Business and Global Economy

Thailand’s International Trade

By Radhiecka Dalal
Roll No: MS22GF026
 The role of international business in Thailand’s rise to economic prosperity.

International trade has offered Thailand with substantial economic gains with
respect to the export and import of both goods and services. Mainly it has led
to an increase in its national income. Due to international business, citizens of
Thailand enjoy more variety in consumption, which allows them to pay less for
their favoured goods or services. In addition, Thailand also witnessed huge
growth in investments as well as a significant increase in the movement of
goods and services. Therefore, development of Thailand's economy depends
greatly on international trade.
Foreign trade is directly related to the industrial and agricultural sectors, as
well as the service sector, which includes international tourism. The number of
foreign tourists arriving from each of Thailand's significant trading partners are
huge in numbers than the others. It can be therefore conceded that
international trade also influences Thailand’s tourism. Moreover, Thailand has
been able to provide many prospects for especially those conducting
international business, as the value of trade on a global scale rises.
Consequently, due to the expansion of Thailand companies’ foreign business
operations, there is also an increase in international travel which in turn
fosters economic growth. All in all, international trade aids in capturing the
interest of consumers abroad to Thailand, which encourages travel and
tourism.
From an economic perspective, increasing international trade or exports
promotes economies of scale, improves the utilization of scarce resources, and
boosts economic growth. On top of that, foreign currencies earned through
international trade yield multiple advantages to the Thai economy. To cite an
example, these currencies are changed into the capital with which Thailand
would invest in equipment and mechanisms with more advanced technology.
As a direct response to this, productions costs drop significantly. When the
cost of production falls, the profits available at a given price of a particular
commodity increase, and producers in Thailand are motivated to produce
more. Furthermore, lower production costs also gave rise to more exports and
therefore, heightened the economic growth further.
Joshi and Little (1996) and Semančíková (2016) have found that trade
openness in developing countries has a positive impact on macroeconomic
performance as well. Thus, trade liberalization has been intensively
implemented in Thailand for the past two decades. Gearing to reap the
benefits of trade openness and trade liberalization, Thailand formed trade
agreements with Japan, second-ranked import partner to Thailand accounting
for 14.5% of total imports. The work of Gulzar (2016) also indicated that trade
openness plays a significant role in bilateral trade. However, the more
desirable feature of such agreements is tariff reduction and granted special
quotas, which yields a lot of profitability, such as increasing trade between
countries. As a direct consequence, the nature of such agreement led to real
GDP growth, better public welfare, and increased trade in Thailand all of which
proved highly beneficial to the economy of Thailand. Hence, it can be
acknowledged that Thailand's exports performed well in both high-growth and
low-growth economies because of the outcomes favouring trade liberalization.
The government of Thailand must support globalisation and hence, foster
economic growth. It will strengthen the trade flows in a high growth market.
Additionally, the government must also advocate the propensities of trading in
the slow-growing market as well.
Overall, it can be admitted that international trade has allowed Thailand to
expand its markets and acquire goods and services that otherwise may not
have been available in the domestic markets. All things considered, due to
international trade, the Thai market has grown more competitive. It invariably
leads to more aggressive rates, which lowers the cost of the final product for
the consumer.
International trade in Thailand has not only resulted in soaring productivity and
cost-effectiveness but also permitted the nation to partake in a global
economy and as a result, advance towards the golden opportunity for seizing
foreign direct investment (FDI). In such a way, generated economies can thus
emerge more effectually and graduate to being competitive economic
participants more effortlessly. Over the decade, Thailand has adapted
countless measures of free trade for the purpose of economic flourishment as
well as protectionism to ensure the survival of domestic markets. Through such
activities, foreign currency and proficiency entered Thailand and subsequently
uplifted employment levels. Owing to that fact, Thailand has documented a
hike in the gross domestic product (GDP).
 Economic impact of various policies adopted by Thailand
Thailand’s policies are majorly geared towards economic development and is
established on competitive and export-driven principles.
The government of Thailand had undertaken a range of actions to greatly
liberalize the exchange control system. It substantially reduced the number of
constraints on international transactions. Commercial banks of Thailand were
granted access to process and operate all foreign exchange transactions and
substantial increases were sanctioned on money transfers. Extra rounds of
foreign exchange liberalization considerably made foreign exchange
precondition uncomplicated and allowed banks to offer foreign currency
accounts to individuals and businesses. The central bank allowed free
repatriation (net of taxes) of investment funds, dividends, profits and loan
repayments. It allowed exports to be paid for without prior permission. Such
exchange rate policies have shaped Thailand into a very open economy for
international trade, opening it up to pave its way forward to steady economic
growth. Consequently, inflation rates have remained stabled.
Apart from that, the government of Thailand also schemed various debt
management policies to sustain economic growth and development. As a
result, there is expansion of domestic credit fuelling rise in consumption in the
Thai economy.
Furthermore, Thai government assembled a range of policies granting export
subsidies and aids to producers. This has led to reduction in costs of production,
especially for those products with less usage of resources. It also ensured a rise in
the domestic prices in Thailand to a certain extent to maintain economic stability.
Such policies have left a high scope for Thailand to produce those goods in which
they do well on. Export subsidies have also aided in protecting Thailand so that
they can reap benefits from the economies of scale. As a result, the production
cost of such protected industries will be reduced. In general, such policies have
also created a sense of national security in amongst Thailand industries.
And as such, export subsidies in Thailand have also led to gradual expansion of
domestic output. The times of tax-relief for exporters have also led to the
people of Thailand feeling more motivated and supported to continue exporting
and hence, increased productivity leading to higher revenues.
When such government subsidies are implemented to the suppliers of Thailand,
the industry can allow its producers or manufacturers to produce more goods
and services.  This increases the overall supply of that particular good or
service, which naturally raises the quantity demanded of that good or service
and lowers the overall price of the good or service. In such cases, the average
cost of production will get lowered.
From the economic perspective, such policies will generate higher revenues in
the long term fully accessing the significances of free international trade
supported by government.
Another economic impact of risk management and trade policies are that they
also assisted Thailand in the proper and sustainable maintenance of foreign
exchange reserves.
Because conservation of foreign exchange reserves is as important as earning
them, the government of Thailand have also executed few policies that help
conserve and protect the foreign exchange reserves like imposing import tariffs
to restrict imports.
The long-term economic impact of these policies implemented religiously by
Thailand is the promotion of globalisation. This will ensure integration and
access to wider range of financial markets and larger availability of resources for
Thailand.
Thailand has also recorded a couple of policies for that make exporting in
Thailand fuss-free and promising. This has opened Thailand to more
diversifying market opportunities so that even if the domestic economy of
Thailand begins to falter, the nation may still have other growing markets for
its goods and services to enjoy maximum profitability and economic
prosperity.

In ways more than one, the exporting initiatives of Thailand have consequently
expanded the lifecycle of mature products. If the domestic market of Thailand
seems saturated to sell goods and services, the nation has the alternative to
introduce them to new markets in other parts of the world.

The producers of Thailand benefit the most from such subsidies, initiatives and
government aids and are hence, able to sustain and maximize profits by such
benefits. A crucial economic impact of Thailand trade policies, however,
is inflation control and moderation of supply and demand. Thus, it can be said
that such policies and their inevitable economic impact are enabling the Thai
economy to keep growing.
 References
Shimada, R. (2019, January 16). Southeast Asia and International Trade: Continuity and Change in
Historical Perspective. Southeast Asia and International Trade: Continuity and Change in Historical
Perspective | SpringerLink. Retrieved November 14, 2022, from
https://link.springer.com/chapter/10.1007/978-981-13-3131-2_3

Pastpipatkul, P., Boonyakunakorn, P., & Phetsakda, K. (2020, January 30). The Impact of Thailand’s
Openness on Bilateral Trade between Thailand and Japan: Copula-Based Markov Switching
Seemingly Unrelated Regression Model. MDPI. Retrieved November 14, 2022, from
https://www.mdpi.com/2227-7099/8/1/9

https://1997-2001.state.gov/issues/economic/trade_reports/eastasia95/thailand.html. (n.d.).
Retrieved November 14, 2022, from
https://1997-2001.state.gov/issues/economic/trade_reports/eastasia95/thailand.html