Floating market scene along a bustling khlong (canal) in the old capital city of Thon Buri across theriver from Bangkok.
THE THAI ECONOMY of the 1980s continued to function much along the open market lines that had traditionally characterized it. It remained capitalist in orientation, largely operated by the private sector with supportive infrastructure furnished by the government, which had some participation in production and commerce through a limited number of state-owned enterprises. Commitment to the existing economic system appeared general--none of the numerous Thai governments of the post-World War II years had advocated significant changes.
In the 1960s and 1970s, Thailand was among the fastest growing and most successful developing countries in the world. Rapid growth in production, accompanied by progress in alleviating poverty, was impressive, especially in the 1970s. By the early 1980s, however, Thailand’s economic performance had slowed, partly as a result of the worldwide recession. Although its annual growth rate remained higher than the average for middle-income countries, earlier expectations had not been met. The targets of the Fifth Economic Development Plan (1982-86) had not been achieved, and serious macroeconomic imbalances persisted.
The government sought balanced economic growth and the closing of the income gap, along with improvement of the inequitable distribution of social services. Social and economic trends included increasing urbanization, expansion of industrial activities at a faster rate than agriculture, and growth of income in the service industries. These trends, often associated with modernization, produced problems with which the government tried to cope. Bangkok continued to face serious housing shortages and severe pressure on such basic services as water, sewerage, energy, and transport facilities. Although agriculture had been the most important economic activity of the country with most of the population living in the rural areas, the area of land under cultivation was unlikely to increase. Rather, it was projected that any increase in income would have to be gained through higher productivity of the labor and land now in use and by the development and diversification of industrial production. Accordingly, the government promoted enterprises that produced agricultural products, chemicals, and mechanical and electronic equipment and those that were labor intensive or export oriented.
Because foreign trade and investment were an important part of the economy, external conditions greatly influenced the country’s economic performance. Thailand’s harvests exceeded domestic consumption, enabling the country to export large quantities of food each year. The major agricultural exports were rice, cassava products, rubber, maize, and sugar; the major nonagricultural exports were textiles, electronics, and tin. Imports included more than half the country’s national petroleum consumption. Although Thailand was a member of the Association of Southeast Asian Nations (ASEAN) with preferential trading arrangements, its principal trading partners were Japan, the United States, countries of the European Economic Community (EEC), and Australia.
Long-term prospects depended greatly on the effects of international economic conditions on the Thai economy. In the late 1970s and early 1980s, rising interest rates, declining demand and prices for Thai exports, and rising petroleum prices had caused a serious economic slump. Further growth of the economy depended, in part, on the success of the Thai government in improving economic efficiency and increasing domestic savings through development planning.