Thaksinomics
Encyclopedia
Thaksinomics is a term used to refer to the economic
set of policies of Thaksin Shinawatra
, Prime Minister of Thailand
from 2001-2006. There has been considerable controversy over the role Thaksinomics has played in Thailand's recovery from the 1997 Asian financial crisis. Among the most prominent advocates of Thaksin's economic policies is Morgan Stanley
economist, Daniel Lian
.
The term was coined by President Gloria Macapagal-Arroyo of the Philippines during the 2003 Nikkei in which she explained how she conducted her economic policy by following Thaksin's "domestic consumption-based (and) managed asset reflation". http://www.news.ops.gov.ph/archives2003/sept08.htm#Prime
set of economic policies aimed at Thailand's rural
people, who make up the majority of the country's population. The policies of Thaksinomics have included:
Supporters of Thaksinomics argue that these policies, implemented in the aftermath of the Asian Financial Crisis, have driven a stable, demand-driven recovery of Thailand's economy, which was previously dependent on exports, making it vulnerable to external shocks. They also point out that under the Thaksin administration, Thailand has repaid all of its debts to the International Monetary Fund (incurred after the Asian Financial Crisis) four years ahead of schedule.
These policies have made Thaksin Shinawatra popular. After an unprecedented four years as Prime Minister, his populist
Thai Rak Thai
party won a landslide victory in the February 2005 elections, winning 374 out of 500 seats in Parliament. This was the largest number of parliamentary seats ever gained by a single party in Thailand's history.
Critics of Thaksinomics claim that Thaksin's economic policies amount to little more than traditional Keynesian fiscal
stimulus policies rebranded as a revolutionary economic doctrine. They argue that, contrary to the claims of Thaksinomics's advocates, Thailand's economy was actually driven by rising export demand, while domestic consumer demand has grown only modestly at best since Thaksin became Prime Minister
. Skeptics also note that under Thaksin's policy of pushing state-owned banks to increase loans to poor farmers, consumer indebtedness has risen dramatically. They state that the banks often made loans without proper due diligence to people who had little means to repay the loans. Thaksin's supporters often counter by pointing out that the percentage of non-performing loans in the banking system has fallen during his administration.
beginning in 2002 was the immediate impact of Thaksinomics. In 2002, Thailand posted GDP growth of 5.3%, the fastest rate since 1996. The economy grew by another 7.1% in 2003. In 2004, in spite of a volatile external environment and rising oil prices, Thailand still managed a GDP growth rate of 6.3%. http://www.bangkokpost.com/ecoreviewye2004/economy.html
Since 2005, however, there has been considerable controversy concerning Thaksinomics. Although the reelection of Thaksin and his Thai Rak Thai
party in an unprecedented landslide in February demonstrated the widespread popularity of his policies, slower economic growth (4.5% in 2005), has given ammunition to critics of Thaksinomics. Thaksin's supporters argue that the economic slowdown is largely a result of the Great Indian Ocean Tsunami
of December 26, 2004 and rising oil prices and inflation. But others point out that consumer indebtedness and trade deficits plagued the Thai economy in 2005, as a direct result of Thaksin's policies. Thaksin was forced into an embarrassing retreat in July 2005 when the trade deficit and public debt caused the government to abandon its transportation vehicle fuel price subsidy. Corruption
allegations stemming from public contracts in the construction of Suvarnabhumi Airport
also threatened to cloud the future of Thaksin's public infrastructure projects that formed the core of his second-term economic policies.
Another important feature of Thaksinomics, is free trade. From 2002 - 2007, the Thaksin government signed free trade agreements (FTA) with China, New Zealand, Australia, India and United Arab Emirates. Prior to being overthrown by a military coup, FTA negotiations were being made with the United States and Japan. Supporters claimed that there was an overall positive benefit from the trade agreements, especially given Thailand's historical reliance on exports. However, critics argued that FTA agreements were unconstitutional for not having been approved by the parliament, and subsequent governments attempted constitutional reforms that would make parliamentary approval necessary. Critics also claimed that no detailed studies and analysis on the losses and gains have been made public. Officials in charge were instructed to present one-sided "win win" analysis to questions about the FTAs. The military government's Senate Committee on Foreign Affairs found that the Thai-Chinese free trade agreement on agriculture products resulted in an overall decline in local production. The study reported in 2005 a 70% decline in the production of red onion, garlic and other vegetables due to their inability to compete with cheaper products from Yunan Province; Chinese garlic sells for 3 to 5 baht per kilogram and opposed to 30 to 35 baht per kilogram for the Thai garlic. King Bhumibol's Royal Agriculture Projects for the hill tribes reported a decline in sales their products since the trade agreement with China. In 2007 the UN on Crime and Drugs (Bangkok office) reported that Thailand is now listed as a country of 'illegal drug producer' (involving some 3,000 families growing mostly opium) in five provinces - all in the North. In the 1990s Thailand was an exemplary country for its total eradication of opium production, despite rising levels of addiction and trade.
Even after the 2006 coup, the Thai government yearly reports give an overtly positive picture of free trade agreements only showing increase trade volumes with the 'partners'.
Export gains by enlarge benefit agricultural co-operates like the giant Charoen Pokaphan, multi-nationals like Toyota, Mitsubishi, Nissan, Nike and others.
FTAs also gave Thaksin's family business a big boost. After years of negotiating, the Chinese government finally allowed iPSTAR of the Shin Corporation to operate its broad band satellite telecommunication. The Australian Ministry of Foreign Affairs and Commerce made one announcement after the FTA - 'Australians will now have access to broad band telecommunication with the investment of $280 million from Thailand's iPSTAR'.
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
set of policies of Thaksin Shinawatra
Thaksin Shinawatra
Thaksin Shinawatra is a Thai businessman and politician, who was Prime Minister of Thailand from 2001 to 2006, when he was overthrown in a military coup....
, Prime Minister of Thailand
Thailand
Thailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...
from 2001-2006. There has been considerable controversy over the role Thaksinomics has played in Thailand's recovery from the 1997 Asian financial crisis. Among the most prominent advocates of Thaksin's economic policies is Morgan Stanley
Morgan Stanley
Morgan Stanley is a global financial services firm headquartered in New York City serving a diversified group of corporations, governments, financial institutions, and individuals. Morgan Stanley also operates in 36 countries around the world, with over 600 offices and a workforce of over 60,000....
economist, Daniel Lian
Daniel Lian
Daniel Lian is a Southeast Asia Economist for Morgan Stanley, based out of Singapore. He holds a Ph.D. in economics from the East-West Center in Honolulu, Hawaii....
.
The term was coined by President Gloria Macapagal-Arroyo of the Philippines during the 2003 Nikkei in which she explained how she conducted her economic policy by following Thaksin's "domestic consumption-based (and) managed asset reflation". http://www.news.ops.gov.ph/archives2003/sept08.htm#Prime
Overview
Thaksinomics is a populistPopulism
Populism can be defined as an ideology, political philosophy, or type of discourse. Generally, a common theme compares "the people" against "the elite", and urges social and political system changes. It can also be defined as a rhetorical style employed by members of various political or social...
set of economic policies aimed at Thailand's rural
Rural
Rural areas or the country or countryside are areas that are not urbanized, though when large areas are described, country towns and smaller cities will be included. They have a low population density, and typically much of the land is devoted to agriculture...
people, who make up the majority of the country's population. The policies of Thaksinomics have included:
- A four-year debt moratorium for farmers, combined with orders to Thailand's state-owned banks to increase loans to farmers, villages and SMEs (small and medium-size enterprises) at low interest rates.
- SubsidizedSubsidyA subsidy is an assistance paid to a business or economic sector. Most subsidies are made by the government to producers or distributors in an industry to prevent the decline of that industry or an increase in the prices of its products or simply to encourage it to hire more labor A subsidy (also...
transportation vehicle fuel prices, starting January 2004 in order to alleviate the impact of rising world oil prices on consumers. The government has also forced the state-owned electricity company EGAT to partially subsidize electricity tariffs. - In the policy of public health, Thaksin started the 30 Baht universal healthcare program, which guarantees universal healthcare coverage for just 30 Baht (about 0.75 USD) a visit at state hospitals. Although highly popular, especially among lower income Thais who were previously denied healthcare because of their income, the policy was strongly criticized by physicians.
- The One Tambon One ProductOne Tambon One ProductOne Tambon One Product is a local entrepreneurship stimulus program designed by Thai Prime Minister Thaksin Shinawatra during the 2001-2006 Thai Rak Thai government. The program aims to support the unique locally made and marketed products of each Thai tambon...
(OTOP) program, which stimulates the development of rural small and medium-sized enterprises. - Thaksin has pushed for continued privatization of state-owned enterprises. Although it is a continuation of the Democrat-initiated policies of the late-'90s, Thaksin has consistently pushed for the privatization of the state-owned electricity company EGAT. However, EGAT is still state-owned.
- "Mega Projects": During Thaksin's tenure, this involved investing over $50 billion in public infrastructure, including roads, public transit, and a new international airportSuvarnabhumi AirportSuvarnabhumi Airport , also known as Bangkok International Airport, is an international airport serving Bangkok, Thailand. It was officially opened for limited domestic flight service on 15 September 2006, and opened for most domestic and all international commercial flights on 28 September...
. - Creating cartels or consortiums to increase the price of exports. (Such as in the rubber industry)http://news.xinhuanet.com/english/2002-08/08/content_516653.htm
Supporters of Thaksinomics argue that these policies, implemented in the aftermath of the Asian Financial Crisis, have driven a stable, demand-driven recovery of Thailand's economy, which was previously dependent on exports, making it vulnerable to external shocks. They also point out that under the Thaksin administration, Thailand has repaid all of its debts to the International Monetary Fund (incurred after the Asian Financial Crisis) four years ahead of schedule.
These policies have made Thaksin Shinawatra popular. After an unprecedented four years as Prime Minister, his populist
Populism
Populism can be defined as an ideology, political philosophy, or type of discourse. Generally, a common theme compares "the people" against "the elite", and urges social and political system changes. It can also be defined as a rhetorical style employed by members of various political or social...
Thai Rak Thai
Thai Rak Thai
The Thai Rak Thai Party was a Thai political party that was officially banned on May 30, 2007, by the Constitutional Court of Thailand due to violations of electoral laws during the 2006 legislative elections. From 2001 to 2006, it was the ruling party under Prime Minister and its founder Thaksin...
party won a landslide victory in the February 2005 elections, winning 374 out of 500 seats in Parliament. This was the largest number of parliamentary seats ever gained by a single party in Thailand's history.
Critics of Thaksinomics claim that Thaksin's economic policies amount to little more than traditional Keynesian fiscal
Fiscal policy
In economics and political science, fiscal policy is the use of government expenditure and revenue collection to influence the economy....
stimulus policies rebranded as a revolutionary economic doctrine. They argue that, contrary to the claims of Thaksinomics's advocates, Thailand's economy was actually driven by rising export demand, while domestic consumer demand has grown only modestly at best since Thaksin became Prime Minister
Prime Minister of Thailand
The Prime Minister of Thailand is the head of government of Thailand. The Prime Minister is also the chairman of the Cabinet of Thailand. The post has existed since the Revolution of 1932, when the country became a constitutional monarchy....
. Skeptics also note that under Thaksin's policy of pushing state-owned banks to increase loans to poor farmers, consumer indebtedness has risen dramatically. They state that the banks often made loans without proper due diligence to people who had little means to repay the loans. Thaksin's supporters often counter by pointing out that the percentage of non-performing loans in the banking system has fallen during his administration.
Thaksinomics in practice
By 2001, the currency had appreciated to an export-friendly level, and the economy had fully recovered from the 1997 Asian Financial Crisis. The strong performance of the Thai economyEconomy of Thailand
The economy of Thailand is a newly industrialized economy. It is a heavily export-dependent economy, with exports accounting for more than two thirds of gross domestic product ....
beginning in 2002 was the immediate impact of Thaksinomics. In 2002, Thailand posted GDP growth of 5.3%, the fastest rate since 1996. The economy grew by another 7.1% in 2003. In 2004, in spite of a volatile external environment and rising oil prices, Thailand still managed a GDP growth rate of 6.3%. http://www.bangkokpost.com/ecoreviewye2004/economy.html
Since 2005, however, there has been considerable controversy concerning Thaksinomics. Although the reelection of Thaksin and his Thai Rak Thai
Thai Rak Thai
The Thai Rak Thai Party was a Thai political party that was officially banned on May 30, 2007, by the Constitutional Court of Thailand due to violations of electoral laws during the 2006 legislative elections. From 2001 to 2006, it was the ruling party under Prime Minister and its founder Thaksin...
party in an unprecedented landslide in February demonstrated the widespread popularity of his policies, slower economic growth (4.5% in 2005), has given ammunition to critics of Thaksinomics. Thaksin's supporters argue that the economic slowdown is largely a result of the Great Indian Ocean Tsunami
2004 Indian Ocean earthquake
The 2004 Indian Ocean earthquake was an undersea megathrust earthquake that occurred at 00:58:53 UTC on Sunday, December 26, 2004, with an epicentre off the west coast of Sumatra, Indonesia. The quake itself is known by the scientific community as the Sumatra-Andaman earthquake...
of December 26, 2004 and rising oil prices and inflation. But others point out that consumer indebtedness and trade deficits plagued the Thai economy in 2005, as a direct result of Thaksin's policies. Thaksin was forced into an embarrassing retreat in July 2005 when the trade deficit and public debt caused the government to abandon its transportation vehicle fuel price subsidy. Corruption
Political corruption
Political corruption is the use of legislated powers by government officials for illegitimate private gain. Misuse of government power for other purposes, such as repression of political opponents and general police brutality, is not considered political corruption. Neither are illegal acts by...
allegations stemming from public contracts in the construction of Suvarnabhumi Airport
Suvarnabhumi Airport
Suvarnabhumi Airport , also known as Bangkok International Airport, is an international airport serving Bangkok, Thailand. It was officially opened for limited domestic flight service on 15 September 2006, and opened for most domestic and all international commercial flights on 28 September...
also threatened to cloud the future of Thaksin's public infrastructure projects that formed the core of his second-term economic policies.
Another important feature of Thaksinomics, is free trade. From 2002 - 2007, the Thaksin government signed free trade agreements (FTA) with China, New Zealand, Australia, India and United Arab Emirates. Prior to being overthrown by a military coup, FTA negotiations were being made with the United States and Japan. Supporters claimed that there was an overall positive benefit from the trade agreements, especially given Thailand's historical reliance on exports. However, critics argued that FTA agreements were unconstitutional for not having been approved by the parliament, and subsequent governments attempted constitutional reforms that would make parliamentary approval necessary. Critics also claimed that no detailed studies and analysis on the losses and gains have been made public. Officials in charge were instructed to present one-sided "win win" analysis to questions about the FTAs. The military government's Senate Committee on Foreign Affairs found that the Thai-Chinese free trade agreement on agriculture products resulted in an overall decline in local production. The study reported in 2005 a 70% decline in the production of red onion, garlic and other vegetables due to their inability to compete with cheaper products from Yunan Province; Chinese garlic sells for 3 to 5 baht per kilogram and opposed to 30 to 35 baht per kilogram for the Thai garlic. King Bhumibol's Royal Agriculture Projects for the hill tribes reported a decline in sales their products since the trade agreement with China. In 2007 the UN on Crime and Drugs (Bangkok office) reported that Thailand is now listed as a country of 'illegal drug producer' (involving some 3,000 families growing mostly opium) in five provinces - all in the North. In the 1990s Thailand was an exemplary country for its total eradication of opium production, despite rising levels of addiction and trade.
Even after the 2006 coup, the Thai government yearly reports give an overtly positive picture of free trade agreements only showing increase trade volumes with the 'partners'.
Export gains by enlarge benefit agricultural co-operates like the giant Charoen Pokaphan, multi-nationals like Toyota, Mitsubishi, Nissan, Nike and others.
FTAs also gave Thaksin's family business a big boost. After years of negotiating, the Chinese government finally allowed iPSTAR of the Shin Corporation to operate its broad band satellite telecommunication. The Australian Ministry of Foreign Affairs and Commerce made one announcement after the FTA - 'Australians will now have access to broad band telecommunication with the investment of $280 million from Thailand's iPSTAR'.
See also
- ThaksinocracyThaksinocracyThaksinocracy is the term created by Dr. Teerayut Bunmee from the Faculty of Sociology and Anthropology, Thammasat University, one of the critics of Thaksin Shinawatra...
- ReaganomicsReaganomicsReaganomics refers to the economic policies promoted by the U.S. President Ronald Reagan during the 1980s, also known as supply-side economics and called trickle-down economics, particularly by critics...
- RogernomicsRogernomicsThe term Rogernomics, a portmanteau of "Roger" and "economics", was coined by journalists at the New Zealand Listener by analogy with Reaganomics to describe the economic policies followed by Roger Douglas after his appointment in 1984 as Minister of Finance in the Fourth Labour Government...
- ThatcherismThatcherismThatcherism describes the conviction politics, economic and social policy, and political style of the British Conservative politician Margaret Thatcher, who was leader of her party from 1975 to 1990...
- ClintonomicsClintonomicsClintonomics refers to the economic policies of United States President Bill Clinton during the 1990s...
- Obamanomics