Development, Trade and Resources in Asia
Chapter 8: Environmental Effects of Investment and Trade Policy Reform During Thailand’s Economic ‘Miracle’
8. Environmental eﬀects of investment and trade policy reform during Thailand’s economic ‘miracle’ 8.1 THAILAND’S ECONOMIC BOOM AND AGRICULTURAL BUST In the middle and late 1980s, a remarkable combination of domestic and international factors came together to ‘make a miracle’ in Thailand: an acceleration of real economic growth from about 6 per cent per year in 1976–85 to above 8 per cent in 1986–95. At its peak in 1988–90, growth averaged 12 per cent per year. This growth was associated with policy and institutional changes that led to a major surge in both domestic and foreign investment. Low wages, reductions in trade barriers and conservative economic management resulting in low inﬂation and a stable exchange rate made the Thai economy an ideal host for foreign investment. From late in the 1980s, ﬁnancial liberalization (the opening of capital markets) encouraged further foreign direct investment (FDI) as well as foreign borrowing, thus adding further fuel to the ongoing investment boom. From 1980 Thailand, along with Malaysia and subsequently China, pulled clear of the other ‘second-generation’ Asian industrializing countries in terms of gross ﬁxed capital formation and FDI (Table 3.2). Political instability notwithstanding, and despite doubts about the robustness of its ﬁnancial institutions, Thailand had become a model developing economy, winning a place in the group of eight ‘high-performing Asian economies’ that the World Bank in 1993 dubbed the East Asian Miracle. The gains from the boom were not uniformly shared among sectors. Agriculture, historically the mainstay of...
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