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Abstract
In this detailed report, it is expected to discuss on the economic and business strategies used by Thailand for gaining a high economic growth rate and uplift the economic activities in past years such as import substitution, diversification of economy, ensuring the confidence of the economy in private sector and investors, Participation of the private sector in export production, developing strategies for alternative power sources, restructuring economic sectors, privatization, targeted industries and policy formulation and more other. As well as, the Sri Lankan application of above strategies is also discussed.
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Content
Topics 1. 2. 3. 4. Thailand in the economic perspective Development and Advancement strategies of Thailand Appropriate strategies in the Sri Lankan context References
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Import substitution
This is considered as a rational approach to industrialization. Before industrialization, country had a stable agriculture sector, but after Thailand was altering its strategies, which centered on food processing and manufacturing for export purpose utilizing its wide-spread natural resources and low cost labor. This resulted to a rapid acceleration in manufacturing sector and marked a huge increase in exports. Here, at the first phase, the country exported only simple agriculture-based products, but when the time passed, Thailand realized the value of changing export strategies into technology-based manufacture. As well as this strategy gradually operated towards the development and advancement of Thai economy.
Diversification of economy
This strategy has also contributed heavily on the economic development of the country. Basically, industrial sector began with simple agriculture-based manufacturing and sharply progressed into more sophisticated industries through the utilization of available resources, such as ample of natural resources and low cost labor. Diversification was also assisted by Foreign Direct Investments made in a wide range of products, like electronics, chemical, property and processed food. In the 1980s, Foreign Direct Investments valued at US$8 billion. Also US$ 2.5 was from Japan and the rest from China, Korea and America. The most important factor that attracts FDIs is lower manufacturing cost in Thailand. 50% of the countrys total industrial production is manufactured in foreign investments and 20% of the total industrial workforce
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is employed in projects backed by FDIs. This diversification strategy facilitated the country to acquire a high economic growth rate and the advancement in the state.
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export income became higher due to increased exports and on the other hand, import expenditure reduced since decreased import of oil. From the most basic level, Thai government implemented plans to gain the contribution of the private sector and foreign investors in these alternative power generation projects in order to operate them according to global accepted standards. Through attracting the private sector and foreign investors, the government benefited with the most advanced technology and a huge sum of funds to make projects a reality. Absolutely, these alternative power generation projects have been a major factor in determining the development and advancement of Thailand.
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Privatization
Thai governments aim is to encourage capital inflows into the key economic sectors of the country. In 2006, the government of Thaksin Shinawatra implemented a privatization process for state-owned enterprises. In this, several state-owned enterprises were privatized other than the Petroleum Authority of Thailand, Airport Authority of Thailand and Mass Communication Organization of Thailand. Also, the 1999 State Enterprises Corporatization Act facilitated the framework for formulating government organization into stock companies and corporations as an alternative to privatization. Foreign investors were also allowed to participate in privatization with several restrictions provided by the Foreign Business Act of 1999. This strategy encouraged capital inflows to the country and facilitated to bring advance technology and techniques into the economy. Through privatization, effectiveness and efficiency of enterprises increased also the quality of the manufacturing and service sector was uplifted. This privatization program strengthened the process of development of Thailand. As well as, Thai government has taken appropriate steps to avoid the drawbacks of the privatization process.
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Thai government has already prepared action plans to work on selected industries. Here, government authorities are responsible for designing, implementation, monitoring and trouble-shooting in selected industries. In the present, Thailand has become the finest country in agricultural industry in the entire world. Thailand promoted its agricultural programs in the name of kitchen of the world. In this, the government has identified industrial segments that the country can operate with available resources at low cost, achieving higher productivity and efficiency as well as the government reviews that the countrys expertise is match with the selected industries. Now, Thailand is working upon suitable industries, increasing its resources and labor employment also the country is heading to sustainable development and growth.
chain management, just-in-time production system and manufacturing process control. As well as, the government is encouraging the private sector to invest in R&D activities and providing facilities needed for the sustainable development. In the present, the country allocates 0.2% of the countrys GDP in R&D activities also the amount of expenditure is expected to increase in the upcoming fiscal year. Thailand is more concerned on developing infrastructure facilities, such as water, electricity, transportation (road, aviation and water) social facilities, like housing in both urban and rural areas with the view of facilitating and developing small and medium scale enterprises. Through focusing more on rural areas, unemployment rate of these areas has decreased and living standards of people have uplifted. Thai government developed rural according to certain standards since developing rural areas and improving peoples living standards and expanding their earning capabilities were identified as key strategies for development. In the simple term, the country was able to expand its production capabilities by using its unemployed resources and low cost labor at a lower cost with higher earning also profits. Mainly, public-private partnership is very important in infrastructure development in Thailand. Currently, the government is willing to commence the biggest infrastructure development with US$ 60 billion. 64% of the total budget will be spent on 31 railways including 4 high-speed rail projects. 24% will be allocated on road development and 12% is planned to spend on water and aviation transportation. The main aim is to boost the production capability of the construction sector in these projects. With all these projects and programs, the government expects to increase per capita income to US$ 10,000 from the present amount of US$ 5000 during the next 10 years.
Selected industries
Sri Lanka has more ancestral knowledge in several economically significant industries, such as agriculture, jams and tourism. So, the country can be specified in those industries with a high level of competitive advantage. In this strategy, Sri Lanka should select industries in which the country can operate more efficiently and effectively at a lower cost level with a higher productivity. Here, talents of employees, resources availability and cost effectiveness have to be considered. Then, this directly affects on the development of the economy.
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Mainly, when the productivity goes up cost tends to decrease as well as that leads to a high development level.
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References
Asian Development Bank (2013), Asian Development Outlook, Manila. Bank of Thailand (2011), Economic Summary of Thailand in 2010, Bank of Thailand, Bangkok. Buampongpattana, W. (2013), Infrastructure and PPPs Development in Thailand, Kyoto University. Chancharoen, N. (2012), Study Results and City Case: Private sector-local government interactions in Thailand, Thailand Environment Institute. Daniel, I.P., Tritos, L., Amrik, S. and Sukun, B. (2007), Manufacturing Strategies and Innovation Performance in Newly Industrialized Countries. Pathmanand, U. (2001), Globalization and Democratic Development in Thailand. Vietnam Development Forum (2005), MOI-VDF Joint Mission on Industrial Policy Formulation of Thailand.
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