Abstract

Thailand, one of South East Asia’s most important countries, had seen 17 military coups since the removal of absolute monarchy in 1932. Civilian governments had often been short-lived and unstable. During the Asian currency crisis, the baht lost half its value. Half the country’s loans turned non-performing and output plummeted. Following the Asian currency crisis, the Thaksin administration attempted to use fiscal policy to facilitate a sustained economic recovery. Policies to diversify export markets and promote agricultural exports were also announced. Incentives were offered to substitute imports with locally produced goods. But most economists believed Thailand had to do a lot more to get rid of the excesses that had led to the 1997 currency crisis. The case illustrates the need for developing countries to have sound financial systems to absorb huge capital inflows.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

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Keywords

Thailand case study, Baht, Asian currency crisis, Thaksin Shinawatra, Thai Rak Thai party, Siam, Thai Asset Management Corporation, Thiraphong of Thai Union Frozen, National Counter-Corruption Commission, Thailand economic policy, ASEAN, Association of Southeast Asian Nations Free Trade Area, Thailand social policy, Thailand industry, Thailand foreign trade, South East Asian trade block