Why Exports Matter


Exports are set to be higher than forecast in 2009, according to the Department for Export Promotion. That is good, of course, since more exports means more Thai goods being sold around the world and more jobs and money coming back here. Thailand exports agricultural products (including frozen chickens, shrimps, fruit and vegetables) as well as manufactured items.

The growth of Thailand’s economy since the 1950s has been based on promoting exports, encouraging inwards foreign direct investment and some substitution of imports, as well as access to western markets, particularly the USA, as a reward for fighting against Communism. This was the growth model approved for all developing countries by the IMF and the World Bank.

The 1997 financial crisis showed some of the weaknesses of this model. Southeast Asia as a whole has always been very open to international trade for many centuries. That has the negative effect that what happens in the rest of the world has a disproportionately strong impact on the home economy. There are other problems too: keeping exports competitive can lead to pressure to keep costs down and this has resulted in low salaries, exploitation of some workers and suppression of rights such as freedom of association and collective bargaining.

The Thai Rak Thai government of 2001 brought about some changes to the Thai economy with a view to trying to reduce the negative effects. The country was to remain open to the rest of the world but more resources would be given to domestic entrepreneurs and rural people to encourage the development of skills and create other export goods which rely on added value (i.e. something which people want because of what it is rather than just because it is cheaper than its competitors). Putting resources into rural regions also helped with poverty reduction during a difficult economic period while reducing the incentive for migration and the various social problems that caused.

The events of the next few months will be influential in determining whether this model will continue or whether it will be replaced and, if so, by what. Closing the country to international business or adopting an anti-business agenda would not be permitted by international markets but there are still many other issues to be resolved.

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JW

JW has been one of the first contributors to this blog before he gave up on it all in April 2010, during a time when Thai society got more and more polarized about political matters because of red-shirt protesters.

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