Monetary Growth in Thailand: A Macroeconomic point of view

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Development Performance . The Thai economy has accomplished high development over the past quarter century6 percent per annum, 1977-20058 percent for each annum, 1977-96 (pre-crisis)The producing part has extended considerably more rapidly8 percent per annum, 1977-200510 percent for each annum, pre-crisis1997-98 emergency had a substantial and durable effect on yield and investmentOverall development eased back to 5 percent .

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Financial Growth in Thailand: A Macroeconomic point of view Barry Bosworth 26 October 2006

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Growth Performance The Thai economy has accomplished high development over the past quarter century 6 percent for every annum, 1977-2005 8 percent for every annum, 1977-96 (pre-emergency) The assembling part has extended significantly more quickly 8 percent for each annum, 1977-2005 10 percent for every annum, pre-emergency 1997-98 emergency had a substantial and durable effect on yield and venture Overall development eased back to 5 percent

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GDP and Investment, 1970-2005

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Overview & Objectives Analysis of Thailand's development: 1977-2005 Growth Accounting system inspects: Roles of capital amassing & TFP Both total & sectoral examinations Agriculture, Industry (Manufacturing), and Services Role of Factor Reallocations Extensions on capital gathering Returns to tutoring Saving & speculation Additional detail on administrations

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Growth Accounting Develop files of development in yield and element inputs. Modify for quality change in labor Increase in years of tutoring Use balanced component shares to quantify commitment of variable sources of info. Need to represent independently employed Obtain gauge of TFP as a lingering

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Basic Growth Identity Output Growth as an element of development in sources of info and TFP s i is component wage share Assumes focused markets where cost is equivalent to peripheral item

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Basic Data Largely drawn from national records for yield and capital stock Employment is from the Labor Force Survey gives data on instructive achievement and wage rate by industry. Measure the arrival to tutoring

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Prior Growth Accounting Studies Major reviews NESDB - Macroeconomic Division TDRI –Tinakorn and Sussankarn (1996,1998) APO – Achara, Bangorn, and Kamjara (2004) Fiscal Policy Research Institute BOT – Katharit (2001) Generally discover negative or little positive rates of development in TFP Large capital commitment Different evaluations of change in labor quality

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Aggregate Economy Growth ruled by increments in work and the capital stock. TFP development is a little positive commitment The emergency of 1997-98 seems to have forced a lasting expense on the economy Output did not come back to earlier way Recession to a great extent consumed by decreases in business and capital collection.

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Agriculture Large hold of underemployed work Productivity level far underneath nonagricultural parts Low yield development Employment decreases lately Large increment in capital commitment. Unobtrusive development in TFP

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Manufacturing Growth to a great extent because of expanded work and capital Gains in TFP are very humble Contract producing with little advancement. Capital products are foreign made (typified innovation) Sharp deceleration in capital amassing after 1997.

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Services Slower yield development Dominated by expanded work input Largest picks up in instructive achievement. High variable share weight appointed to work Most capital escalated industry (lodging?) as measured by K/Y; however capital contributed unassumingly to development. TFP change is negative – especially after 1997. Monetary division interruptions, estimation issues Need for more disaggregation of administrations

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Component Service Industries Very assorted examples of development Difficult estimation issues Reasonable measures for transportation, exchange, and managing an account. Before 1997, in number picks up in labor profitability and not too bad picks up in TFP Finance part endured exceptional misfortunes after 1996 TFP development profoundly negative Trade contrarily influenced

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Contribution to Output Growth, 1980-1996

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Contribution to Output Growth, 1996-2005

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Reallocation Effects Weighted total of division TFP changes represents not as much as half of progress in total. 1977-96 1999-2005 Total economy 1.6% 2.1% Weighted entirety of sectors 0.5% 1.0% Resource reallocation 1.1% Gains from moving specialists out of low-efficiency horticulture into industry and administrations.

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Regional Comparisons Sources of development in Thailand are extremely regular of East Asian economies. Extensive commitment from capital aggregation Ranks in center for TFP Similar to Alwyn Young outcomes for other East Asian nations.

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Sources of Growth in Asian Economies, 1975-2003

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Conclusion Bulk of development is because of expanded utilization of capital and work Reliance on existing innovations suggests restricted picks up in TFP inside industry Large picks up from asset reallocations out of farming . Money related emergency prompted to sharp decreases in the rate of venture and vast yield disturbances in a few administrations Future development capability of 6-7 percent Services could give a more extensive base to future development