Thailand

A

Role of Government

Thai governments, including unelected military regimes, have in general worked to ensure price stability while promoting economic growth. Other than in some key infrastructure and energy sectors, the government has not made extensive use of direct interventions in the market. Instead, it prefers to exert influence through indirect measures, such as investment incentives and taxes on trade.

B

Labor

The Thai labor force totaled 36.5 million workers in 2006. Although agriculture’s share in national income is now very small, official statistics indicate that 43 percent of the labor force is still employed in that sector, with 20 percent in industry and 37 percent in services. These statistics are likely to overstate agriculture’s true share of the labor force, as many rural Thai engage in seasonal migration, working in cities for part of the year and returning to the countryside during peak demand periods in agriculture, such as the rice harvest. Within industry, most employment is with small firms (those with less than 50 employees). Less than 10 percent of the labor force is unionized, although that figure rises to more than 20 percent in larger firms of 50 or more employees.

The economic boom of 1985 to 1996 caused massive growth in total employment, especially of unskilled and semiskilled workers. From 1990 to 1996, real wages (adjusted for inflation) rose by about 10 percent per year. The employment boom drew many Thai from rural areas to urban centers and resulted in a large influx of illegal immigrants from poorer neighboring countries, such as Laos and Myanmar.

Following the 1997 collapse of Thailand’s economy, unemployment and underemployment became serious problems, with the former peaking at nearly 3 million jobless in mid-1998. Some of the unemployed returned to rural areas, but many more remained in the cities in the hope that jobs would become available again once the economy recovered.

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A longer-term issue for the Thai economy is the prevailing low educational attainment of Thai workers, as compared to their counterparts in other middle-income developing economies. Although the literacy rate is high, official figures show that only 56 percent of children of high school age are enrolled in high school.

C

Agriculture, Forestry, and Fishing

Agriculture was traditionally the mainstay of the Thai economy. However, along with the remarkable acceleration of economic growth in the 1980s came rapid changes in the country’s economic structure. While agricultural production increased, the economic contributions of industry and services grew faster, which decreased the relative importance of farming. Agriculture’s share of GDP fell from 23 percent in 1980 to 11 percent in 1996 as Thailand moved into the ranks of the so-called newly industrializing economies.

Thailand has 18 million hectares (44 million acres) of land under cultivation. Of this total, about 5 million hectares (12 million acres) of irrigated land produce most of the country’s major crop, rice. Other important crops include sugarcane, natural rubber, corn, soybeans, coconuts, and other tropical fruits. Agricultural exports, especially of rice, were the basis for most of Thailand’s early trade. The country is still a major exporter of rice, but its agricultural trade has diversified to include rubber, cassava, fruits, flowers, and many other products.

Much of the expansion of agriculture has taken place at the expense of forest cover, which is disappearing at a rate of 0.6 percent per year. The timber harvest in 2006 was 28 million cubic meters (1 billion cubic feet), nearly all of which was burned for fuel. Following severe flood damage caused by deforestation, the Thai government banned all commercial logging in 1989. Formerly an exporter of tropical hardwoods, Thailand now imports much of its timber from neighboring countries.

Fisheries in the Gulf of Thailand and the Andaman Sea, along with inland and coastal fish farms, yielded 3.7 million metric tons of fish and shellfish in 2005, up from 1.8 million metric tons in 1980. Thailand is one of the world’s leading exporters of fish and seafood products, especially farmed shrimp.

The rapid growth of agriculture and fisheries has raised concerns about the long-term sustainability of these industries. Urbanization and the spread of irrigation have generated water shortages and spawned conflicts over water use. In dryland agriculture (farming in dry areas using methods other than irrigation), intensive cultivation has led to soil erosion and land degradation, which in turn have required farmers to increase fertilizer use in order to maintain yields. Mangrove swamps and other coastal ecosystems have been severely depleted to create fisheries, and the rapid expansion of the commercial ocean fishing fleet has reduced catches. These natural resource management issues pose major policy problems for current and future Thai governments.

D

Mining

Thailand is not richly endowed in mineral resources. Chief mineral products include lignite (a form of coal), zinc ore, lead concentrates, tin, gypsum, and iron ore. However, supplies of most minerals are insufficient to satisfy the growing domestic demand. An exception is gemstones, which form the basis of an export-oriented jewelry industry.

E

Manufacturing

Manufacturing has led Thailand's economic growth. Manufacturing output grew at 10 percent annually during the 1980s and early 1990s, much faster than the economy as a whole. As a result, the manufacturing share of GDP rose from 22 percent in 1980 to 35 percent in 2006. While all industries grew, expansion was most rapid among manufacturers of labor-intensive products, such as clothing, footwear, and consumer appliances. Industrial production diversified considerably, spurred by foreign investment, new technologies, and the growth of domestic and export markets. Major industries include food processing, textiles and clothing, electronics, motor vehicles and parts, cement, petroleum, plastics, and chemical products.

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