Thaksinomics

Thaksinomics (a portmanteau of "Thaksin" and "economics") 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.

Overview

Thaksinomics is a populist set of economic policies aimed at Thailand's rural people, who make up the majority of the country's population. These policies 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.
*Subsidized 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 .75 USD) a visit at state hospitals. However, The universal healthcare program for public hospitals has failed.
*The One Tambon One Product (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-90's, 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 airport.

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.

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 economy 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.

See also

* Thaksinocracy
* Reaganomics

External links

* [http://www.thaksinomics.com/ "Thaksinomics"- Unofficial Website]
* [http://www.nationmultimedia.com/2005/10/07/business/index.php?news=business_18809586.html "The Nation" - "Abhisit's Fame Taken in Vain", October 7, 2005]
* [http://tffannouncement.blogspot.com/2005/12/thaksinomics.html"Thaksinomics มีที่ไหน"- Thai Friend Forum]