THAILAND: SECOND WAVE OF NEWLY INDUSTRIALIZING COUNTRIES

Thailand

The only Southeast Asian country not colonized by European powers.

Foreign investment, capital, expertise

Economic Plan (1): Focused on attracting ___, ___, and ___ to promote economic development.

Consumer

Goal of Economic Plan (1): To develop Thailand’s economy and meet the growing demand for ___ products.

open-market, capitalist, state-planned

Thailand adopted an ___, ___ model and rejected the ___ industrialization seen in Taiwan and South Korea.

Labor, land, industrial

Measures under Economic Plan (1): Increased ___ and ___ productivity, expanded and diversified ___ production.

Chemicals, machinery, electronics

Measures under Economic Plan (1): Encouraged enterprises producing ___, agricultural goods, ___, ___, labor-intensive, and export-oriented products.

Developing

Result of Economic Plan (1): Thailand became one of the fastest-growing and most successful ___ countries, showing rapid production growth and poverty reduction.

Rice, cassava products, rubber, maize, sugar

Thailand’s Major Agricultural Products (RCRBS; 5)

Textiles, electronics, tin

Major Non-Agricultural Exports (TET, 3)

Deforestation, watersheds

Environmental Side Effects of Economic Plan (1): Reduction of agricultural land, ___, and damage to ___.

68

Economic Plan (2): Established ___ state enterprises to participate in key commercial and economic sectors.

Public utilities, transport and communication, finance, petroleum, manufacturing, agriculture, commerce, and services

State Enterprise Sectors (PuTacFPMACas; 7)

Owner, partner

Government Role in State Enterprises: The government acted as sole ___ or dominant ___ in most state enterprises.

Bureaucrats, military officers, politicians

Disadvantages of State Enterprises: Managed by ___, retired ___, or ___; absorbed a budget 9% larger than the national total; responsible for 65% of external public debt.

Construction, rice, car, middle class, yuppie

Boom Indicators: Surge in ___, ___ exports, ___ production (Japanese-owned plants), and emergence of a ___ and “___” culture.

Mercedes-Benz, Scotch, tourism

Luxury Consumption Trends: Rise in ___ sales (5,000 in 1992 → 14,082 in 1995), high ___ consumption, and increase in Thai outbound ___ spending.

Japan, China, South Korea, Taiwan

Postwar Economic Development: ___, ___, ___, and ___ directed capital toward industrial sectors with high growth potential.

Central bank, financial agencies, private sector

Thailand’s Postwar Strategy: Relied on an independent ___ and government ___ to create growth conditions while leaving business decisions to the ___.

Bangkok

Economic Boom Limitation: Growth was concentrated in ___, leaving rural areas neglected.

Education

Thailand’s ___ system failed to produce a skilled labor force comparable to Taiwan and South Korea.

Underinvested

The government ___ in education, leading to low high school graduation rates (17%) and few engineers (260 per million vs. 2,500 in South Korea).

Pollution, income, slums, overcrowding, traffic

Social Problems: Environmental ___, widening ___ gap, urban ___, ___, and ___ congestion increased during the boom.

HIV/AIDS

Thailand faced the most serious ___ crisis in Asia.

Financial Crisis

Began in July 1997 when Thailand’s financial markets collapsed.

Competitiveness

Causes of 1997 Crisis (1): Early 1990s financial liberalization and loss of competitiveness against China, Vietnam, and other Asian economies.

Foreign loans, lending

Causes of 1997 Crisis (2): Thai businesses’ overreliance on short-term ___ and excessive ___ by international banks.

Bank of Thailand

Causes of 1997 Crisis (3): Political interference in the previously independent ___ and weak financial regulation.

Response

Causes of 1997 Crisis (4): Slow government ___ despite recognizing financial problems.

Baht

Government Response (1997): Devalued the ___ due to insufficient foreign currency reserves to maintain its peg to the US dollar.

Asian Financial Crisis

A 1997 financial crisis originated in Thailand and spread across Asia.

Depreciation, debt, confidence

Currency ___, stock market decline, rising private ___, and higher foreign debt-to-GDP ratios (up to over 180%) leading to loss of demand and ___ across the region.