Globalisation Case Study - Thailand

The Impact of Globalisation to Thailand and its Environmental Consequences

From 1960 to 1996: A period of Industrialisation leading to High and Stable growth

Globalisation in Thailand dated back as early as the 1960s when the Thai government announced the first Five-Year Plan which tried to industrialize its agrarian economy through import-substitution policy. During the 1970s and 80s, import substitution was replaced with policies to boost exports. Along with the early policy of foreign trade and exchange liberalization, Thailand’s economic structure became an export-led which diversified into chemicals, textiles, electronics, iron and steel, and minerals by drawing on relatively abundant and inexpensive labour and natural resources. Overall, Thailand took substantial advantage of globalization through international trade and foreign investment which underlay its economic success in the years up to 1997. From 1960 to 1996, the average real GDP growth per annum was a respectable 6.6% which well reflected Thailand’s three decades of strong performance.

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1997 Asian Financial Crisis: Negative Impact of Globalisation

Prior to 1997 Thailand’s open financial policy managed its economy with a pegged exchange rate to the U.S dollar that effectively reduced transaction costs associated with exchange rate volatility. It allowed Thailand to experience rapid growth with massive amount of capital flows which came in the form of foreign direct investment. Nonetheless, the potential downside of such policy appeared to be overlooked by the government, which led Thailand expose to a capital market that relied heavily on external investment and hot money. In 1997, the “Asian Financial Crisis” was triggered in Thailand due to a loss of foreign investors’ confidence in the ability to service their financial debts. On 2nd...