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  1. #1
    Mid
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    50-year-old export-led model needs overhaul, say experts

    ECONOMY

    50-year-old export-led model needs overhaul, say experts
    Saturday March 08, 2008
    WICHIT CHANTANUSORNSIRI

    Thailand needs to develop a new ''growth story'' and move beyond the export-led economic model used for the past half century, according to Sethaput Suthiwart-narueput, managing director and chief economist of SCB Securities.

    From 1950 to the present, Thailand had posted ''world-class'' growth, Dr Sethaput said yesterday, with average per capita gross domestic product rising at the seventh-fastest pace in the world.


    Sethaput: Wages stailing growth

    But the dependence on exports as the main growth engine for the economy has created its own risks. Exports now account for 60% of GDP, compared with 29% in 1990.

    Dr Sethaput, speaking at an economics conference at Sasin, said the heavy dependence on exports had opened the country to greater risks from global economic volatility and had also affected the domestic labour force.

    ''Since the 1997 economic crisis, even though the economy has grown, labour wages have not risen at the same pace. This is despite the fact that 40% of the labour force have completed secondary school, compared with just 20% in 1990,'' he said.

    An export-oriented model relied on cheap wages to remain competitive with other emerging markets, Dr Sethaput said. The pressure to keep wages low has in turn curbed productivity improvements and depressed domestic demand.

    Dr Sethaput said a new growth model was needed, one that took advantage of the country's strengths in the services and agricultural sectors.

    Bandid Nijathaworn, a deputy governor of the Bank of Thailand, noted that in the Korean case, post-crisis development hinged on three factors: macroeconomic and sectoral restructuring, the development of good governance and a breakdown of the chaebol system to allow smaller companies to compete in the market.

    He said the economic downturn in the US market and sub-prime mortgage crisis would have a greater impact than the collapse of the dot-com boom earlier in this decade.

    While Thailand was relatively insulated from the sub-prime crisis, exports inevitably would be affected as a result of weaker US economic growth.

    Ammar Siamwalla, acting president of the Thailand Development Research Institute, said the government should focus more on the country's economic problems on the supply side.

    Investment has stayed at a relatively low 22% of GDP for a number of years, despite the fact that many industries were running at full capacity, he said.

    bangkokpost.net



    there's some good points there IMHO ,

    The pressure to keep wages low has in turn curbed productivity improvements and depressed domestic demand.

    this one is a bit of a no brainier though it seems there are those who disagree , especially those who dispute the necessity of a FAIR minimum wage .

    .

  2. #2
    The Cat
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    Right.
    So what's the alternative?
    Developing a wider consumer base in Thailand and developing services.
    But this can only be done by developing the country outside Bangkok and a handful of other big cities.
    And welcoming foreign investment without restrictions...

  3. #3
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    Sethaput has got it dead right as has BC, Thailand has made woeful progress in decentralisation, way too much of the economy is based in Bangkok.

  4. #4
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    well, the transition would be extremely painful, so it's all wishful thinking as it would mean importing "western" talents to run the country, higher and credible education budget for the locals, massive investment in the local infrastructure, and the end of cheap labors

    we all know this can't happen

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