What are the consequences of these frequent changes of government on the domestic economy in Thailand? Is political instability likely to have a positive effect on economic growth? Against this background I would like to examine in this paper the extent to which political instability affects the economy in Thailand. First, the concept of political instability and the link to economic growth as presented in recent literature will be explained. A description of the political and economic history of Thailand will follow. After that, the relationship between political instability and economic growth within Thailand will be analysed using selected indicators.
Between 1932 and 1997, Thailand had twenty-four governments, often emerging in the wake of major political crises. During these years, Thailand went through ten coups and sixteen failed coup attempts. Accordingly, the average tenure of a Thai government has been about twenty-four months. The longest survived one hundred months, under Prem Tinsulanonda (16th Prime Minister between 1980 and 1988) the shortest, under Suchinda Kraprayoon (19th Prime Minister between 7 April 1992 and 24 May 1992), only two months.
Historically, Thailand had largely positive growth rates of between five and ten percent. Thailand's economy has grown increasingly over the last 25 years. Except for two major events, the Asian financial crisis in 1997 and the global economic crisis beginning in 2007. However, it can be said that economic growth in recent years has increased, despite the above-average number of changes of government and military coups.
Political instability leads to greater uncertainty for economic actors within instable countries and can lead to fewer investments being made. The investment climate is suffering from violent conflicts such as civil wars, wars between nations, politically motivated attacks, coups d'états. Also frequent changes of government can generate uncertainty.
Table of Contents
1 Introduction
2 Literature Review
2.1 State of the Art
2.2 The Relationship between Political Instability and Economic Growth
3 Analysis of the Political and Economic Situation in Thailand
3.1 Politico-historical Background
3.2 Economical Background
4 Analysis of Indicators
4.1 Fragile States Index
4.2 The Worldwide Governance Indicators
5 Conclusion
Research Objective and Core Topics
The primary objective of this paper is to examine the extent to which political instability affects economic growth and development in Thailand. By investigating historical political trends and correlating them with selected indicators, the research seeks to determine whether frequent changes in government and civil unrest have a measurable negative impact on Thailand's economic performance.
- The historical evolution of Thailand's political landscape and its regime changes.
- Economic development and GDP growth trajectories over the last four decades.
- Methodological application of the Fragile States Index to measure political instability.
- Comparative analysis using Worldwide Governance Indicators to assess the impact on investment and consumption.
Excerpt from the Book
2.2 The Relationship between Political Instability and Economic Growth
Many studies examine the relationship between political instability and economic growth. Many of them observe a negative impact of political instability on economic growth. Political instability is often associated with unrest or military coups and can therefore lead to uncertainty among investors, as they need a stable political framework for long-term investment decisions.
Moreover, political instability can reduce a country's political standing and credibility. In addition, the perspective for politicians to be in office only for a short time could mean that they may be pursuing a short-sighted policy (Obinger, 2004). According to Gupta (Gupta, 1990), there are two lines of argument after which political instability inhibits economic growth: “The presence of political instability affects the economic performance in two different ways. First it introduces an additional dose of environmental uncertainty to a natural jittery market.”
Alesina et al. (1996) define political instability as the tendency of a government to collapse. They use variables such as the number of years without a change of government, a variable describing regular and irregular changes of government that had an enormous impact on the political ideology of the government and a variable that records the number of coups. Feng (1997) defines political instability as the probability of regime change. Furthermore, he considers it necessary to distinguish between the stability of the regime and the government and introduces the differentiation of irregular political changes, large regular political changes and small regular political changes.
Summary of Chapters
1 Introduction: This chapter introduces the history of political instability in Thailand and sets the research question regarding its influence on the national economy.
2 Literature Review: This section provides a theoretical framework by reviewing current academic literature on the relationship between government volatility and economic growth.
3 Analysis of the Political and Economic Situation in Thailand: This chapter outlines the historical background of Thailand’s political regime changes and details its economic development progress.
4 Analysis of Indicators: This chapter applies the Fragile States Index and the Worldwide Governance Indicators to analyze correlations between political stability and economic variables like tourism and investment.
5 Conclusion: This chapter summarizes the findings, noting that while Thailand exhibits frequent political instability, its direct impact on economic growth is more complex than initially assumed.
Keywords
Political Instability, Economic Growth, Thailand, Fragile States Index, Worldwide Governance Indicators, Investment, Tourism, GDP, Government Tenure, Political Conflict, Regime Change, Macroeconomics, Public Policy, Market Uncertainty, Capital Formation.
Frequently Asked Questions
What is the primary subject of this research paper?
The paper examines the correlation between political instability—characterized by frequent government changes and coups—and its effects on the economic performance of Thailand.
What are the central themes discussed in the work?
The core themes include the historical context of Thai politics, the relationship between political volatility and investment climate, and the measurable impact of unrest on macroeconomic indicators.
What is the fundamental research question?
The paper asks to what extent political instability in Thailand affects its domestic economy and whether it consistently acts as an inhibitor to economic growth.
Which scientific methods or tools are utilized?
The author uses empirical indicators, specifically the Fragile States Index (FSI) and the Worldwide Governance Indicators (WGI), to quantify political instability and compare it with economic data from the World Bank and the Bank of Thailand.
What is the main focus of the main section?
The main section focuses on testing the theory that political instability reduces investment and growth by analyzing long-term trends and specific historical events like the 2013/14 political unrest.
Which key terms define this work?
The paper is characterized by terms such as political instability, economic growth, regime collapse, Gross Capital Formation, and governance indicators.
How does the author define political instability?
The author cites various definitions, ranging from the tendency of a government to collapse and the number of coups to the probability of regime change and the perception of political violence.
What is the author's conclusion regarding the relationship between politics and economy in Thailand?
The author concludes that despite high political volatility, the Thai economy has shown resilience, and the direct correlation between political instability and poor economic performance is not as straightforward as once thought.
- Quote paper
- Julius Henke (Author), 2018, Political Instability in Thailand. Which Effects Does it Have on the Economy of the Country?, Munich, GRIN Verlag, https://www.grin.com/document/490002
