Lessons Learned From Thailand's Growth Model

The gap between rich and poor regions is also getting worse. In 1978, the total income of the people in the East was 1.38 times higher than that of the people in the Central region. In 1995, the GDP per capita of the people in the East was 2.41 times that of the people in the West. The highly developed areas in Jiangsu Province in the East had incomes more than 70 times higher than the average of the West [16].

Second, the danger of environmental degradation. China's rapid and continuous "hot" development over the past 20 years has left serious consequences for the ecological environment. Just looking at the environmental problem in Xiangzhen, we will imagine a terrible picture of the harm to the next generation. The development of "Xianzhen" enterprises is one of the links in the industrial chain that has been developed without considering the environmental impact on the next generation.

(3) - Solve problems, improve growth quality

- Maintain moderate but stable growth

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During the years 1992-1994, China's economy grew at a high rate, maintaining double-digit growth for four consecutive years. This overheating caused the economy to become unbalanced, strained in the money supply, and a shortage of some raw materials. Inflation increased rapidly from 2.5% in 1990 to 22% in 1994. Therefore, since 1996, China has advocated adjusting macroeconomic policies, controlling growth, tightening finance, and controlling inflation. In macroeconomic adjustment, it is important to combine total tightening with structural loosening, and building monetary order. Therefore, since 1996, China's economic growth has shifted from "hot" to stable: growth of 9.7% in 1996; 8.8% in 1997; 7.8% in 1998 and

7.3% in 2001 [16].

- Increase investment in human resource development

Since the 1990s, China has attached great importance to education for human resource development, meeting the requirements of improving the quality of growth. The adjustment of the educational structure is reflected in the following points: (1) Increasing

Strengthening basic education, attaching importance to compulsory nine-year education nationwide, and basically eliminating illiteracy among people under 50 years old; (2) Developing technical and vocational education as well as specialized and in-service training programs, improving the quality of skilled workers and intermediate cadres; (3) Expanding university and postgraduate education, improving the quality of education, adjusting scientific management organizations, and increasing teaching and learning efficiency.

In addition, China also attaches importance to training, attracting and employing overseas Chinese students and those who are studying and working abroad. With the principle of “supporting students to study abroad, allowing and encouraging them to return freely”, the Chinese government has implemented many policies to train and employ overseas students. In 1993, the State Education Commission launched the program “training talented and virtuous people for the 21st century”, a special program to train the most outstanding cadres in many fields of science and technology. In early 1999, China announced a sum of 72 million USD for three years to attract overseas Chinese intellectuals to return home to serve the country's industrialization. In the early years of the 21st century, China continued to attach importance to building a contingent of cadres according to the motto of "4 transformations": revolutionization, rejuvenation, intellectualization, and specialization in the third stage (the three stages are: preparation, formation, and maturity). In particular, to strengthen international integration after joining the World Trade Organization (WTO), China implemented the policy of nurturing and educating talents in "three directions": toward modernization, toward the world, toward the future, thereby linking Chinese education with education.

abroad and educate better human resources for the future.

- Increase investment in environmental protection

China has realized that environmental protection is the basis for better use and exploitation of resources and must be carried out under the premise of environmental protection. With the orientation of shifting from extensive development to intensive development, China has put forward a number of action programs for

environment, regularly hold national environmental protection conferences to promote sustainable development.

China has proposed a plan to increase annual spending on environmental protection from 0.7% of GDP in 1995 (equivalent to 17 billion USD) to 1.5% in 2000 (equivalent to 40 billion USD) to control the current environmental degradation [9]. However, to effectively protect the environment, it is estimated that China needs to spend from 5 to 10% of GDP, so in addition to the state budget, China's environmental policy is also based on the principle of "polluters pay" to force enterprises to find ways to avoid wasting resources and to limit the negative impact of production on the environment.

On the international front, China has signed the Montreal Protocol on the Emission of Substances that Deplete the Ozone Layer. China was one of the first 10 countries in the world to ratify the United Nations Framework Convention on Climate Change. China also signed on to the implementation of environmental goals for sustainable development at the Rio De Janeiro Summit in 1992, attended the New York Summit on Environment organized by the United Nations (June 1997) and the Tokyo World Climate Conference (December 1997).

- Administrative reform and strengthening democracy

Some amendments to the Constitution are primarily aimed at gathering forces and economic sectors to encourage the development of collective and private economies. In 1988, the amended Constitution stipulated that “the State allows economic sectors to exist and develop within the scope of the law”, that “private economy is a supplementary economic sector to the Socialist public economy”. On March 15, 1999, at the 2nd session of the 9th National Assembly, China passed the Draft Amendment to the Constitution of the People’s Republic of China, which clearly stated: “Non-public economy regulated within the scope of the law such as individual economy, private economy... is an important component of the Socialist market economy. The State protects the legitimate rights and interests of individuals and organizations.

The State shall direct, supervise and manage the individual economy and the private economy.

Reform to streamline the administrative apparatus is also an important content, having a strong impact on improving the quality of economic growth. With the goal of transforming the government apparatus of the planned and subsidized period into the government apparatus of the market economy, according to the decision of the Chinese National Assembly in March 1998, China cut 11 out of 40 Central Ministries by merging or converting some Ministries into Corporations or Production Associations. The number of civil servants and employees was halved, from 8 million to 4 million. Administrative reform also goes hand in hand with strengthening democracy. Since 1998, China has implemented democratic elections at the commune level.

- Balance between regions and areas

Since the end of 1990, in the economic development of China, a prominent problem is the large gap in development level between the East and the Central and Western regions. Therefore, for many years, China has invested 70% of its semi-government bond investment and 70% of its preferential loans from international monetary organizations in the West [9]. Currently, China has proposed a model and development focus for each region.

1.5.2. Lessons learned from Thailand's growth model

(1) – Success in maintaining growth rate

The Thai economy has changed rapidly over the past four decades. The average annual economic growth rate was close to 8% in the 1960s and 1970s, and even reached 10% in the second half of the 1980s. However, the growth rate decreased to 5.9% in 1996, and by 1997, the growth rate was negative for the first time, at 1.75% [16]. The change in the Thai economy for the worse is considered to be due to the poor quality of growth.

- The process of economic restructuring in the country

Thailand's rapid economic growth was accompanied by the rapid development of its manufacturing sector. In the 1960s, with the implementation of the import substitution industrialization strategy, the protected manufacturing sector developed strongly to produce consumer goods and import substitutes for the domestic market. However, since 1970, when the domestic market was saturated due to its small size, Thailand adjusted its development strategy from import substitution to export orientation, bringing about fundamental changes in the economic structure.

The share of agriculture in GDP declined rapidly from nearly 40% in 1960 to 11% in the second half of the 1990s. This decline in agriculture was replaced by a doubling of the share of the manufacturing sector, from 12.5% to 28% of GDP. The share of other sectors (services) also increased quite rapidly from 48% to more than 60% in the same period [16].

- Foreign investment and integration into global production

FDI inflows into Thailand increased sharply after 1988, especially FDI from Japan, Taiwan, South Korea and Singapore. FDI in Thailand initially focused on the steel and non-steel industries, but by the early 1990s, FDI shifted strongly to real estate, construction, trade and financial and banking services. Thailand’s high economic growth over nearly four decades stimulated speculation and inflated the bubble economy.

In addition, technology transfer through FDI in Thailand is very limited, most of the inputs are imported. As a result, the linkage between domestic manufacturers and foreign investors in enhancing the training of domestic workers has achieved very low results. The impact of FDI on endogenous technological capacity and R&D is also not high.

Another problem is the implementation of financial liberalization policy, although it has helped Thailand integrate quite successfully into the international financial market, but because the Thai Government does not have much experience in managing an account.

open capital account, not recognizing the different impacts of different types of capital on economic stability. Meanwhile, the policy and institutional environment is both weak and inadequate, for example, the Government continues to maintain a fixed exchange rate to maintain Thailand's attractiveness for trade and investment without realizing that the coexistence of a fixed exchange rate with an open capital account is a cause of the Government losing control over monetary policy.

Speculators took advantage of the opportunity, focusing on speculating on the baht to take advantage of the high interest rates of the domestic currency. The baht appreciated, limiting investment in export-oriented industries as well as discouraging investment oriented to serve the domestic market. Meanwhile, many less profitable sectors were overinvested, especially real estate, banking and financial services. These causes caused the Thai economy to fall into crisis.

(2) – Problems that arise

- TFP growth is not high due to low investment in R&D .

According to Young's calculation, during the period 1970-1985, Thailand's TFP contributed significantly to economic growth: ranking 2nd among 7 East Asian countries. According to Collins and Bosworth, Thailand ranked 3rd among 7 countries studied during the period 1960-1994. However, compared to countries assessed by the WB as having relatively stable development, Thailand's index is not high, and more importantly, Thailand's TFP only reflects the efficiency of using imported technology, not reflecting much on the ability to catch up and create new technology. The reason is that Thailand's investment level for research and development (R&D) activities is very low, about 0.16% of GDP in the period 1987-1997, much lower than Korea's 2.8%, the US's 2.6%, France's 2.3%, Singapore's 1.1% and Malaysia's 0.2% [16].

- The crisis of social structure and its impact on the environment

Urban-rural inequality: While poverty has declined rapidly in Thailand, inequality has increased. Income inequality, often measured by the Gini coefficient, has worsened, especially since the financial crisis; the income gap between the poorest 20% and the richest 20% has widened. This is largely due to the urban-rural gap, which has resulted from protectionist measures and policies for the manufacturing sector (in urban areas), while agriculture (especially in poor and remote areas such as the Northeast) has been largely left to itself. Regional disparities have been exacerbated by the government’s failure to use more equitable income redistribution tools; government spending on education, health and other services has increased disproportionately compared to spending on other items and has been concentrated mainly in urban areas.

Negative impact of the crisis on social life: the crisis has reversed the trend of poverty reduction in Thailand. If before the crisis, the poverty rate tended to decrease, then after the crisis the poverty rate increased again, from 11.4% in 1996 to 15% in 1999 [16]. The crisis has adversely affected the Thai labor market, causing real wages to fall and employment to decrease. The most serious impact of this crisis is on the small and medium-sized enterprise sector and those working in that sector, people under 24 years old, people with low education levels and people in the poorest region - the Northeast of Thailand.

Social recovery is often slower than economic recovery after the crisis, and has even continued to deteriorate due to the very low prices of agricultural products on world markets, a sharp decline in domestic consumption, a slowdown in construction activities and high unemployment rates since the outbreak of the crisis.

Education has not kept up with the demands of reality: in 1990, more than 70% of the total Thai workforce had only a basic education.

primary education or lower, about 17% have lower secondary education, only 8% have higher education. Although the enrollment rate is increasing rapidly, it will still take many years for Thailand to improve the educational level of the workforce, creating positive impacts on poverty reduction, improving income and improving the quality of human resources, especially high-tech human resources such as information technology, for which Thailand is expected to need about 800,000 more people in the next 15 years [16].

Negative impacts on the environment: rapid growth with the over-exploitation of natural resources is the main cause of natural resource depletion and severe environmental pollution. Forests in Thailand are being destroyed very quickly, the proportion of forests planned for protection was only 13.8% in 1996.

Air pollution measured by the index of carbon dioxide emissions per 1 ton m3 was quite high and increased from 0.9 in 1980 to 3.4 in 1996. Water pollution was also very serious, with organic waste in river and lake water reaching 213,271 kg/day in 1980, then doubling in 1995.

Environmental pollution and depletion of natural resources due to overexploitation are the high prices to pay for rapid industrialization that focuses only on quantitative growth, but lacks attention to the qualitative aspect of growth in Thailand.

(3) – Solving problems, improving growth quality

- Economic policies

Overcoming the negative impact of the financial and monetary crisis

To do this, the Government has implemented many measures to support businesses to reduce production costs and improve their solvency. For workers who have to leave their jobs in bankrupt businesses or have to downsize due to the impact of the crisis, there are policies to support or compensate for losses. Since March 1999, the Government has implemented a job creation program.

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