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Economic Development of Thailand: an Analysis of the Agricultural Sector

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Economic Development of Thailand: an Analysis of the Agricultural Sector Utah State University DigitalCommons@USU All Graduate Theses and Dissertations Graduate Studies 5-1972 Economic Development of Thailand: An Analysis of the Agricultural Sector Thamnoon Soparatana Utah State University Follow this and additional works at: https://digitalcommons.usu.edu/etd Part of the Economics Commons Recommended Citation Soparatana, Thamnoon, "Economic Development of Thailand: An Analysis of the Agricultural Sector" (1972). All Graduate Theses and Dissertations. 3067. https://digitalcommons.usu.edu/etd/3067 This Thesis is brought to you for free and open access by the Graduate Studies at DigitalCommons@USU. It has been accepted for inclusion in All Graduate Theses and Dissertations by an authorized administrator of DigitalCommons@USU. For more information, please contact [email protected]. ECONOMIC DEVELOPMENT OF THAILAND: AN ANALYSIS OF THE AGRICULT RAL SECTOR by Thamnoon Soparatana A thesis submitted in partial fulfillment of the requirements for the degree of MASTER OF SCIENCE in Economics UTAH STATE UNIVERSITY Logan, Utah 1972 ii ACKNOWLEDGMENT I wish to express my sincere appreciation to Professor 0. William Asplund, thesis director, for his guidance, assistance and criticism in making this thesis possible; to Professor Kenneth S. Lyon for his valuable suggestions on quantitative analysis of this study, and to Professor B. Del worth Gardner for providing theoretical background in the field of Economics Development. My words of appreciation are inadequate to express my gratitude, without them this thesis would not have been written. Special respect and appreciation go to Professors Reed R. Durtschi, Leonard J. Arrington, A. C. Wiseman, Bartel Jensen, Morris Whittaker and, last but not least, Gary B. Hansen, my teacher and advisor. Special thanks are made to the USU Computer Center and Aloha Com­ puter Center. l also wish to express my respectful gratitude to my parents and our family for their encouragement and stimulation a ll during the time I have been studying at Utah State University. Finally, I am endebted to my love ly sister, Arunhassa, who directed my destiny from being an up-country school teacher to becoming an Economist. Thamnoon Soparatana iii TABLE OF CONTENTS Page ACKNOWLEDGMENT .•. ..•..•... ii LIST OF TABLES vi ABSTRACT ix Chapter I. HISTORY AND GENERAL ECONOMY OF THAILAND Historical Aspects .......... ........ ....... .. Origin of the Thais • . • . • • . Geography and Topography . • . • . 2 Demography Aspects . 3 Economic Structure . .. • ... .. ..... ..•.......... II. ECONOMIC DEVELOPMENT AND PLANNING Target of the First Six- Year Plan ... ............. Economic Indicators . • • . • . • • • . 12 Financing . • . • • • . • . • . • . • . 12 Agricultural Development . • . • . • . • 12 Manpower Structure . • • . • • . 18 General Economic Effects • . • • . 19 International trade 19 Internal economic effects . • • . • . • . • • • • 19 The Second Five-Year Plan (1967 - 1971) . 19 Budget Expenditure . • . • • . • • . 22 Evaluation of the Second Plan . • . 22 III. TRENDS OF MAIN PRIMARY PRODUCTS .... •... 30 Rice . • • • . • . • . 30 Rubber . • • • • . • • . • . • • . • . • . • • • • • . 31 Maize .... ••.•.........••...•. ..... .•• 33 Cassava . • ••...•....•.. ... •••. .... ...•• -.... 33 Kenaf and Jute • . 36 Development Expenditures to Agriculture . 40 iv TABLE OF CONTENTS (Continued) Chapter P age IV. THE IMPORT LEAKAGE FROM THAILAND 42 The Propensity to Import . • . 42 Some Macro Relationships •. 43 I. Consumption function 43 II. Export function 43 III. Import function •........ .... .. 43 V. GOVERNMENT AID TO AGRICULTURE: A FIRST LOOK 47 Production Functions ....•............ •. ... 47 List of Var iables •....................... 48 Output (Y) and Yield (Y d) ••... ..... · · · · · · · · · · • · 48 Area Planted (At) ......•..................... 48 Accumulated Government Research Expenditures (Gt) .. ... 49 Government Rice Research •..........•........... 49 Rubber Research .. ..•. .... .•. ..............• 50 Annual Rainfall (R ) • • • • • • • • • • • . • • • • • • • • • • • • • • • • 50 Dummy Variable (bt) ......... .. · · · · · · · · · · · · · · · · 50 VI. SIMPLE PRODUCTION FUNCTION ANALYSIS •........ .. 51 R1ce ...•.................. ..... ......... 51 Rubber ............................. .. .. .. 53 Maize . ... 55 Other Crops 57 VII, CONCLUSIONS 60 LITERATURE CITED 62 Books ........ .. ... 62 P e r iodicals . 64 P ublic Documents ..... 6 4 Documents from Thailand 65 APPENDIXES ....•.... .. 67 Appendix I: Abbreviations and List of Variables . 68 Abbreviations .. 68 List of variables 68 v TABLE OF CONTENTS (Continued) Chapter Page AppendiX II: Regression Coefficients and Correlation Matrix . • . 69 Appendix III: Data for Regression . 73 VITA 78 vi LIST OF TABLES TablE: Page 1. PopulatiOn of Thailand . .... .. ..... 4 2. F1rst half of the six-year plan, 1961-1963 10 3. P r C«Plla income and capital formation (i n U.S. dollars) 13 4. Gross capital formation during the first plan, 1961-1966 (m!llion of baht) ......... ..... ... .... 13 5. Ind1cators of economic growth for the First Plan (at current r.nces) . ... ................ 14 6. St1·uctural changes in GNP for the First Six-Year Plan (1961 - 1966) •. .. .......... .......... .. 14 7. Fmancmg of the public development expenditure on the First Plan, 1961-1966 (million of baht) ......... 15 8. Grants and technical assistance hy donor during First Si · Year Plan, 1961-1966 (million of baht) . 16 9 Grants and technical assistance by sectors, 1961-1966 . 16 10. Development of irriga tion during the First Six-Year Plan 17 11. Irngaled area by region ........... ... ... .. 17 12 Em)Jloyed persons by economic sectors .•.. .... 18 13 . Average balance of payments , 1961-1966 20 Comb111ed economic indicators . .. ... 21 15. Gross Domesti c P roduct of Thailand, 1965-1971 (milhons of Baht) .. ........... 23 16 Product IOn targets 1971 .. ....... .. .. ..... 24 vii LIST OF TABLES (Continued) Table Page 17. Sectoral allocatwns of development expenditures in the First and Second Plans (millions of baht) . 25 18 . Comparative government's revenue and expenditure (millions of baht) • . • . • . 26 19. Comparattv government expenditure with GDP at current pnces (mtllions of baht) . 26 20. General e conomic indJCator of 1967-1969 (millions of baht) . 28 21. U. S. R. & R. and mihtary expenditures (millions of baht) . 29 22. Rtce: arpa, production, a nd prices ..... 32 23. Rubb r : area, production, and market value 34 24. Maize : area, production, and market value 35 25. Cassava: area, production, and market value 37 26. Kenaf: a r ea, productiOn, and market value 38 27. Jute: area and productiOn 39 28. Development exp nditure in the First and Second Plans {mtllions of baht) ........... ........ 41 29. Sectoral develoJ.;ment allocations for 1968 and 1969 {mtlhons of baht) ..... ........ ...... ... 41 30. Thadand's average propenstty to import and marginal propenstty to tmport . 42 31. Economic mdJCators of export sector of Thatland 45 32. Esltmaled r egression coefficients of rice (1938- 1969) 52 33. Correlatwn coefficients of all variables--rice ..... 52 34. Estimated regressiOn coefficients- - rubber (1948-67) . 53 viu LIST OF TABLES (Cont,nu~d) Tabk Page 35 . Corn·l<tlJOn co ~ff1c1e nts of vanabl s -- rubber 54 36 Esllmattd r egreSSIOn coeffic>ents of maize (1948-1967) 56 3 7 . CorrelatiOn coefflci nts of all a riables- - ma1ze 56 38 lnte r tsl rate of agncultural cred1ts ... ... 59 39. Estimated r egr ssion coeffici nts of kenaf and jute (1950 - 1967) . • . • . 69 40. Carr latton co fficJents of all va r~abl es- - kenaf and jute . 69 41. Estimated regression coeffiCients of cassava (1957-1967) 70 42. Corrdatton co ffic1ents of all vanables--cassava . 70 43. Est1mated regress10n coefficients of cotton (1948-1967) 71 44. CorrelatJOn coefficients of a ll vanables--cotton . 71 45. Estimated r gresston coefficients of ground nuts (1948-·1967) . .... ..... ..... • 72 46. Correlation coeffi Cients of all vanables--ground nuts 72 47. Data for regre swn--nc ..... 73 48. Data for rE:grtSSJon -- rubb r a nd ma1ze • . 74 49, Da ta for r egreS&lOD --Jute and k naf • . • . • . • . 75 50. Data for r egresswn- -cassava • ... 76 51. Data for regresswn- - cotton and ground nuts 77 ix ABSTRACT Econom1c DevElopmEnt of Thailand: An Analysis of the Agncultural Sector by Thamnoon Soparatana, Master of Science Utah State Univers1ty, 1972 MaJor Professor: Dr. 0 . Wtlham Asplund Department: EconomiCs Tills study take a look at government aid to agriculture in Thailand and attempts to analyze its effect1veness. Only two crops have been aided directly by the governm nt, nc and rubber, though others have undoubtedly benefitted by Improve ments m th country's infrastructure. The regressions performed on some stmple productJOn functions md1Cate that rice yields have been improved through government programs. The program for rubber largely a subs1dy for new plantings. has as yet not had much rmpact on y1elds. This maybe due to the fact that the pdy- off penod IS at least seven years. Th re 1s also some ev1dence that ma1ze Y' lds have 1mproved through the opening of new lands by htghway and rail. The rest of agriculture 10 Thailand still largely relies on nature and the Gods to determine output. It may well be true for a change. (87 pages) CHAPTER I HISTORY AND GE:\fERAL ECONOMY OF THAILAND Historica l Aspects Be!ore June 24, 193 9, Thailand was known as Siam. The Portugese were the first Europeans to reach Siam m 1511. D. Insor points out: "Th<tiland" I S the offiCial name of
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