Rapid Industrialization in Thailand 1986-1991

Abstract

THE economic-development paradigm established during the 1950s and 1960s was dominated by four broad concerns--capital accumulation, agriculture as a provider of resources for industrial investment, import substitution and protection for nascent industries, and state-directed strategies, especially for capital-intensive industries (Higgins 1959; Lewis 1960). However, the dynamism of the export-oriented economies of five Asian countries--Japan, Taiwan, Hong Kong, South Korea, and Singapore--influenced thinking about development and resulted in a shift in that paradigm. By the 1980s, the importance of trade liberalization, transfer of technology by direct foreign investment, and the role of exports in spurring economic growth were recognized as important components in development. Based on the experiences of Japan, Singapore, and other newly industrialized countries, the role of human capital investment emerged as perhaps the most important component in economic development (World Bank 1991). Concomitantly, environmental concerns began to be emphasized internationally. Case studies suggested that rapid industrialization was causing severe and, in some instances, irreversible environmental damage. Thus, the notion of social costs, especially as articulated in the concept of sustainable development (World Commission 1987), is emerging as a new paradigm in economic-development theory. Until recently, Thailand was rarely featured on economic news pages. For decades its economy, like those of many developing countries, was based on the export of primary products and on import-substitution policies at home. However, the Thai economy shifted from the lowest growth rates in Asia in the mid-1980s to the highest by 1988, when the world economic press dubbed the country Asia's fifth tiger. This article reviews the recent and rapid industrialization in Thailand and examines the spatial implications of growth in Bangkok and its surrounding provinces. The effects of rapid growth and industrialization on the urban environment are surveyed, and contrasts are drawn between Thailand and other newly industrialized countries. In the 1960s and 1970s, Thailand, like most of the developing countries in Asia, had high growth rates, on the order of 6.9 to 7.9 percent, in gross domestic product (GDP). In contrast with the path followed by South Korea, Taiwan, Hong Kong, and Singapore, where growth was based on export-driven industrialization, most of Thailand's manufactures were the products of simple processing industries: wood, prawns, tapioca pellets, tobacco, and sugar. In 1976, manufactures accounted for only 26 percent of Thailand's total exports, and only 8 percent of the population was employed in the manufacturing sector. During the 1960s and 1970s, economic growth in Thailand was sustained by expansion of the agricultural sector, by export of primary products, and by the involvement of the United States in Vietnam. Aid from the United States and the International Bank for Reconstruction and Development (IBRD) enabled Thailand to build an infrastructure from which it could launch its primary products into a buoyant world market. The United States military presence in the country resulted in a military-procurement boom for Thai entrepreneurs. The most productive agricultural region in Thailand is the central valley of the Chao Phraya. However, with development aid from IBRD and the United States, Thailand launched ambitious programs to expand agriculture on the margins of the Chao Phraya and into the eastern and northern regions of the country. Forestland was cleared, the felled trees were processed and sold profitably on the world market, and the cleared land was given to agriculture. The rapid expansion of the agricultural base resulted in high growth rates for the Thai economy. From the mid-1970s into the mid-1980s, a series of external events seriously disturbed the Thai economy. The pullout of the United States from Vietnam in 1975 ended the procurement boom, and shortly thereafter the closure of U. …