ABSTRACT
Thailand has had one of the best records of economic growth of any country in the world since 1960. This chapter sketches out the main features of Thai institutional arrangements that led to rapid growth after 1960. It explores why these institutional arrangements have not been adequate to meet the challenge of increasing industrial competition from other developing countries. Economists typically attribute inefficiency to protectionism and politically powerful import-competing sectors. Instead, three related factors help to account for the country's weakness in higher value added products: institutional and political features of key governmental agencies; a trade regime that superimposed export promotion on protection; and ineffective and half-hearted efforts at technology development. These in turn led to dualistic production structures whereby locally owned firms did expand but lacked linkages to the more demanding and foreign-dominated production of higher value added goods for export. The economic crisis weakened their resistance by revealing the necessity for more competent and stable governments.
