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 Home > About Thailand > Manufacturing


Development and Diversification

Traditionally, Thailand's economy has been based on agriculture. It is only relatively recently that the manufacturing sector has begun to play a significant role.

This transformation, over the last 30 years, has been dramatic. The agricultural share of the Gross Domestic Product (GDP) has declined steadily from 40 percent in 1960 to 11.2 percent in 1994. At the same time, the manufacturing sector has expanded rapidly, with its share of GDP increasing from 13 percent in 1960 to 42 percent in 1994. The sector employs more than 3 million people, over 10 percent of the entire labour force. While manufacturing is increasing in regional areas, industrial activities are still highly concentrated in the central region.

The industrial sector grew at an average rate of 9.5 percent per year during the 1970s. Its share of GDP increased from 15.9 percent in 1970 to 22 percent in 1970 and production of manufactured goods 1980, these developments had changed the structure of Thailand's manufacturing sector. The relative importance of processing industries had diminished in favour of labour-intensive exports (which had risen to 11 percent) and intermidiate and capital goods.

Through 1982, the contribution of manufacturing to GDP was still slightly below that of the agricultural sector. However, since 1983, the contribution of manufacturing to the GDP has exceeded that of the agricultural sector. By the latter part of 1980s, especially since 1987, manufactured products increased dramatically to become the leading sector of the Thai economy. The growth of manufactured products reached 12.6 percent in 1987.

Since 1990, the industrial sector has undergone a rapid diversification process. Industrial production was more evenly spread between a number of sectors, including consumer goods, component parts, and intermediate capital goods. Other growth industries include computers, automotive and autoparts, electronics, heavy industries and huge projects in steel, petrochemicals, and communications. There is an increasing number of industrial products, with new entrants seen every year as the economy adjusts its production structure to take advantage of new opportunities.

In 1993 and 1994, both demestic and export production of manufacturing goods showed strong growth, with total manufacturing output expanding by more than 11 percent each year. Domestically, strong growth occurred in beverages, tobacco, and construction materials.

Further growth in manufacturing is expected in the late 1990's, with the expected brisk recovery in the major industrialized countries coupled with sharp rises in domestic consumption, and the favourable investment climate in Thailand. Some adjustment in the structure of manufacturing output is expecxted in the 90's in favour of higher technology and higher value-added products, such as those in the electrical and electronics sectors. Projects involving very high technology, bringing with them huge investment, such as the eafer project (electronic parts), pig iron project, and copper cutthroat project will be on stream.

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