past two decades, the national income has increased by
approximately eight percent per year. Moreover, growth
has been broadly based, with all economic sectors participating
in the development process.
The fabric of the Thai economy remained
virtually unchanged up to the late 1950s. In the early
1960s, the industrial and service sectors began supplementing
agriculture as significant income and employment generators.
Today, Thailand is still predominantly an agrarian country,
with about 57 percent of its working population engaged
in agricultural production and earning about 12 percent
of the national income. Over the years, however, the industrial
and service sectors have been increasing their shares
of the total GDP.
Significant structural changes in the
Thai economy have taken place since the early 1960s. Agriculture's
share of the national income declined steadily from
about 40 percent in 1960 to 12 percent in 1993. At the
same time, the manufacturing
sector expanded very rapidly, increasing its portion
of the national income from 13 percent in 1960 to 37 percent
in 1993. Such a structural change does not, however, imply
that agricultural output failed to rise during the period.
On the contrary, it increased by about five percent per
year. Moreover, a high degree of diversificaiton took
place, enabling Thailand to boost its export items from
only three major commodities namely rice, teak and rubber
in the early 1950s to more than 10 main agricultural products
The industrialization process initiated
during the 1960s was geared towards import-substitution.
It was succeeded in the 1970s by a drive to produce export-oriented
items. by the mid-1970s Thailand was exporting manufactured
goods ranging from cement to watch parts, and including
canned fruit, garments, chemical products, transport equipment
and television sets. In 1993 manufactured exports accounted
for about 81 percent of total export earnings.
International trade is vital to the
Thai economy. Thailand's entry into foreign markets in
the mid-19th century enabled its economy to expand rapidly.
Today, export and import transactions together account
for about half of the national income. Although there
were annual deficits in the balance of trade, the balance
of payments recorded continuous surpluses throughout the
1960s and early 1970s. Sharp increases in oil prices since
1970, however, affected the balance of payments position
severely. Large tourist earnings and foreign capital inflow
put the balance of payments back into a surplus position.
The public sector supports the growth
process by providing developmental facilities through
the construction of basic infrastructure and by creating
a conducive environment for the private sector to operate
Despite the steady increase in population,
real per capital income has doubled over the past two
decades. At current prices, it increased from 4,000 baht
per head in 1970 to 53,215 baht per head in 1993. The
proportion of the country's population living at the subsistence
level has declined from around half in the early 1960s
to less than a quarter in recent years.
In short, the performance of the Thai
economy over the past two decades has ranked high among
developing countries. Some basic economic problems such
as income disparity, the need to conserve natural resources,
the uncertainty of export markets, and the need for improving
administrative efficiency, remain to be solved but judging
by past performance as well as from the present economic
outlook, it is clear that Thailand has the potential to
expand its economy and thereby improve the welfare of