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Saturday, September 25, 2021

East Asian Success Models: Thailand

Researchers date the beginning of Indo-Thai cultural relations to 350 BCE, i.e., more than 2000 years ago. Bharat’s trade relations with East Asian countries including Cambodia, Laos, Vietnam, Thailand, Malaysia, and Indonesia had spread Hindu Dharma and Buddhism to this region. Thailand was influenced by Hindu and Buddhist influence of neighbouring Cambodia, Srivijaya, and Dwaravati. Buddhism is said to have entered the region during the rule of Ashoka Maurya.

The Thai concepts of divine kingship, royal ceremonies, and the idea that the king is a reincarnation of Bhagwan Vishnu are drawn from Hindu Dharma. Thailand’s national emblem, the Garuda is inspired by Hindu Dharma wherein Garuda is the vehicle of Bhagwan Vishnu. The Thai language is influenced by Pali and Sanskrit languages.

Thailand’s nation statehood began around 1300 when its first kingdom Sukhothai was formed. Sukhothai ‘s border city Chakangrao was conquered by the king of the Ayutthaya kingdom, King Borommaracha I in 1378, making this kingdom the dominant power in the region. In 1767, the kingdom fell to a 14-month Burmese siege but was taken back in 1782 under the leadership of General Phraya Taskin. The city of Thonburi was made the capital.

Ancestors to the current monarchs began to rule since 1782. Drawing from Hindu nomenclature, any king of this dynasty was called ‘Rama’ in keeping with the belief that a king is an incarnation of Vishnu. The first king of this dynasty, Rama I made Bangkok its capital and ruled until 1809. The Temple of the Emerald Buddha and the Grand Palace were built in his reign. The dynasty has continued ruling into the 21st century.

Thailand became a Constitutional monarchy in 1932. Since 1932, Thailand has experienced 19 military coups so far. In 1933, students and workers demonstrated on streets demanding a more democratic Constitution which led to the overthrowing of the existing military government albeit after shoot outs in which at least 100 people were killed.

A new interim Constitution was adopted in 1972 under Field Marshall Thanom Kittikachorn whereby the legislative assembly would be only through appointment and two thirds of its members would be from the military and the police.

There were coups in 1976 and 1977 after which General Kriengsak Chamanand became the Prime Minister (PM). A new Constitution was again adopted in 1978.  In 1980, the increase in prices of oil and gas and electricity provoked demonstrations by workers and students and the PM resigned to be replaced by General Prem Tinsulanonda.

There was another coup in 1991 which led to the formation of the military government under General Suchinda Kraprayoon. National elections took place in 2000 wherein Thaksin Shinawatra was elected as the leader of the Thai Rak Thai party.

Another period of turbulence began in 2006. This culminated in a coup in 2014 and led to Prayut Chan-ocha, the current PM, coming to power. Elections held in 2019 strengthened the power of his Phalang Pracharat party. At the same time, the death of King Bhumibol Adulyadej led to the crowning of his son King Maha Vijiralongkorn. The monarchy has however been facing pro-democracy protests since February 2020.

Religion and Ethnic groups

The predominant faith in Thailand is Theravada Buddhism and it is the official religion as well. There are around 93% Buddhists, 5% Muslims, and 1% Christians and a marginal percentage of Hindus, Sikhs, and other faiths. Ethnicity of the region is nearly 98% Thai people and 1.3% Burmese people.

Thailand’s path to progress

Thailand is a resource-scarce country but its coastal ports were early economic centres that saw trade from Bharat, Persia, Arab countries, and China. The rise of the Ayutthaya kingdom was linked to commercial activities with China. With Bangkok becoming the capital in the 19th century, foreign trade especially with China became important.

Thailand was saved from becoming a European colony since the British and French agreed upon keeping it a neutral territory. It did face some pressures from western imperialism though which led to Rama IV in 1855 signing the Bowring Treaty with Britain that opened up several trade restrictions. British subjects were allowed to trade in all Thai ports and also granted extraterritoriality. Import duties were lowered to just 3%.

During the rule of Rama V–King Chulalongkorn from 1868 to 1910, infrastructure development initiatives were undertaken. Post and telegraph services were modernized and the railway network was constructed along with efforts at outward looking policies. A centralized and bureaucratic political structure was set up.

Rama VI contributed to enhancing the educational system. The first Thai university, the Chulalongkorn University was set up in 1917. In 1921, Rama VI issued a law that made primary education compulsory.

Globalization began in the 20th century. Rama VI was succeeded by his brother Rama VII who worked at improving foreign relations and international networking. Thailand began to export agricultural produce especially rice.

In 1942, the country’s central bank was established. Thailand became a member of the UN in 1946 and of the World Bank in 1949. The two factors that led to growth was investment in education in the 1930s and 1950s and policies that supported liberalization.

Under the reign of King Bhumibol Adulyadej, who was crowned n 1950, social projects were undertaken for poverty alleviation. Luang Phibulsongkram who was PM from 1948 to 1944 and 1948 to 1957 sought help from the US which provided economic assistance from 1955 t9 1959.

When Field Marshall Sarit Thanarat became the premier in 1957, he undertook policies for economic development and national security and formulated the first national economic development plan. In 1959, Thailand’s Board of Investment was created to promote investment in the private sector using local and foreign capital. The automobile industry was set up in 1962 as a part of the import substitution policy of the government.

Thailand’s primary initiative led to the establishment of the Association of South-East Asian Nations (ASEAN) in 1967. Thailand’s Stock Exchange came into being in 1974 under the supervision of the Ministry of Finance and the Bank of Thailand.

There were periods of setbacks too. From the 1970s to 1984, Thailand suffered many economic problems: fall in US investment, deficits, oil-price hikes, and inflation. Between 1981 and 1984, the Thai baht was devalued thrice under pressure from the IMF as a part of the government’s austerity measures.

Fiscal constraints affected the public sector but the private sector grew and the country transitioned from import substitution to export oriented industrialization. By 1987, the manufacturing sector overtook the agricultural sector starting the period of industry-led development. This improved foreign trade and this along with foreign direct investment mainly from Japan created an economic boom period from 1987 to 1996.

The IMF World Economic Outlook database estimated the Thai GDP average annual growth rate to be 9.5% for this period, peaking at 13.3% in 1988. In 1989, Thailand became the founding member of the Asia Pacific Economic Cooperation (APEC). In 1992, the Office of the Securities and Exchange Commission was established to monitor and supervise the operations of Thailand’s stock exchange. In 1995, Thailand joined the World Trade Organization as one of its founding members.

However, there was a current account deficit from 1987 to 1996 and this along with a shortage of capital led to a burgeoning foreign debt. The economic bubble caused a loss of confidence in the country’s financial institutions and 56 financial institutions had to be shut down in 1997. Once again, the Thai Baht had to be devalued which led to the 1997 East Asian crisis. This caused the Thai economy to nosedive with GDP growth falling to -0.14% from the previous year’s 5.52%.  By 1999, the country had managed to recover and register a positive trade balance which was a result of foreign direct investment.

Under Thaksin Sinawatra who won the election in 2001, growth rates improved and the country was able to repay IMF’s debt in 2003. The economy performed well until 2006, but once again political instability caused by the military coup made GDP growth rates to slow down. This continued till 2010 which saw an improvement in growth rate, but these dipped again in the following years.

Thailand’s free-market economy benefits from relatively well-developed infrastructure. Exports of electronics, agricultural commodities, automobiles and parts, processed foods, and other goods account for about two-thirds of GDP. Gems and jewellery are the third most important exports after electric and electronic goods and automotives (including motorcycles and automotive parts). The service sector including tourism, banking, and finance also contributes to exports.

Thailand is considered a success story in social development. In 2015, its per capita Gross National Income (GNI) was US$ 6610 and its HDI ranking was 83. However, the Office of the National Economic and Social Development Council (NESDC) found that the percentage of people below the national poverty line had decreased from 65.26% in 1988 to 8.61% in 2016. It is also one of the countries with the lowest unemployment rates in the world.

Enabling factors

With Buddhism as the state religion, the country has managed to curtail the onslaught of Abrahamic faiths so that focused nationalism has been able to prevail without dilution by opposing forces.

Along with civilizationally rooted Dharmic monarchs, governance has been undertaken by politicians with military backgrounds. This has harboured a system where discipline and nationalism are emphasized. Western concepts of democracy have not been entertained.

At the same time, policies that aid development have been promoted. Factors that have enabled steady progress include efficient enforcement of laws to protect property and contractual rights. The judiciary is effective overall though courts are politicized and not completely corruption free. Cronyism, nepotism, and bribery are other problems.

The financial system was restructured and the stock exchange is open to foreign investors. Measures to bring in foreign investment are being undertaken. This includes abolishing regulations on minimum capital for foreign firms although foreign investment is capped for certain sectors.

However, the government size is large with the top individual tax rate of 35% and top Corporate tax rate of 20%. Property and value-added taxes are also imposed. The government spending averages at about 20% of GDP.

Lessons for Bharat

Thailand has a state religion which is Theravada Buddhism which has helped in keeping out anti-national forces and influences. Conversely, Bharat’s refusal to become a Hindu Rashtra after partition has led to a dilution of focus on national interest and civilizational identity.

Despite intermittent political instability, other than a few setbacks, the country has managed to maintain a steady growth rate. Drawing from Thailand’s success in social development, Bharat may also need to draw a few lessons regarding how poverty alleviation was achieved.

References:

https://www.heritage.org/index/country/thailand

https://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/Thailand-COUNTRY-HISTORY-AND-ECONOMIC-DEVELOPMENT.html#ixzz6zjfldrwM

https://en.wikipedia.org/wiki/Economy_of_Thailand

Featured Image Source: nomadicmatt.com


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Anuradha
Writer, Editor, Researcher

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