 3.8 where in 1997 the total unemployment rate is 0.9 percent but it increases to 3.4 percent in 1998 due to the bankruptcies of a lot of companies that in just fortnight lead to a massive amount of employees to become jobless. Thailand recovery from Asian financial crisis relied on external demand from the United States and other foreign markets.

3.2 Oil Price Crisis in 2001

The Thai economy slowed down since the beginning of 2001, it is mainly caused by the adverse impact of the global economic fall on the external sector. In 2001, the Thai economy has grown at a rate of approximately 2.2 percent, which drop from 4.7 percent growth rate in 2000, which is shown in Figure 3.9 below. The slowdown in Thailand is due to the slowdown in the world economy which in result of the downturn of the US business cycle and the fragility of the Japanese economy.

Besides that, other factors that caused to the slowdown are higher oil prices in the first half year of 2001. The terrorist attack also dampened the US economy as well as the world economy, and the slack in world demand led to a sharp fall in oil prices during the last quarter of 2001.

Figure 3.9: Annual GDP Growth Rate from 1990 to 2009

Source: World Development Indicators, World Bank, Various Issues

Figure 3.10 below indicates the crude oil prices falls in December 2000. The falling oil prices will be largely determined by the outcome of the Middle East peace process, along with OPEC’s supply policy, however if the level oil prices level is maintained at about US$25 per barrel, it will play a major role in easing potential inflationary pressures. The combination of lower oil prices, stable baht, and domestic economic slowdown caused inflation to decline steadily.

Figure 3.10: Price of Crude Oil from 1997 to 2000

Source: Domestic Crude: Federal Reserve

The downturn in US economy, which particularly depressed demand in the US market, has hurt the Thailand’s export sector. The 911 attacks have worsened the slide of the US economy into recession, prompting the Export Promotion Department and the Bank of Thailand to cut earlier export projections. This caused the exports in 2001 are likely to be worth US$65186.62 million dropped from US$69775.51 million in 2000. At the same time, the total imports of Thailand also decrease from US$62180.14 million in 2000 to US$61751.83 million in 2001. Figure 3.11 below implies the total exports, imports and net exports in Thailand from 1995 to 2009. Although the total imports decreased in 2001. However, the total exports are declining more than the declining in total import, and cause the net export to fall to US$3434.79 million in 2001 from US$7595.37 million in 2000, or equivalence to 55 percent. The falling in the net export has cause the Thailand GDP to fall in 2001 at about 5.86 percent.

Figure 3.11: Total Export, Import and Net Export from 1995 to 2009

Source: Customs Department, Bank of Thailand

Exports fall by 6.9 percent from the previous year in Thailand due to the slowdown in demand from trading partners, especially United States and Japan, Thailand’s major markets together which account for 35 percent of Thailand’s total exports. The decline was in every type of goods particularly manufacturing goods which integrated circuits were the hardest hit, with a contraction of 21.7 percent. On the other hand, the domestic demand and the major drop in exports caused the value of imports to contract especially in the consumer goods, particularly durable goods for instances electrical devices.

3.3 Political Crisis in 2009

GDP for 2008 in Thailand is about US$ 272429 million. Then, in 2009 Thailand GDP decreases to US$ 263772 million in which could be refer in Figure 2.1. The Gross Domestic product (GDP) for 2009 decline about 3.18%. This is because in 2009 political crisis occurred in Thailand, This crisis started because of the rioting by the red-shirt group. The instability of the political in Thailand has causes retardation of economic activities. For example, tourism activities cannot be run as usual and smoothly because of the political crisis in Thailand at 2009. One of the subsector of the service sector which is tourism is an important subsector to the Thailand’s economy.

Tourism contributes about 6 percent of gross domestic product every year. Tourists come to Thailand for reasons such as going to beaches or just for relaxation. The main capital of Thailand, Bangkok held the most amount of tourists that come to Thailand. In 2007 about 14 million tourists had visited Thailand. Then, in 2009 because of the political crisis that had happened and this rioting happen especially in Bangkok it caused the tourist scared to come to Thailand to take their vacation or even to come to visit a while. This incident causes Thailand to experience a decrease of international visitors for about 16% in 2009. This problem gives negative impact to the GDP in Thailand on 2009.

Figure 3.12: Evolution of International Visitors to Thailand from 1998 to 2010

Source: Tourism Authority of Thailand

The tourism sector in Thailand could gives impact to the GDP of Thailand as it is one of the important subsectors of services sector. Figure 3.12 above shows the evolution of international visitors to Thailand between 1998 until 2010. From the graph above it shows that at 2009, the number of international visitors visited Thailand is about 14.15 billion of international visitors. The number of international visitors in 2009 decreases compare to the value in 2008 in which the number of international visitors is about 14.2 billion of international visitors. The decline of the international visitors is because of the riots and the political instability.

The Political disturbances that happen in 2009 give impact to tourism in Thailand and indirectly give impact towards GDP in Thailand. This is because tourism activities contribute a lot to the GDP of Thailand. When the international visitors come to visit Thailand they spend about US$ 16 billion at 2008 and the average length of stay per tourist is around 9 days. The revenue of the tourism activities has contributed to the GDP in Thailand. Besides that, as stated previously political disturbances in 2009 also have negative effect to the tourist arrivals in which the number of tourist arrive in 2009 is less compare to 2008. In overall, on 2009 Thailand suffered from political instability caused by rioting of the red-shirts group and the yellow-shirts group that make Thailand become unsafe to be visit by the international visitors.

However by 2010, the number of international visitor to Thailand increased about 15.8% compare to when in 2009. At 2010 it shows the highest number on record of tourist arrivals. From here, the economic activities of Thailand especially tourism could affect the country’s GDP especially Thailand services sector is one of the main contributor towards the country’s GDP.

4.0 Policy Implemented in Thailand

The first development plan in Thailand is on 1961 which marks the start of the government in committing itself to the primacy of private enterprise to a policy to assist and foster it. A policy of foreign trade and exchange liberalization was also followed by Thailand. The first five year plan of Thailand covers from the period 1961-1966 which the aim is to raise the standard of living of the people and this is done by promoting greater agriculture, industry and power production. Then, the second development plan that covers from 1967-1971 emphasize on agricultural development, highways, irrigation, education and industrial development in the private sector. Next, the third development plan covers the period 1972-1976 which place special emphasis on improving the rural infrastructure, growth in financial and commercial sectors and also diversifying the crops and not to forget to promote the import-substitution industries. In the third development plan, government of Thailand also commit itself to reduce the role of state-owned enterprises (Encyclopedia of the Nations, 2011).

The first three plans manage to increase the standard of living which enables the building of new roads, irrigation schemes and land reform. However, these changes also cause the income gap between the rural and the urban area to increase. As a consequence, it leads the number of migrants to the city to increase in order to search for work. The fourth economic plan covers the period of 1977-1981 that emphasized on the decentralization of industry and economy growth from the capital region to the provinces. This plan also marks the end of encouraging import-substitution industries and starts to promote export-oriented industry. Under the direction of Industrial Estate Authority of Thailand, plans were made to establish industrial estate (Encyclopedia of the Nations, 2011).

The fifth development plan covers the period 1982-1986, reduction of rural poverty and social tensions and expansion of employment opportunities in the poorer regions were stressed in this plan. The sixth national economic and social development plan covers the period 1986-1991. In this plan, it continues the promotion in exports, strict monetary and fiscal policies, streamlining the public sector and target growth at about 5 percent yearly. However for this plan, less emphasize was placed on capital-intensive industries and more towards utilization of resources. This plan is targeted on private sector investment and initiatives where privatization of state enterprises would proceed in phases and these enterprises were required to find their own revenue. Other than that, the development of small-scale industry especially the ones that are situated in the rural areas are emphasized (Encyclopedia of the Nations, 2011).

In 1993, the Eastern Seaboard Development Plan southeast of Bangkok which begun 10 years before as a US$ 4 billion investment had demonstrated results with the new port, Laem Chabang. This plan extend Bangkok towards a greater future as it extend all main national arteries into four lane highways and double tracking the railways. The Sixth National Development Plan coincides with the early part of Thailand ten year booms. Next, the Seventh Development Plan which covers the period of 1992-1997 on the other hand coincides with the second half of Thailand ten year booms which had shifted the government to put more emphasis on a more balance, sustained development and less on growth per se. The seventh development plan was formally titled as the seventh national development and social development plan and it emphasize on three things which are firstly, sustained, moderate growth. Secondly, redistribution of income and decentralization of panning to achieve reductions in the percent in poverty and widening gaps between the rich and the poor and lastly to develop human resource. In this plan, the real GDP growth target was met however goals to eliminate the large balance of trade and current account deficits were not met. Besides that, the average annual savings rate 9.1 percent also drop below the plan targeted percentage of 12.8 percent (Encyclopedia of the Nations, 2011).

Thailand’s eight national developments and social development plan covers from the period 1997 to 2001 which emphasize on the qualitative and quantitative growth. This plan coincides with Asian Financial Crisis. Although it emphasize on growth however the priority is on human development and replacement of top-down administration with bottom up processes. However, due to recession and high inflation with the collapse of baht in 1997, none of the goal in the eight developments and social development plan was met. In addition, although the decade of booms had bring out about a million of people from poverty, because of the crisis, about a million and a half a year were put back into poverty were the number is estimated to rose from 6.8 million to 9.8 million (Encyclopedia of the Nations, 2011). During the crisis, Thai Government launched a series of economic initiatives in order to stabilize the economy, encouraging the growth of small and medium-sized businesses, to boost domestic demand and to improve the income and development of rural areas.

This then continues with the introduction of the ninth national development and social development plan which covers the period of 2001 to 2006. In this plan, the government introduce the concept of sufficiency economy as a guide to the people so that they knew the means to overcome economic crisis. This concept tells the people that, a balance development can be achieved through a combination of patience, perseverance, diligence, wisdom and prudence (Encyclopedia of the Nations, 2011). During 2001 also, Thaksin, the prime minister that time embrace a dual track economic policy which combines increased domestic activity with the traditional promotion of open markets and foreign investment in which this set of policies is known as Thaksinomics.

5.0 Conclusion

From the Gross Domestic Product (GDP) graph of Thailand, we can see that before the year in which the financial crisis happen, the GDP growth in Thailand had been increasing at a tremendous speed with an average of 5 percent to 10 percent per year and there is years where the growth rate is even more than 10 percent per year. However, because of the financial crisis, a lot of people are unemployed and Thailand currency, Baht also depreciated drastically. Then the two other crises which are the oil crisis in 2001 and the political crisis in 2009 impact the export of Thailand and as Thailand is an export-oriented country thus decreasing export affect the GDP of Thailand heavily.

From the analysis done in this report, the sector which contributes the most to the GDP of Thailand since 1970s is the services sector in which the most important services activities is tourism but industry sector began to be emphasizes when the fourth economic plan was introduced in which Thailand start to emphasize on export-oriented industries instead of import-substitution industry. As export-oriented industries are being promoted, the portion that industry sector contributes to the GDP of Thailand also increases and now it is in pace with services sector. From the analysis also, we know that Thailand depended more on international trade rather than foreign direct investment.

In conclusion, we could see that at the earlier stage which is from 1970s until 1996, Thailand had amazing growth rate and even manage to decrease the poverty incidence however because of the crisis they drop drastically thus missing their chance in being a developed country. However, if Thailand could achieve what they had achieved years back then they will surely be able to become one of the developed country even now, Thailand is one of the top ten emerging economies that people will invest in.

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