Macro Signals Declining Efficiency of Investment
It may be useful to put the discussion of performance constraints of the Thai economy briefly in perspective. Over the past 2 decades, the Thai economy has been one of the best performing economies in the world, characterized by sustained high growth rates, averaging 10.3% 1985-90, and 8% in the years prior to the crisis (1990-96). This growth was accompanied by a dramatic decline in the incidence of absolute poverty, from 57% in 1962 to 14% in 1992, with per capita income increasing from $700 per annum in the late 1960s, to $2,700 in 1996. At the same time, rapid growth was accompanied by environmental degradation, resource depletion, and an increasingly unequal distribution of income and wealth. However, on balance a remarkable record of development. During this period of rapid growth and economic transformation, Thailand became increasingly integrated into the world economy through trade and investment flows, and production linkages. As the economy expanded rapidly and became more complex in structure, it posed more and new types of strains and challenges to economic management or "governance" systems at both the macro (i.e. public policy) and micro (enterprise) levels. As the relative role of the private sector increased i
Although cyclical demand factors seem to be relevant, they are only partly helpful in understanding the performance of the Thai (real) economy prior to the crisis. There seems to be more to the story. For example, industry-specific factors may have also been at work: a rapid rise in US sourcing of garments from Western Hemisphere producers such as Mexico, Honduras, and El Salvador, led to a relative loss of US market share by Asian exporters, including Thailand, among others. It is not clear whether this shift in sourcing is a "cyclical" factor, or a "structural" shift in the basis of competitive advantage (e.g. relating to NAFTA; relating to the increasing role of time or order cycle as a competitive · Domestic factors cited generally relate to rising wage rates and overvalued exchange rates. Domestic wage rates during 1991-95 rose about 11%, on average or about 5% increase in real wages per year, cited as the key factor If the "usual suspects" are not sufficient to explain the export slowdown, then could this be primarily a "cyclical" downturn, e.g. the result of short-term, mainly external, adverse factors? There is some support for this being a factor. There was a global slowdown in world trade in 1996, with the growth rate of world manufactured exports A fundamental question that emerges from the perspective of
Some common words found in the essay are:
, Indochina Philippines, El Salvador, Korea Thailand, export performance, Western Hemisphere, prior crisis, labor intensive, factors cited, labor intensive exports, intensive exports, growth accompanied, micro enterprise, dramatic decline, global economic, rapid growth,
Approximate Word count = 896
Approximate Pages = 4 (250 words per page double spaced)
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