An Economic Overview of Thailand
17 December 2010
An Economic Overview of Thailand
The country of Thailand is located in the southeast Asia region, south of China and immediately bordering Burma to the west, Laos to the East and Cambodia to the south. Around 65 million people inhabit Thailand with the capital and its largest city being Bangkok; the national currency is the baht. After a series of political and military turmoil thrashed the country in the mid 2000's, December of 2007 earmarked the reinstatement of a democratic government as well as the inclusion of full democratic elections. The official language is Thai and has remained that since the country's early beginnings. Buddhism encompasses most the Thailand's population in terms of religion, nearly 95%, with all belonging to the Theravada denomination. On a global scale Thailand is quite a large country for how small it is geographically; it ranks 50th as far as total area, and is the 20th most populous in the world.
Thailand is abundant in both land and labor factors of production. The land measures roughly 510,890 sq km and is full of natural resources such as tin, rubber, natural gas, timber, lead, fish, and many metals. The large amount of agricultural production lead to a GDP of $539.3 billion in 2009. The 2009 household consumption expenditure was 2.05% even though the real GDP growth rate was -2.2%2. The final factor of production for Thailand, labor, is another one of their most abundant resources. In 2009, the labor force was comprised of 38.43 million people. They were divided between 42.4% working in agriculture, 19.7% in industry, and 37.9% in services3. This is consistent with the large amount of arable land throughout the country.
With much production occurring in the agricultural sector, is makes sense that Thailand exports agricultural commodities. The country also exports machinery and electronic components, and jewelry. The machinery and electronic parts are a major export because of the size of the labor force. Jewelry exports are large due to the amount of natural metals and jewels found in the land. The exports drive the economy and account for more than half of GDP. In 2009, exports totaled $150.7 billion. The major importers are the United States at 10.94%, China at 10.58%, Japan with 10.32%, Hong Kong with 6.22%, and Australia importing 5.62%3. The global financial crisis of 2008-2009 severely hurt Thailand’s exports with most industries dropping a large percent. Imports were also affected the financial crises. in 2009, they totaled $118 billion. Most imports were in capital goods, intermediate goods, and raw materials. This is because of the lack of capital factors of production and the large labor force. Thailand imports from Japan (18.7%), China (12.73%), Malaysia (6.41%), United States (6.31%), and UAE (4.98%)3. [pic]
It seems to be that the groups benefiting most from trade are the farmers and factory workers. The farmers have the largest labor force and therefore the highest amount of exports in the country. The factory workers are also benefiting from the import of cheap intermediate goods and raw materials from China and Malaysia. They then use the abundance of labor to produce machinery for export. In 2009, Thailand had a trade surplus of roughly $32.7 billion.
Long before the liberalization of Thailand’s economy and its move to become an export-promoting economy in the mid 1980s, Thai governments have pursued Free Trade Agreements (FTA’s) and economic cooperation with fellow countries in the Eastern Hemisphere and of course, the USA.
In 1967, Thailand help create the Association for South-East Asian Nations (ASEAN). ASEAN was founded to promote nation building, tackle communism and increase economic cooperation. This act has served as the foundation for establishing future FTA’s. Continuous dialog and a desire for economic growth led to the...