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Thailand’s Economy Essay Sample

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Thailand’s Economy Essay Sample

Introduction

Thailand economy is an export oriented economy which has emerged quite rapidly. The volume of exports accounts for about two thirds of the country’s GDP. Thailand’s GDP stood at $ 627 billion according to the 2008 estimates compared to $601.7 billion registered in 2007. Thailand is the second largest country in terms of GDP in the South East Asia region after Indonesia but forth in terms of GDP per capita after Brunei, Singapore and Malaysia.  It’s the anchor economy among the surrounding economies of Burma, Laos and Cambodia. It ranks among the best in automotive exports together with production of electronics (Phongpaichit, 2008; Todaro & Stephen, 2008)

Background

A junk of the labor force is engaged in Agriculture but the contribution of the agricultural sector to the country’s GDP has been declining over the years while exports have remarkably increased.  Revenues from tourism have been increasing. The political instability due to the military rule negatively impacted GDP growth reducing it from 6.3% to about 4.2% while the annual inflation rate rose to 9.2 % in the month July 2008

Real GDP growth has been strengthening over the years rising from 2.2% in the year 2001 to 6.3% towards the end of 2004. The 2007 economic growth relied heavily on the improved exports growing at 17.1% particularly in the petrochemicals, electronics and automobile sectors.  The 2008 global financial crisis further weakened Thailand’s capacity reducing the demand for its exports (Phongpaichit, 2008). 

Source: Adapted May 12, 2009 from http://earthtrends.wri.org/pdf_library/country_profiles/eco_cou_764.pdf

Standard of Living

The standard of living is measured by the GDP per capita. The GDP per capita for Thailand had been rising steadily from $ 7, 900 in 2006, $ 8,200 in 2007 to $ 8,500 (Todaro & Stephen, 2008; Williams, 2007).

Source: Adapted May 12, 2009 from http://earthtrends.wri.org/pdf_library/country_profiles/eco_cou_764.pdf

Inequalities

The Gini coefficient which measures the distribution of family income is 42 according to the 2008 estimates. The consumption or household percentage share is 33.4% for the highest 10% and 2.7 % for the lowest 10% further indicating the wide disparities in the income inequalities in Thailand. Income inequalities have increased over the years and especially so in the last two decades as depicted by the graph below (Landon, 2008; Todaro & Stephen, 2008)

Source: Adapted May 12, 2009 from 

Physical infrastructure Issues

Thailand has an advanced communication infrastructure with a robust telecommunication system. The number of telephones in 2007 was 7.024 million subscribers while cellular phones stood at 51.377 million. The country has 104 Airports among them 64 have pave runways. Only eight airports have over 3, 047 meters of pavements while the others are 2,438 meters and less.

 Those without paved runways are 40 in number. Thailand has a gas pipeline measuring 1,348 kilometers long with a railways system measuring 4,071 meters. The total distance of roadways is 180,053 kilometers which included expressways measuring 420 kilometers. It is also developed with 4,000 kilometers of waterways of which 3,701 kilometers are navigable. The major ports and terminals are Prachjab, Si Racha, Laem Chabang, and Bangkok (Williams, 2007)

Health and Education

The health system in Thailand is funded by the government, the private and the Non-governmental (NGOs). The Government funds health in through the Ministry of Public Health which is in charge of medical services, public health and government hospitals. Citizens are issued with the Universal Coverage Health card which grants them free medical care except on weekends. The government hospitals have over 93,000 beds in 900 hospitals (Phongpaichit, 2008)

Non-Thai individuals pay normal charges to access medical services. Te private health providers offer some of the most excellent services through advanced facilities. Thailand has private health providers numbering over 470 with a bed capacity of 40,000.  e not for profit originations have set a variety of facilities including the Medicines’ Sans Frontiers, World Vision and the Red Cross.

The number of beds per 1000 members of the population is a paltry 1.9 according to the 2008 estimates. Thailand spends approximately US $321 on health care which accounts for about 4.4% of the total GDP. By 2002, about 85% of the Thais had access to public tap water while 42.9 % accessed from the private sources (Phongpaichit, 2008)

Thais are also reeling under the threat of the HIV/AIDS pandemic despite the Thai administration launch of a comprehensive, well funded and pragmatic response to the pandemic.  Nevertheless, this initiative has drastically reduced aids prevalence to a low of 1.5 % among the population aged from 15 to 49 years. Over 60,000 Thai have died from the disease. Those infected are stigmatized besides the government effort to provide support to the affected nationals. The H5N1 avian bird flu spelt a health danger to the nationals in Thailand. The government responded swiftly by launching programs to counter its spread mainly targeting poultry.  Residents of Thailand are also predisposed to the dangers of Japanese encephalitis, Diarrhea, dengue fever, rabies and hepatitis.

All children aged 6 to 12 years in Thailand have access to compulsory and free education. 90% of school going childreren in the primary category does attend public schools and Buddhist monasteries. But when it comes to secondary education, only 50% of the students join from primary schools. Thailand literacy rate ranks among the highest in the South East Asia region at about 95% (Phongpaichit, 2008)

Thailand has a number of universities with and statistics show that over 600,000 students enrolled in the first half of 1990s.  Education is funded by the government through the Education Ministry. Primary schools are everywhere in the districts but the secondary schools are mainly in the districts. The private sector is actively involved in providing education in Thailand, though the cost of education is higher compared to the government sponsored institutions. Other charitable institutions are also involved in offering cheap general education including in some universities. In the secondary level, 8 core subject areas are undertaken which include, Mathematics, Thai Language, Arts and Music, Foreign Language, Social Science, Technology and Science. There are a total of 412 vocational colleges (Landon, 2008)

The Impact of Global Warming on Thailand

In the past twenty years, the temperatures having been ring by over a degree. The g\effect of global warming on Thailand is evident on Thailand exemplified with the rising sea levels and the unpredictable weather conditions besides affce4ting the farmers tremendously.

Glacier ice in the Antarctic and Greenland are melting and sea level in Thailand has risen by 20 to 60 meters. Bangkok ranks among the most vulnerable cities that are being affected by the changing global climate. This rising sea level has led to the saltiness in the lower watercourse of Thailand delta where agricultural land had been adversely affected. This has also caused seasonal flooding in other towns apart from Bangkok.

Weather conditions are simply unpredictable with the wet conditions becoming wetter while the dry seasons changing to drier conditions. Himalayan glaciers are melting causing Salween and Mekong rivers to melt resulting into flooding. The past 30 years have witnessed increased cyclones and hurricanes rising to category five. The farmers and other citizens are endangered since most of them rely on rice besides production from exports. Rural communities are being affected, farmers are poised to be poor, rural to urban migration will follow and finally the GDP is going to fall remarkably.

Crime and Corruption in Thailand

Thailand has a crime rate that ranked 3.3 on the 2003 CPI (Corruption Perception Index) score. This positioned her to be the 70th in a total of 130 countries unlike Finland which had a CPI of 9.7 which ranked the first. In Thailand, Corruption is ranked the forth most problem (Punyopashtambha, 2006)

The CPI (Corruption Perception Index)

Source: Adapted May 12, 2009 from http://aceproject.org/ero-en/regions/asia/TH/Corruption_in_Thailand.pdf

Contracts are tailored to be awarded to particular individuals, bribes are received, and procurement procedures are violated.  Thailand is relatively a safe place to stay and live. However, pick pocketing and burglaries are on the increase. This has made tourist who the country to be worried for they have to take extra care when moving around especially in underdeveloped areas.  The most recent incident is when American citizens lost wallets, passports besides other valuables. These incidences do occur despite the deployment of the Tourist Thai Police.  Motorcycles and other road users do grossly violate traffic rules making the navigation of major cities including Bangkok difficult for some visitors.  Bangkok was bombed in January 2006 which made the United States government to put its citizens on the alert (OSAC, 2008)

Application of the Economic Theory on Thailand

The Neocolonial Dependence Model Theory

Under this economic development theory, underdevelopment is dependent of historical evolution because of the unequal world capitalist system of poor-rich nation’s relationships. In this theory, there are the center countries which are developed and the periphery countries which are the Least Developed Countries (LDCs). This scenario renders the effort by the underdeveloped countries fruitless and makes them captive to the developed countries (Todaro & Stephen, 2008)

Certain vested interests among the political elites and the financial well up perpetuate this scenario because they benefit from it. Close economic ties have existed between Thailand and the United States dating back to the Second World War when the US engaged Thailand in the Vietnam- US war (Furtado, 2003)

For Thailand to expand her industry and economy she will more likely depends on the west, OPEC countries and Japan. She has to rely heavily on other trade partners to imports mush needed materials like equipment, steel, and oil which are brought with the Thai money but little will be exported to bring in money (Todaro & Stephen, 2008)

The capitalist control human labor in the international system, which has in turn, induces dependency of Thailand’s cheap labor on the West, giving the developed countries a comparative advantage at the expense of underdeveloped. In order to increase tourism in Thailand, the government had to put in place initiatives to send emissaries to the West including Japan to diffuse the threats issued for its political unrest. This dependency on the West has economically ruined the economic conditions of Thailand because se has to dependent on them for to industrialize.

The capitalist ties with the West have continued to ruin the economy of Thailand being on of the reason for the underdevelopment in Thailand. This neo-colonial relationship has send Thailand to the economic periphery

Thailand and the Global Financial Crisis

As a result of the US bubble in the real estate, foreign investment in Thailand is dwindling, tourism earnings declined by a massive 21% and the export oriented Thai economy is limbo (Kritayanavaj, 2008). In January 2009, exports plummeted by 26.4% while imports dropped by 40.3% and GDP is expected to decline by 5% by the end of 2009 which will adversely reduce employment in Thailand. About 2 million are projected to lose their jobs by the end of the year. The government is expected to run a deficit of 3.6 % of the GDP (Chomthongdi, 2009)

Some financial institutions in Thailand are closing down due to the global financial crisis with most real estate developers becoming insolvent shortly after the bubble burst in the US.  The aftermath of the crisis has resulted into banks tightening credit lending rules which has led to drop in the mortgages that borrowers can receive. Besides financial institutions has put in pace measures to mitigate such shocks as adjustment mechanism to deal with the crisis.

Conclusion

Because Thailand is an export oriented economy with most of its products destined to the western markets, it has to bow at all times to the demands of the mighty to develop. This economic periphery has continued to sideline Thailand on the global market and make it indecisive in collective bargaining.  The economy of Thailand has been prone to the shocks in the global trade like the most recent financial crisis.  Nevertheless the development of China is a model that is to ape every where among the developing countries for having risen from the ashes to international stardom.  However in the current financial crisis, Thailand is poised to face difficult times is the situation does not relent in the mean time given the fact that it’s an export oriented economy.  Thailand will need to diversify her economy and discover new markets because dependency on the western market may not portent good prospects in the coming years. These interdependencies that have been brought about by the recent spate of globalization will have dealt far reaching consequences especially to the developing economies like Thailand.

References

Chomthongdi, J. (2009). Thailand and the World Financial Crisis. Retrieved May 12, 2009 from http://www.theglobalist.com/StoryId.aspx?StoryId=7681

Dam, Jan (2003). Impacts of Climate Change and Climate Variability on Hydrological. Cambridge University Press; London

Furtado, Celso (1993). The Concept of External Dependence in the Study of Underdevelopment. Political Economy of Development and Underdevelopment, Vol. 24(5), pp 46-63.

Kritayanavaj, B (2008). Crisis: A view from Thailand. The World Urban Forum. Retrieved May 8, 2009 from http://www.ghb.co.th/en/Journal/Vol4/36.pdf

Landon, K. (2008). The Chinese in Thailand. Oxford University Press; London

OSAC, (2008). Thailand 2008 Crime & Safety Report: Crime and Safety. Retrieved May 12, 2009 from https://www.osac.gov/Reports/report.cfm?contentID=80373

Phongpaichit, P. (2008). Thailand, Economy and Politics. Oxford University Press; London

Punyopashtambha, A. (2006). Transnational Crime in Thailand Paper presented at the annual meeting of the American Society of Criminology (ASC), Los Angeles Convention Center, Los Angeles, CA, Oct 31, 2006.Retrieved May 9, 2009 from http://www.allacademic.com/meta/p168111_index.html

Todaro, M & Stephen, C. (2008). Economic Development. Addison-Wesley Educational Publishers, Inc: New Jersey, USA. 10th Edition

Williams, C & Aaron A. (2007). Thailand. Lonely Planet Publishers; Thailand.

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