Thailand experienced different periods of economic development from 1960 to the present: I. A pre-boom period from 1960-1986 when import substitution industrialization protected domestic industries and large conglomerates dominated, leading Thailand to be called one of the "Asian Tigers." II. A boom period from 1987-1996 when export-oriented industrialization fueled rapid industrial and economic growth through expanding exports. III. The Asian Financial Crisis of 1997-1999 caused an economic downturn and massive business closures and restructuring, requiring IMF support. IV. In the post-crisis recovery period from 2000 onward, Thailand pursued financial restructuring, embraced foreign capital dependence, and promoted export-

1. THAILAND’S CAPITALISM:
DEVELOPMENT THROUGH BOOM AND BUST

2. Prime Minister Yingluck Shinawatra King Bhumibol Adulyadej

3. Geographical Location:

4. About Thailand:
Currency: Baht (1 USD = 32.1102 THB)
Religion: 95% of the population practice Buddhism
Population: 65 million+
Language: Thai
Sports: Muay Thai is the national sport
Capital: Bangkok
Reign of Kingdoms: 1238-1782
Constitutional Monarchy:1932
From Siam changed to Thailand:1939
Thailand is the only Southeast Asian nation that has never been colonized.
Thailand was once the largest exporter of rice in the world
Thailand is the second in the best quality of life in ASEAN

5. THAILAND’S ECONOMY
Content:
I. Pre-Boom period (1960-1986)
II. Boom period (1987-1996)
III. Asian Financial Crisis period (1997-1999)
IV. Post-crisis recovery period (2000-present)

6. Pre-Boom period (1960-1986)
o The era of Import-substitution Industrialization began.(Conservatism)
o The manufacturing sector started to develop due to the protective
measures being implemented by the gov’t, like the high tariff rates to
further encourage domestic Investment and giving incentives to private
investments.
o Agricultural taxation and the extraction of household savings into the
commercial Banking sector assisted by providing capital for industry.
o The Thai gov’t also strengthened the banking sector by means of
protective measures—no foreign banks could enter branch banking, and
could offer only limited services. The gov’t makes policies and
encouraging their people to save for the financial sector to increase their
profitability.

7. o As a result of these measures Large conglomerates were created,
Commercial banks is at their apex. It also resulted to the 15-20 families
dominating the commercial banks. These families also invested in
Thailand’s developing Industry like in cement, textiles, and garments.
So, due to the protectionism policies of the gov’t these families almost
controlled the economic sectors of Thailand so in other words these
families are Building Oligopolies in a range of the economic sectors.
o Employment risen because of the Industrialization taking place.
Between 1960-1979 three million Thai’s were employed.
o Industrialization policies protects the big conglomerates. And because
the people are already having jobs and the gov’t encouraging them the
labor force to save money in banks, funds being deposited by the
people in the banks grew rapidly, allowing the banking families to
expand their economic control.
o And due to this changes in Thailand; Thailand was called the “5th Tiger”
along with Korea, Singapore, Taiwan, and Hong kong

8. 0%
5%
10%
15%
20%
60's 70's 80's mid 90's
6%
11%
16% 16%
Export Expansion
Export Expansion
Boom period (1987-1996)
o Export–Oriented Industrialization Policy began.
o Due to the shift of the gov’t from Import-Substitution
Industrialization(ISI) policy to Export-Oriented Industrialization(EOI)
policy the gov’t focused on export expansion. From 6% annual growth
in the 60’s to 11% in the 70’s and rising to over 16% in the 80’s and
maintained it up to the mid 90’s. Rapid industrial growth was seen
export manufacturing grow from 1% in the 60’s to 75% in the 90’s. The
agriculture sector has grown too but less rapidly than manufacturing.

9. o A total of 11 million people were employed during this period.
o Growth in capital in this period were driven by the private sector both
with the domestic and foreign, but 2/3 of this are domestic capitals.
o The Economy of Thailand became more larger and diverse specially
in banking, due to the entry of foreign banks in Thailand, Because
Thailand is already practicing liberalization.
o Agriculture reliant rural areas/provinces in Thailand has the most
poverty incidence while in the industry clustered center Bangkok has
the least poverty incidence in the country. So they encouraged
industrial activity in to the rural areas to enhance the trickle-down
effects in these areas.

10. 0
5
10
15
20
25
30
35
40
1976 1981 1986 1988 1992 1994 1996
rural poverty incidence
urban poverty incidence

11. 12.5
17.5
20.7
21.9
27.2
28.2
0
5
10
15
20
25
30
1960 1970 1980 1985 1990 1995
GDP in selected Sectors(%)
Manufacturing
Banking& Insurance
Wholesale & Retail
Trade
Services

12. Asian Financial Crisis period (1997-1999)
o The Asian Financial Crisis occurred
o There was an over-capacity and over-production in a range of sector
including electronics, household appliances, auto construction,
textiles & garments, footwear, electricity generation, real estate, and
heavy Industry. Despite this, “hot money” poured into unproductive
areas and sectors with over-capacity. These factors eventually
brought a “price collapse”.
o On July 1997 Devaluation marked the beginning of Economic
downward spiral.
o Thailand accepted the US$17 billion support package (loan) from IMF
for reform and restructuring in Thailand.

13. o Businesses started to close. Bankruptcies, mergers, and acquisition
were seen. There are about 5000 companies that closed during
1998.
o Massive reorganization of ownership and control, including the
transfer of assets to other Asian (particularly Japan).
o Also the Americans and the Europeans saw the opportunity in these
tragic times in Thailand they offered debt-for-equity swaps,
takeovers, investments in devalued companies, and buy-outs of
Thai partners.
o Reductions in Unproductive gov’t spending and more cost-effective
spending on health, education, the poor, and the unemployed are
the actions of the gov’t to mitigate the effect of the crisis.
o Survival became the aim of the businesses. Only 4 out of the 15-20
pioneer banks in Thailand that started in 1957 make it through and
retained their ownership over their banks.

14. Post-crisis recovery period (2000-present)
o Financial Restructuring- for big commercial banks they urged them to
dispose of their nonperforming-loans (NPLs) and increase their capital
bases.(private sector-driven approach) Behind this approach are
historical factors, such as traditional sentiments that do not welcome
government intervention in the financial market due to the continued
rule of the oligopolies. For small- to medium-sized banks, it promoted
nationalization and mergers with foreign banks.
o Foreign Capital Dependence- Thailand is Welcoming many foreign
companies and promoting economic strategies that depend on foreign
capital is one of their strategies.
o Promotion of Exports- The manufacturing industry, represented by
automobiles, computers, and related parts, is certainly the core of
Thailand’s export sector. It is the engine that drives Thailand’s
economy. (export-driven strategy)

15. END