1.5. Economics

The geographical setting of Thailand lends itself to an agricultural economy. Since Sukhothai period, the major economy was agriculture, namely rice farming and fruit growing. These together with fresh-water fish caught in fields, streams and rivers, formed the simple, albeit nourishing, Thai diet.¹ However, over the last three decades, the face of the Thai economy has been greatly, if not totally, changed. For better or for worse, it has been said to be the Fifth Tiger (after Hong Kong, South Korea, Singapore and Taiwan), on its way to becoming a NIC.² The changes can be seen both in its growth and structure.

1.5.1. The Growing Economy3

Thailand's economic growth, despite untoward events at home and abroad, particularly early in the year 1991, is still more rapid than in most countries. In fact with the GDP growth at 8.2% or 8.4%,⁴

the Thai economy should still rank as one of the world's fastest growing economies in this present time.⁵

Since 1960, the country has experienced rapid economic growth, and has emerged as one among the very few countries which have sustained a high, long-term, non-inflationary growth, with the GDP of average 7-8% per annum, and with the average low inflation rate of 5% or below per year. This booming economy was primarily due to the success of manufactured exports, tourism, and foreign investments.

	1982	1983	1984	1985	1986	1987	1988	1989	1990	1991
GDP Growth	4.10	7.30	7.10	3.50	4.90	9.50	13.20	12.00	10.00	8.20
Inflation	5.20	3.80	0.90	2.40	1.70	3.70	5.00	5.35	5.55	5.80

Table 3.2 Percentage of Economic Growth and Inflation⁶

Amidst this overall growth, it is the industrial sector, led by manufacturing sector that has contributed significantly to this growth, and has consequently contributed to the change in the structure of Thai economy. However, the growth of the industrial sector has been concentrated almost exclusively in Bangkok and its surrounding provinces in the Central region. In 1985, 75.6% of the industrial GDP was produced in Bangkok. Such development has further increased the income disparities between those living on agriculture and those in industries and between rural and urban dwellers. For example, the per capita GDP of Bangkok is Bhts 30,828, as opposed to Bhts 8,963, Bhts 8,331, Bhts 6,708, Bhts 5,273, Bhts 4,795, and Bhts 3,111, of the Eastern, Western, Central, South, North, and the Northeastern, respectively.

Category	1950-52	1955-57	1960-62	1965-67	1970-72	1975-77	1980-82	1983-85	1986-88	1989-91
Agriculture	46.45	41.78	40.40	35.83	31.54	29.24	24.68	23.50	22.60	13.50
Manufacturing	12.31	12.44	11.93	13.68	16.19	19.25	20.73	21.00	21.70	25.50

Table 3.3 Share of GDP by Economic Sectors by percent⁷

With the rate of growth of the manufacturing sector which is on the average much higher than that of the agriculture sector, the trend is clear that the industrial sector is overtaking the agriculture sector as the biggest contributor to the national income.

1.5.2. Economic Structural Change8

Some major structural changes in pattern of growth has taken place in the Thai economy over the last three decades. Traditionally, Thailand has been an agricultural economy where the agricultural sector has accounted for a significant proportion of the country's GDP, employment and exports. Since 1960, the GDP share of agriculture has continually been falling from 40.5% in 1960 to 24.9% in 1980, and to 13.50% in 1991 (Table 3.3). In contrast, the manufacturing sector's share in GDP has increased from 11.9% in 1960 to 20.7% in 1980, and 25.5% in 1991 (Table 3.3). The GDP share of other non-agricultural sectors notably public utility and finance have also increased significantly over the years.

Not only has manufacturing output been increasing, a structural change has also been observed within the manufacturing sector. The record showed that Thailand has been successful in diversifying her manufacturing base. Although the bulk of production is still closely related to primary production of food, tobacco, and beverage, their combined share in manufacturing GDP have declined significantly. New industries which emerged as the next most important group are textiles, wearing apparel or garments, accounting for 26% of the manufacturing GDP share. They have grown rapidly as the leading suppliers of manufactured exports.

The overall structural change is also reflected in the export structure. Agricultural export declined from 84.38% in 1960 to 15.7% in 1991. On the other hand, manufactured export which constituted only 2.4% of value of total exports in 1960 increased rapidly to 76% in 1991 (Table 3.4). Since 1985, the value of manufactured exports has exceeded that of agricultural products.

Sector	1960	1961	1966	1971	1976	1981	1984	1986	1991
Agriculture	84.38	82.67	76.85	62.57	51.82	47.71	45.36	34.33	15.70
Fishery	0.41	0.40	1.76	2.87	4.45	4.33	5.03	5.42	5.60
Manufacturing	2.44	2.39	3.76	10.02	26.02	35.78	44.09	54.92	76.00

Table 3.4 Export Value by Economic Sectors by percent⁹

² NIC is the abbreviation for Newly Industrialized Country.

³ Cf S. KOMIN, Social Dimensions of Industrialization in Thailand, pp. 4-6. This publication was originally the result of a research project a country project of Social dimensions of Industrialization in ASEAN funded by United Nations Center for Regional Development (UNCRD) in Nagoya, Japan, and was presented at the International Symposium on Industrialization and Development: Focus on ASEAN, held in Bangkok, during 21-26 August, 1989. With wide interest generated in this topic of industrialization among the general public, academicians, and student of social development in particular, the author decided to publish this report in a book form with the addition and expansion of a few more dimensions to the original report for a fuller coverage of social cultural change.

⁴ Cf The Economy, Good Showing in Rough Year, in Bangkok Post, Economic Review 46 (1991) 12. The Bank of Thailand's new estimate of economic expansion in 1991 is 8.2% and that of the Bangkok Bank 8.4%.

⁵ Cf The Economy, Good Showing in Rough Year, p. 12.

⁶ Cf THAILAND. OFFICE OF THE NATIONAL ECONOMIC AND SOCIAL DEVELOPMENT BOARD, Social Indicators 1991. Bangkok, Bank of Thailand 1992.

⁷ Cf THAILAND. OFFICE OF THE NATIONAL ECONOMIC AND SOCIAL DEVELOPMENT BOARD, Social Indicators 1991.

⁸ Cf S. KOMIN, Social Dimensions of Industrialization in Thailand, pp. 13-16.

⁹ Cf THAILAND, OFFICE OF THE NATIONAL ECONOMIC AND SOCIAL DEVELOPMENT BOARD, National Income Accounts. Bangkok, NESDB various years.