A Study of Anchor Economy: The Case of Thailand

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(1)國立高雄大學國際企業管理碩士學位學程碩士論文. A Study of Anchor Economy: The Case of Thailand. 研究生：Pittinun Puntha 撰指導教授：Professor Po-Chih Lee, Ph.D. Professor Chian-Hsueng Chao, Ph.D.. 中華民國 2020 年 05 月.

(2) National University of Kaohsiung Approva! for Final Examination/Defense of Master's Thesis This is to certify that: A Study of Anchor Economy : The case of Thailand. (Thesis Title),. by. Pittinun Puntha. M1073502. (Student's Name),. (Student's lD Number),. a candidate for the lnternational MBA degree.. Signature of Program Director:. YA Y*z- L*-, Date: o S- t rj (month). (day). r. >o 2o (year).

(3) Acknowledgement I would first like to thank my thesis advisor Professor Po-Chih Lee of the Department of Asia Pacific Industrial and Business Management at Kaohsiung University. The door to Prof. Lee office was always open whenever I ran into a trouble spot or had a question about my research or writing. He consistently allowed this paper to be my own work, but steered me in the right direction whenever he thought I needed it. I would also like to thank the experts who were involved in the research framework for this research project Professor Min-Hsin Huang, Professor Chien-Hsing Wu, and Professor Chian-Hsueng Chao Without their my research could not have been successfully conducted. My sincere thanks also goes to Professor I-Hsien Ting and Professor Yung- Kai Yang who provided me an opportunity to join study in National University of Kaohsiung. Professor Pei-Chi Huang who gave the good suggestion and made me better in presentation skilled. Professor David K. Wang who always give the kind help to me. Professor ShaoHsun Keng who give the research method knowledge. Professor Yi-Kai Chen who give the finance knowledge. Without they precious support it would not be possible to conduct study in this degree. Finally, I must express my very profound gratitude to my family and to my life partner for providing me with unfailing support and continuous encouragement throughout my years of study and through the process of researching and writing this thesis. This accomplishment would not have been possible without them. Thank you very much.. Respectfully, Pittinun Puntha (彭畢恩) May 2020. I.

(4) A Study of Anchor Economy: The Case of Thailand Advisors: Professor Po-Chih Lee, Ph.D. Department of Asia-Pacific Industrial and Business Management National University of Kaohsiung Professor Chian-Hsueng Chao, Ph.D. Department of Information Management National University of Kaohsiung Student: Pittinun Puntha International Master of Business Administration National University of Kaohsiung ABSTRACT This study investigates the sources in the Anchor Economy. Annual time series data for the period 2008-2018 were collected from the Thailand Office of the Ministry of Labor, Thailand Customs Department, United Nations, and World Bank's World Development Indicators 2018. The variables of the study were GDP of Thailand and 5 neighboring countries, trade, investment, development, migrant workers activity. The PEST analysis framework is used to identify major issues in the business environment inside the country. The PEST analysis shown information about political factor’s that more stable, have clearly plan strategy, and have policy for sustainable growth in the future. Economic factors can see the numbers from World Bank that shown about Thailand GDP is steady increase and sure. Social factor that’s shown about the various holiday, foods, life style, socialization, and cultures of Thailand and Myanmar, Laos, and Cambodia are very similar, that is one reason why a huge of migrant workers from that country popular come to work in Thailand. Technology factors have master plan for Thailand 4.0 for support about agriculture and bio-tech, health and medical technology, and have technology for support migrant workers in Thailand such as telecommunications, and remittances money back to home country. The government of Thailand should put policies about promote medical tourism industry, promote rich tourism industry, give more precedence about Thailand - neighboring countries border trade and economic relations, and improve more efficiency migrant workers activity system.. Keywords: Anchor Economy, Migrant Workers, PEST analysis, Gravity Model, Thailand.

(5) Table of Contents ACKNOWLEDGEMENT………………………….………………………………….I ABSTRACT……………………………………………...……..…………………….II TABLE OF CONTENTS…………………………………………………………….III LIST OF FIGURES………………..………………….………..………….….……..VI LIST OF TABLES………………………..………..….….……………….………..VII. CHAPTERS 1.. 2.. PAGES. INTRODUCTION…………………………………………………….……….1 I.. Background Information ………………………...……………………1. II.. Main purpose of the Study…………...………………………………..9. III.. Flow Chart ……………………………………………………..…….10. IV.. Expansion of Flow Chart of the Study ……………………………....11. REVIEW OF LITERATURES………………………………………………12 I.. Classical Model of Economic Growth……………………………….12. II.. Basic Neoclassical (Solow) Model ……………………..…………..14. III.. Economic Development ……………………………………..……...15. IV.. The Gravity Model …………………………………….…………….16. V.. Economy of Thailand ………………………………………………..21 A. Overview Economy of Thailand ……………....…………..21 B. Thailand Exports - Imports ………………………..………26. VI.. Economy of Malaysia ………………………………………………..28 A. Overview Economy of Malaysia……………….…………..28 B. Malaysia Exports - Imports ………………………..………30. VII.. Economy of Cambodia ……………………………………………..30 A. Overview Economy of Cambodia ……………....…..……..30 B. Cambodia Exports - Imports ………………………………31. VIII.. Economy of Lao PDR ……………………………………………..33 A. Overview Economy of Lao PDR ……………...…………..33 III.

(6) B. Lao PDR Exports - Imports …………….…………………34 IX.. Economy of Myanmar ………………………………….…………..35 A. Overview Economy of Myanmar …………….......………..35 B. Myanmar Exports - Imports ………………………………36. X.. Economy of Vietnam………..…………………………...…………..38 A. Overview Economy of Vietnam ……………….…………..38 B. Vietnam Exports - Imports ……………………………...…39. 3.. XI.. Thailand’s Border Trade with Neighboring Countries ………….…..40. XII.. Migrant Workers in Thailand ………..…...……………………...…..41. XIII.. The PEST analysis ………..…...………………………………...…..42. RESEARCH METHOD...……….…………………………………...………44 I.. The PEST Analysis ……………………………………….…..……..44. II.. The Gravity model……………………………………….…………..44. III.. Data……………………………………………….………………….45. IV.. Research Framework ………………………………….……………..46. MAJOR FINDINGS …………………………………………….…………...47. 4.. I.. PEST Analysis of Thailand …………….……………………..…......47 A. Thailand’s Political Analysis ...……………………………47 B. Thailand’s Economic Analysis ……………………….……59 C. Thailand’s Social Analysis ……………………..………….62 D. Thailand’s Technology Analysis...…….…………...……....66. 5.. II.. Thailand’s GDP with 5 Neighboring Countries ……………………..69. III.. Thailand Exports & Imports with 5 Neighboring Countries…………71. IV.. Investment and Developing in Thailand …………………………….78. V.. Thailand Migration……………………………………………….…..83. CONCOULDING REMARKS …..……..………………………….……...92 I.. Major Contributions ……….…………………….……………..…....92 A. PEST Analysis of Thailand ………..….……………….…..92 B. Thailand Exports & Imports with 5 Neighboring Countries 93 IV.

(7) C. Migrant workers in Thailand ………………..……………..94 D. Conclusions …………………….………………………… 95 II.. Major Suggestions ……………………………………………….…..96. III.. Limitation of the Study ……………………………………………...99. IV.. Further Study ………………………………………………………..99. REFERENCES ………………………………………………………….………...100 CURRICULUM VITAE ………………………………………………………… 106. V.

(8) List of Figures FIGURES. PAGES. Figure 1.1 Thailand Map ……………………………………………………………...2 Figure 1.2 Projection Investments into the EEC ……………………………………...4 Figure 1.3 Migrants worker sort out by industry.………………...…………………...6 Figure 1.4 Ranking in SDG index 2019.…………………..….……..………………...7 Figure 1.5 Flow Chart of the study .……………………..…...……………………...10 Figure 2.1 The Size of European Economies, and the Value of Their Trade………..18 Figure 3.1 Research Framework ……………………………………………...……..46 Figure 4.1 The Infographic about Overview Thailand Migration …………..…..…..85. VI.

(9) List of Tables TABLES. PAGES. Table 1.1 Number of Migrant Workers from 5 Neighboring Countries ………….…..5 Table 1.2 Gross Domestic Product (GDP)…………………………...………………..8 Table 1.3 GDP per capita………………………..…………………………...………..8 Table 2.1 Thailand Macroeconomic trends ………………………...………………..23 Table 2.2 Cars, motorbikes, parts and components export of Thailand ……...…….. 24 Table 2.3 Totals Thailand Exports & Imports of goods, and services.……..…...….. 28 Table 2.4 Malaysia Macroeconomic trends…………………………...……………..29 Table 2.5 Totals Malaysia Exports & Imports of goods, and services……………….30 Table 2.6 Cambodia Macroeconomic trends………………………………...……….31 Table 2.7 Totals Cambodia Exports & Imports of goods, and services……......…….32 Table 2.8 Lao PDR Macroeconomic trends………………………………………….34 Table 2.9 Totals Lao PDR Exports & Imports of goods, and services………………35 Table 2.10 Myanmar Macroeconomic trends……………………………….……….36 Table 2.11 Totals Myanmar Exports & Imports of goods, and services…….……….37 Table 2.12 Vietnam Macroeconomic trends…………………………………………39 Table 2.13 Totals Vietnam Exports & Imports of goods, and services ……….…….40 Table 4.1 Introduction to Political Environment of Thailand………………..………48 Table 4.2 Gross Domestic Product (GDP) Thailand with 5 Neighboring Countries...70 Table 4.3 GDP per capita Thailand with 5 Neighboring Countries……………….…70 Table 4.4 GDP growth rate Thailand with 5 Neighboring Countries………….…….70 Table 4.5 International Exports………………………………………………………70 Table 4.6 International Imports………………………………………………..……..71 Table 4.7 Number of Migrant Workers from 5 Neighboring Countries ……………71 Table 4.8 Totals Thailand Exports & Imports with Malaysia………………..………73 Table 4.9 Totals Thailand Exports & Imports with Cambodia………………………74 Table 4.10 Totals Thailand Exports & Imports with Lao PDR………..………….…75 Table 4.11 Totals Thailand Exports & Imports with Myanmar………………..…….76 VII.

(10) Table 4.12 Totals Thailand Exports & Imports with Vietnam…………………..…...77 Table 4.13 Estimated non-Thai population residing and working in Thailand…...….84 Table 4.14 The economic impact of decreasing employment of migrant workers…..91. VIII.

(11) Chapter 1 : Introduction I. Background Information Thailand or the Kingdom of Thailand is a country at the center of the Southeast Asian composed of 77 provinces with a total area of 513,120 km2 and over 69 million people. (See Figure 1.1) Thailand is the world's 50th largest country by total area and the 21st most-populous country. The capital and largest city is Bangkok, a special administrative area. Thailand is bordered to the north by Myanmar and Lao PDR, to the east by Lao PDR and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the west by the Andaman Sea and the southern extremity of Myanmar. Its maritime boundaries include Vietnam in the Gulf of Thailand to the southeast, and Indonesia and India on the Andaman Sea to the southwest. Although nominally a constitutional monarchy and parliamentary democracy. Thailand is a founding member of Association of Southeast Asian Nations and remains a major ally of the US. Despite its comparatively sporadic changes in leadership, it is considered a regional power in Southeast Asia and a middle power in global affairs. With a high level of human development, the second largest economy in Southeast Asia, and the 20th largest by PPP in the World. Thailand is classified as a newly industrialized economy; manufacturing, agriculture, and tourism are leading sectors of the economy. Thailand is a newly industrialized country and the second largest economy in Southeast Asia after Indonesia, and with an upper-middle income status, serves as an economic anchor for its developing neighbor countries. The country's economy appears 1.

(12) resilient and, according to IMF, is expected to advance at a moderate pace despite domestic political uncertainty. Public investment is projected to remain a key driver, increasing over the next few years, in line with the government’s infrastructure plans to attract private investment.. Figure 1.1: Thailand Map Source: Provinces of Thailand Wikipedia 2.

(13) Inflation reached 0.9% and it estimated to remain around 1.1%, which will probably be offset by the favorable impact on pay of strong employment and activity in most sectors. Deficit and public debt remained relatively stable in 2018, estimated by the IMF at -0.8% and 41.3% respectively. Exports of goods and services (71% of GDP) are expected to perform well, with the slowdown in China’s economic being counterbalanced by the economic upturn in other markets. Despite high indebtedness, household consumption, amounting to 50% of GDP, is projected to remain strong, reflecting the levels of real disposable income. As indicated in Figure 1.2, the National Strategic Plan (20172036) places the emphasis on improving the business environment, boosting the country's competitiveness and long-term economic performance through the development of rail, road, airport, and electricity infrastructures. Growing regional competition risks, however, are to diminish Thailand's attractiveness as an investment destination. Years of political infighting and repeated coups have pushed the country away from its traditional alliance with the USA and more toward China. Thailand has a labor force of 38.5 million people out of its 69.2 million population. Its economy heavily based on agriculture, which contributes 8.7% of the GDP and employs 32.8% of the active population. The country is one of the leading producers and exporters of rice and also possessor rubber, sugar, corn, jute, cotton and tobacco among its major crops. Fishing constitutes an important activity as Thailand is a major exporter of farmed shrimp. However, agriculture's contribution to the GDP is declining, while the exports of goods and services have increased.. 3.

(14) Figure 1.2: Projection Investments into the EEC Source: Ministry of Industry, Thailand. Thailand has been a crossroads for migration within South-East Asia for centuries. Total number of documented migrant workers about 4,898,461. The period of large-scale labor migration to Thailand from Cambodia, the Lao People’s Democratic Republic, and Myanmar began in earnest during the 1990s. This coincided with a decadelong economic boom from 1987 to 1996, which greatly expanded wage differentials 4.

(15) between Thailand and its neighboring countries. Based upon increased exports and a major influx of foreign direct investment, the economy grew by an average rate of nearly 10 per cent per year. In less than a generation, Thailand had emerged as a middle-income country and transitioned from being a net-sending to a net-receiving nation for labor migration. In 2018 Migrant workers send money back to the home countries per year about 2.8 US Billion Dollar. Table 1.1 indicated foreign labor from border country in Thailand during the period 2008-2018, and migrant workers sort out by industry in Figure 1.3. Table 1.1: Number of Migrant Workers from 5 Neighboring Countries in Thailand 20082018 (Unit: persons) Vietnam Total. Malaysia. Cambodia. Lao PDR. Myanmar. 2008. 3,749. 12,094. 13,670. 487,286. 727. 517,526. 2009. 2,251. 179,248. 161,127. 1,083,498. 301. 1,426,425. 2010. 2,230. 122,607. 106,125. 944,296. 312. 1,175,570. 2011. 2,196. 347,814. 168,643. 1,313,329. 362. 1,832,344. 2012. 2,329. 202,052. 81,139. 715,693. 496. 1,001,709. 2013. 2,771. 185,505. 60,956. 780,199. 769. 1,030,200. 2014. 1,933. 194,820. 53,975. 930,911. 714. 1,182,353. 2015. 1,994. 210,207. 67,980. 992,983. 655. 1,273,819. 2016. 2,815. 251,946. 105,778. 935,426. 919. 1,296,884. 2017. 3,002. 355,933. 161,310. 1,347,718. 1,004. 1,868,967. 2018. 3,278. 459,476. 225,888. 1,212,895. 1,063. 1,902,600. Source: Office of Foreign Worker Administration, Ministry of Labor, Thailand. 5.

(16) Figure 1.3: Migrants worker sort out by industry Source: Office of Foreign Worker Administration, Ministry of Labor, Thailand The manufacturing sector accounts for 35.0% of the GDP and is well diversified, employing 22.6% of the active population. The main Thai industries are electronics, steel and automotive. Thailand is an assembly hub for international car brands. Electrical components and appliances, computers, cement production, furniture and plastic products are also important sectors. The textile sector employs less than a quarter of the active population and is no longer as dynamic as tourism, which has become the main source of foreign currency. The tertiary sector, including financial services, is rising and contributes to 56.3% of the GDP. It employs 44.6% of the active population. Tourism plays an ever more important role in the Thai economy. According to Ministry of Tourism, Thailand welcomed 38.28 million visitors in 2018, accounting for 18.4% of GDP and allowing the country to become one of the top 10 travel destinations. China provides the largest number of tourists (27.5% of total).. 6.

(17) The Thailand economy is heavily export-dependent, with exports accounting for more than two-thirds of its gross domestic product (GDP). In 2018, according to the World Bank, Thailand had a GDP of 504.9 billion US$, the 8th largest economy of Asia. As of 2018, Thailand has an average inflation of 1.06% percent and an account surplus of 7.5 percent of the country's GDP. The Thai economy is expected to post 3.8% growth in 2019. Its currency, the Thai Baht, also ranked as the tenth most frequently used world payment currency in 2018, The unemployment rate remained low in 2018 (0.7%) and is projected to maintain the same level in the coming years. Thailand's official unemployment rate is among the lowest in the world due to low birth rate and Thailand is No.1 in ASEAN ranking in SGD sustainable development goals index 2019 shown in Figure 1.4.. * Brunei Darussalam no ranking in SDG index 2019 Figure 1.4: Ranking in SDG index 2019 Source: ASEAN Information center 7.

(18) For Companion prepare, Table 1.2 and 1.3 present Thailand GDP and GDP per capita with neighboring countries such as CLMV groups Cambodia, Lao PDR, Myanmar, Vietnam and Malaysia is growing up together. Table 1.2: Gross Domestic Product (GDP) (In US Billion) 2008. 2009. 2010. 2011. 2012. 2013. 2014. 2015. 2016. 2017. 2018. Thailand. 291. 282. 341. 370. 398. 420. 407. 401. 412. 455. 505. Malaysia. 231. 202. 255. 298. 314. 323. 338. 296. 297. 315. 354. Cambodia. 10. 10. 11. 13. 14. 15. 17. 18. 20. 22. 25. Lao PDR. 5. 6. 7. 9. 10. 12. 13. 14. 16. 17. 18. Myanmar. 32. 37. 50. 60. 60. 60. 65. 60. 63. 69. 71. Vietnam. 99. 106. 116. 136. 156. 171. 186. 193. 205. 224. 245. Source: World Bank Table 1.3: GDP per capita (In US Dollar) 2008. 2009. 2010. 2011. 2012. 2013. 2014. 2015. 2016. 2017. 2018. Thailand. 4,379. 4,212. 5,075. 5,491. 5,860. 6,168. 5,954. 5,846. 5,979. 6,594. 7,274. Malaysia. 8,475. 7,292. 7,041. 10,399. 10,817. 10,970. 11,319. 9,797. 9,671. 10,118. 11,239. Cambodia. 746. 738. 786. 882. 951. 1,014. 1,094. 1,163. 1,270. 1,384. 1,512. Lao PDR. 900. 948. 1,141. 1,381. 1,589. 1,839. 2,018. 2,159. 2,339. 2,457. 2,568. Myanmar. 644. 741. 988. 1,186. 1,176. 1,171. 1,260. 1,139. 1,196. 1,299. 1,326. Vietnam. 1,149. 1,217. 1,318. 1,525. 1,735. 1,887. 2,030. 2,085. 2,192. 2,366. 2,564. Source: World Bank. For this reason, researcher interested in studying about Anchor Economy: The Case of Thailand. The Anchor Economy is the country situated in the center of other countries and attract a huge of migrant workers from neighboring countries, when economic of this country growing up, the neighboring countries are also growing up together such as USA, China. The Anchor Economy are look information about 8.

(19) International trade, Neighboring Countries trade, Investment and Development, and Migrant workers activity. II. Main Purpose of the study The objectives of this study are: A. To investigate GDP growth of Thailand and other 5 neighboring countries. B. To analyses migrant workers at Thailand and other 5 neighboring countries. C. To study imports - exports between Thailand and other 5 neighboring countries. D. To offer policy recommendations to government of Thailand.. 9.

(20) III. Flow Chart. Background Information and Objectives. Literature Reviews Journals and Articles. Research Method Case Study, Quantitative Analysis, PEST Analysis. Major Finding. Concluding Remarks. Figure 1.5: Flow Chart of the study. 10.

(21) IV.. Expansion of Flow Chart of the Study A. Introduction Background and object Summary of the research question, motivations why it is important, list expected outcomes, focus to your research statement, and identify objectives.. B. Reviews of Literatures, Paper of Studied, Analysis in Journals Survey of what others did, synthesis their work, identify gaps, explain related theory, and position your research. C. Research Method, Case Study, Historical Method, Quantitative Analysis Includes variables to measure for Quantitative Analysis, and PEST Analysis. D. Majors Findings Used to secondary data on main finding and analysis relate to the study question. E. Concluding Remarks Used to confirm the answer to the main study question, reflect on the study process and offer policy recommendations on future study.. 11.

(22) Chapter 2 : Review of Literatures This chapter review literature about classical model of economic growth, basic neoclassical (Solow) model, the economic development, the gravity model, economics and exports-imports of Thailand, Malaysia, Cambodia, Lao PDR, Myanmar, and Vietnam, Thailand’s Border Trade with Neighboring Countries, migrant workers in Thailand, and PEST analysis.. I. Classical Model of Economic Growth Adam Smith and other classical economists had important contribution on the economic growth theory. Barro and Sala-i-Martin (2003) state that classical economists, such as Adam Smith (1776) provided many of the basic ingredients that appear in modern theories of economic growth. These ideas include the basic approaches of competitive behavior and equilibrium dynamics, the role of diminishing returns and its relation to the accumulation of physical and human capital, the interplay between per capita income and the growth rate of population, the effects of technological progress in the forms of increased specialization of labour and discoveries of new goods and methods of production, and the role of monopoly power as an incentive for technological advance. Smith (1776) stated that “... But the annual revenue of every society is always precisely equal to the exchangeable value of the whole annual produce of its industry, or rather is precisely the same thing with that exchangeable value. As every individual, therefore, endeavors as much as he can both to employ his capital in the support of. 12.

(23) domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labors to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign. industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it..” Technological progress could also increase growth overall. Smith's famous thesis that the division of labor (specialization) improves growth was a fundamental argument. Smith (1776) stated that “ ...this great increase of the quantity of work which, in consequence of the division of labor, the same number of people are capable of performing, is owing to three different circumstances; first to the increase of dexterity in every particular workman; secondly, to the saving of the time which is commonly lost in passing from one species of work to another; and lastly, to the invention of a great number of machines which facilitate and abridge labor, and enable one man to do the work of many...” Smith also saw improvements in machinery and international trade as engines of growth as they facilitated further specialization. Smith also believed that "division of labor. 13.

(24) is limited by the extent of the market" - thus positing an economies of scale argument. As division of labor increases output (increases "the extent of the market") it then induces the possibility of further division and labor and thus further growth. Thus, Smith argued, growth was self-reinforcing as it exhibited increasing returns to scale. Output growth (gY). was driven by population growth (gL), investment (gK) and land growth (gN) and increases in overall productivity (gP).. II. Basic Neoclassical (Solow) Model The workhorse model of traditional neoclassical growth theory is that due to Solow (1956). The major innovation introduced by Solow was to allow for factor substitutability so that stable equilibrium growth could be obtained. This model is consistent with a number of stylized facts related to economic growth such as the relative constancy over time of the capital-output ratio and factor income shares. The major difficulty with this model is that growth in per capital output converges to zero in the steady state. In order to have steady state growth exogenous technological change was introduced. A problem from the stand point of policymaking in developing countries is that policies have no effect on growth in the steady state of the Solow model. For example, there is evidence of a positive correlation across countries between investment rates and growth, but in the Solow model this world affect the long-run level of output but not growth rates. The neoclassical growth theory in the Solow-tradition is based on the following production function: Y(t) = F[K(t),A(t),L(t)]. 14.

(25) Where Y is output, K is physical capital, A is an index of total factor productivity, and L is the labor force; there are constant returns to scale and decreasing returns to capital. With these assumptions, income growth can come from the increased efficiency of productive inputs, i.e. an increase in A, or the augmentation of such inputs, i.e. an increase. in K and/or L. Positive growth rates can be sustained if and only if the decreasing returns to the accumulation of capital are offset by population growth, or if the marginal productivity of capital is constantly shifted upwards by technical progress. In balanced growth equilibrium - i.e. given a constant savings rate - there will be no depreciation of the capital stock and, assuming A (t) as constant, output and capital will grow at the rate of population growth. Differences in the time path of the scale factor A (t) explain countries' different growth experiences. This exogenous source of growth has been interpreted as technical progress. Policy has little scope in affecting long-run growth in this setting. Investment and savings behavior impacts on the level of per capita income, but has no effect on the long-run growth rate. Policies can raise the long-term growth rate by speeding up technical innovation or knowledge accumulation, but the theory itself suggests no mechanisms whereby this could be achieved. There are neither invention costs - costs associated with the development of new technologies - nor adoption costs - costs associated with making use of new technologies.. III. Economic Development Economic development is the process by which the economic well-being and quality of life of a nation, region or local community are improved. The term has been used. 15.

(26) frequently in the 20th and 21st centuries, but the concept has existed in the West for centuries. "Modernization", "Westernization", and especially "industrialization" are other terms often used while discussing economic development. (Greenwood, Daphne T.; Holt, Richard P. F., 2010) Economic development policies in its broadest sense, policies of economic development encompass two major areas: - Governments undertaking to meet broad economic objectives such as price stability, high employment, and sustainable growth. Such efforts include monetary and fiscal policies, regulation of financial institutions, trade, and tax policies. - Programs that provide infrastructure and services such as highways, parks, affordable housing, crime prevention, and K–12 education. - Job creation and retention through specific efforts in business finance, marketing, neighborhood development, workforce development, small business development, business retention and expansion, technology transfer, and real estate development. This third category is a primary focus of economic development professionals.. IV. The Gravity Model The gravity model suggests that relative economic size attracts countries to trade with each other while greater distances weaken the attractiveness. Initially, the gravity model was seen as an empirical one, without any particular grounding in trade theory, but the widespread adoption of the gravity model to explain patterns of trade has been seen by. 16.

(27) economists as a significant development on previous theoretical models. (Paul R Krugman, 2011) The basic model for trade between two countries (i and j) takes the form of. In this formula G is a constant, F stands for trade flow, D stands for the distance and M stands for the economic dimensions of the countries that are being measured. The equation can be changed into a linear form for the purpose of econometric analyses by employing logarithms. The model has been used by economists to analysis the determinants of bilateral trade flows such as common borders, common languages, common legal systems, common currencies, common colonial legacies, and it has been used to test the effectiveness of trade agreements and organizations such as the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO). The model has also been used in international relations to evaluate the impact of treaties and alliances on trade. Three of the top 15 U.S. trading partners are European nations: Germany, the United Kingdom, and France. Why does the United States trade more heavily with these three European countries than when other? The answer is that these are the three largest European economies. That is, they have the highest values of gross domestic product (GDP), which measures the total value of all goods and services produced in an economy. There is a strong empirical relationship between the size of a country’s economy and the volume of both its imports and its exports.. 17.

(28) Figure 2.1: The Size of European Economies, and the Value of Their Trade with The United States (U.S. Department of Commerce, European Commission) Figure 2.1 illustrates that relationship by showing the correspondence between the size of different European economies-specifically, America’s 15 most important Western European trading partners in 2008 and those countries trade with the United States in that year. On the horizontal axis is each country’s GDP, expressed as a percentage of the total GDP of the European Union; on the vertical axis is each country’s share of the total trade of the United States with the EU. AS you can see, the scatter of points clustered around the dotted 45-degree line that is, each country’s share of U.S. trade with Europe-was roughly equal to that country’s share of Western European GDP. German has a large economy, accounting for 21 percent of Western European GDP; it also accounts for 19.9 percent of U.S. trade with the region. Sweden has a much smaller economy, accounting for only 2.7 percent of European GDP; correspondingly, it accounts for only 3 percent of U.S.-Europe 18.

(29) trade. Looking at world trade as a whole, economists have found that an equation of the following form predicts the volume of trade between any two countries fairly accurately, Tij = A x Yi x Yj/Dij, Where A is a constant term, Tij is the value of trade between country i and country j, Yj is country i’s GDP, Yi is country j’s GDP, and Dij is the distance between the two countries. That is, the value of trade between any two countries is proportional, other things equal, to the product of the two countries’ GDPs, and diminishes with distance between the two countries. An equation is known as a gravity model of world trade. The reason for the name is the analog to Newton’s law of gravity: Just as the gravitational attraction between any two objects is proportional to the product of their masses and diminishes with distance, the trade between any two countries is, other things equal, proportional to the product of their GDPs and diminishes with distance. Economists often estimate a somewhat more general gravity model of the following form: Tij = A x Yia x Yjb/Dijc, This equation says that the three thing that determine the volume of trade between two countries are the size of two countries’ GDPs and the distance between the countries, without specifically assuming that trade is proportional to the product of the two GDPs and inversely proportional to distance. Instead, a, b, and c are chosen to fit the actual data as closely as possible. If a, b, and c were all equal, Equation would be the same as Equation. In fact, estimates often find that is a pretty good approximation.. 19.

(30) The gravity model of migration is a model in urban geography derived from Newton's law of gravity, and used to predict the degree of migration interaction between two places. Newton's law states that: "Any two bodies attract one another with a force that is proportional to the product of their masses and inversely proportional to the square of the distance between them." When used geographically, the words 'bodies' and 'masses' are replaced by 'locations' and 'importance' respectively, where importance can be measured in terms of population numbers, gross domestic product, or other appropriate variables. The gravity model of migration is therefore based upon the idea that as the importance of one or both of the location increases, there will also be an increase in movement between them. The farther apart the two locations are, however, the movement between them will be less. This phenomenon is known as distance decay. The gravity model can be used to estimate: Traffic flow, Migration between two areas, the number of people likely to use one central place. The gravity model can also be used to determine the sphere of influence of each central place by estimating where the breaking point between the two settlements will be. An example of this is the point at which customers find it preferable, because of distance, time and expense considerations, to travel to one center rather than the other. The gravity model can be used to measure accessibility to services (e.x., access to health care). A special case of gravity model is the two-step floating catchment area method, which is popular in health care research.. 20.

(31) The gravity model was expanded by William J. Reilly in 1931 into Reilly's law of retail gravitation to calculate the breaking point between two places where customers will be drawn to one or another of two competing commercial centers. Opponents of the gravity model explain that it can’t be confirmed scientifically, that it's only based on observation. They also state that the gravity model is an unfair method of predicting movement because it’s biased toward historic ties and toward the largest population centers. Thus, it can be used to perpetuate the status quo.. V. Economy of Thailand A. Overview Economy of Thailand Thailand is a newly industrialized country. Its economy is heavily export-dependent, with exports accounting for more than two-thirds of its gross domestic product (GDP). In 2018, according to the World Bank, Thailand had a GDP of US$ 504.9 billion, the 8th largest economy of Asia. As of 2018, Thailand has an average inflation of 1.06% percent and an account surplus of 7.5 percent of the country's GDP. The Thai economy is expected to post 3.8% growth in 2019. Its currency, the Thai Baht, also ranked as the tenth most frequently used world payment currency in 2017. The industrial and service sectors are the main sectors in the Thai gross domestic product, with the former accounting for 39.2 percent of GDP and the later 52.4 percent in 2017. Thailand's agricultural sector produces 8.4 percent of GDP—lower than the trade and logistics and communication sectors, which account for 13.4 percent and 9.8 percent of GDP respectively. The construction and mining sector adds 4.3 percent to the country's. 21.

(32) gross domestic product. Other service sectors (including the financial, education, and hotel and restaurant sectors) account for 24.9 percent of the country's GDP. Telecommunications and trade in services are emerging as centers of industrial expansion and economic competitiveness. Thailand is the second-largest economy in Southeast Asia, after Indonesia. Its per capita GDP (US$7,273.56) in 2018, however, ranks in the middle of Southeast Asian per capita GDP, after Singapore, Brunei, and Malaysia. In July 2018 Thailand held US$237.5 billion in international reserves, the second-largest in Southeast Asia (after Singapore). Its surplus in the current account balance ranks tenth of the world, made US$37.898 billion to the country in 2018. Thailand ranks second in Southeast Asia in external trade volume, after Singapore. The nation is recognized by the World Bank as "one of the great development success stories" in social and development indicators. Despite a low per capita gross national income (GNI) of US$6,610 and ranking 83th in the Human Development Index (HDI), the percentage of people below the national poverty line decreased from 65.26 percent in 1988 to only 8.61 percent in 2016, according to the NESDB's new poverty baseline. (ASEAN Secretariat, 2018). Thailand's one of countries with the lowest unemployment rate in the world, reported as 0.63 percent for the first quarter of 2017. This is due to a large proportion of the population working in subsistence agriculture or on other vulnerable employment (ownaccount work and unpaid family work) and Thailand Macroeconomic trends shown in Table 2.1.. 22.

(33) Table 2.1: Thailand Macroeconomic trends. Year. 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018. GDP (Billion). GDP per capita (US Dollar). 291 4,379 282 4,212 341 5,075 370 5,491 398 5,860 420 6,168 407 5,954 401 5,846 412 5,979 455 6,594 505 7,274 Source: World Bank. Total exports (Billion). Total imports (Billion). Foreign Direct Investment (Million). GDP growth rate (%). Wage and salaried workers (% of total employment). 179 134 183 229 249 250 228 203 194 222 250. 178 152 193 223 229 229 227 214 215 237 252. 8,562 6,411 14,747 2,474 12,899 15,936 4,975 8,728 2,810 8,046 13,248. 1.73 -0.69 7.51 0.84 7.24 2.69 0.98 3.02 3.28 3.9 4.12. 43.3 44.71 44.54 42.32 41.67 44.58 47.35 48.42 49.06 49.44 49.81. 1. Agriculture, forestry and fishing. Developments in agriculture since the 1960s have supported Thailand's transition to an industrialized economy. As recently as 1980, agriculture supplied 70 percent of employment. In 2008, agriculture, forestry and fishing contributed 8.4 percent to GDP; in rural areas, farm jobs supply half of employment. Rice is the most important crop in the country and Thailand had long been the world's number one exporter of rice, until recently falling behind both India and Vietnam. It is a major exporter of shrimp. Other crops include coconuts, corn, rubber, soybeans, sugarcane and tapioca. Thailand is the world's third-largest seafood exporter. Overall fish exports were worth around US$5.8 billion in 2017, according to the Thai Frozen Foods Association. Thailand's fishing industry employs more than 300,000 persons.. 23.

(34) 2. Electrical and electronics. Electrical and electronics (E&E) equipment is Thailand's largest export sector, amounting to about 15 percent of total exports. In 2014 Thailand's E&E exports totaled US$55 billion. The E&E sector employed approximately 780,000 workers in 2015, representing 12.2 per cent of the total employment in manufacturing. 3. Automotive. Table 2.2 present Thailand is the ASEAN leader in automotive production and sales. The sector employed approximately 417,000 workers in 2015, representing 6.5 per cent of total employment across all manufacturing industries and accounting for roughly 10 percent of the country's GDP. In 2017, Thailand exported US$27.54 billion in automotive goods. As many as 73 percent of automotive sector workers in Thailand face a high risk of job loss due to automation. Table 2.2: Cars, motorbikes, parts and components export of Thailand (US Billion). Year. 2011. 2012. 2013. 2014. 2015. 2016. 2017. Value. 17.69. 23.47. 25.37. 26.02. 27.89. 29.51. 27.54. % of GDP. 5.37%. 6.08%. 6.29%. 6.31%. 6.53%. 6.58%. 5.90%. Source: Federation of Thai Industries 4. Services. In 2017 the service sector (which includes tourism, banking and finance), contributed 56.29 percent of GDP and employed 46.62 percent of the workforce. Thailand's service industry is competitive, contributing to its export growth. 5. Retail. Retail employs more than six million Thai workers. Most are employed by small businesses. Large multinational and national retail players (such as Tesco Lotus, 7Eleven, Siam Makro, Big C, Villa Market, Central Group and Mall Group) are estimated. 24.

(35) to employ fewer than 400,000 workers. This accounts for less than seven percent of Thailand's total employment in retail. 6. Tourism. Tourism is a major economic contributor to the Kingdom of Thailand. Estimates of tourism revenue directly contributing to the Thai GDP of 12 trillion baht range from one trillion baht (2013) 2.53 trillion baht (2016), the equivalent of 9% to 17.7% of GDP. When including indirect travel and tourism receipts, the 2014 total is estimated to be the equivalent of 19.3% (2.3 trillion baht) of Thailand's GDP. The actual contribution of tourism to GDP is lower than these percentages because GDP is measured in value added not revenue. The valued added of the Thailand's tourism industry is not known (value added is revenue less purchases of inputs). According to the secretary-general of the Office of the National Economic and Social Development Council speaking in 2019, the government projects that the tourism sector will account for 30% of Thailand's GDP by 2030, up from 20% in 2019. Tourism worldwide in 2017 accounted for 10.4% of global GDP and 313 million jobs, or 9.9% of total employment. Most governments view tourism as an easy moneymaker and a shortcut to economic development. Tourism success is measured by the number of visitors and revenue the more, the better. In the MasterCard 2014 and 2015 Global Destination Cities Index, Bangkok ranked the second of the world's top-20 most-visited cities, trailing only London. The U.S. News' 2017 Best Countries report ranked Thailand at 4th globally for adventure value and 7th for cultural heritage. 7. Medical Tourism. Thailand is leading Asia as a medical tourism destination. Medical tourism in Thailand is booming; pushing other nations down the list. The number. 25.

(36) of medical tourists that come in Thailand has been steadily increasing since the early 2000's. This has resulted in the country taking its place on the top of the global medical tourism market. The main reasons that have enabled Thailand to dominate this growing market are the low cost of medical treatment, the quality of treatment provided by private medical centers, and the highly developed tourism industry. Thailand's healthcare system. There are over 1,000 hospitals in Thailand, of which over 470 are private facilities. The country takes pride in having the largest private hospital in Asia, as well as having the first Asian hospital to receive the ISO 9001 certification and JCI accreditation. To date, 37 hospitals in Thailand have been accredited by the JCI, all of them private. Thailand’s Medical tourism industry is largely driven by private hospitals. Thai doctors are attracted to the international hospitals as they can earn as much as 70% more than in the public hospitals.. B. Thailand Exports - Imports 1. Exports Thailand shipped US$249.8 billion worth of goods around the globe in 2018. That dollar amount reflects a 9.8% gain since 2014 and a 5.8% increase from 2017 to 2018. As of September 4, 2019, Thailand exported $144 billion worth of goods during the first 7 months of 2019 dipping -0.4% compared to the same period one year earlier. From a continental perspective, about three-quarters 65.1% of Thai exports by value in 2018 were delivered to fellow Asian countries while 12.9% were sold to North American importers. Thailand shipped another 11.6% worth to Europe and 5.1% to Oceania led by Australia and New Zealand.. 26.

(37) The following export product groups represent the highest dollar value in Thai global shipments during 2018. Also shown is the percentage share each export category represents in terms of overall exports from Thailand. Thailand’s Top 10 Exports such as Machinery including computers: US$42.9 billion (17.2% of total exports), Electrical machinery, equipment: $35 billion (14%), Vehicles: $30.4 billion (12.2%), Rubber, rubber articles: $15.5 billion (6.2%), Plastics, plastic articles: $14.5 billion (5.8%), Gems, precious metals: $11.9 billion (4.8%), Mineral fuels including oil: $10.6 billion (4.2%), Meat/seafood preparations: $6.6 billion (2.6%), Organic chemicals: $6.1 billion (2.5%), Cereals: $5.7 billion (2.3%) 2. Imports Thailand imported US$250.9 billion worth of goods from around the globe in 2018, up by 10.1% since 2014 and up by 11.4% from 2017 to 2018. Thai imports represent 1.4% of total global imports which totaled an estimated $17.788 trillion one year earlier during 2017. From a continental perspective, 74.1% of Thailand’s total imports by value in 2018 were purchased from fellow Asian countries. European trade partners supplied 12.9% of imports into Thailand while 6.8% worth originated from North America. Oceania (Australia, New Zealand) accounted for 2.9% of the total. Even smaller percentages came from Africa (1.8%) and Latin America (1.5%) excluding Mexico but including the Caribbean. Given Thailand’s population of 68.6 million people, its total $250.9 billion in 2018 imports translates to roughly $3,700 in yearly product demand from every person in the East Asian country.. 27.

(38) Table 2.3: Totals Thailand Exports & Imports of goods, and services (In US Billion) Exports Imports. 2008. 2009. 2010. 2011. 2012. 2013. 2014. 2015. 2016. 2017. 2018. 179 178. 134 152. 183 193. 229 223. 249 229. 250 229. 228 227. 203 214. 194 215. 222 237. 250 252. Source: World Bank. VI. Economy of Malaysia A. Overview Economy of Malaysia The economy of Malaysia is the 3rd largest in Southeast Asia, after Indonesia and Thailand, and is the 35th largest economy in the world. Malaysian labor productivity is significantly higher than neighboring Thailand, Indonesia, Philippines or Vietnam due to a high density of knowledge-based industries and adoption of cutting edge technology for manufacturing and digital economy. According to the Global Competitiveness Report 2018, the Malaysian economy is the 25th most competitive country in the world in the period of 2018–19. Malaysian citizens lead a much more affluent lifestyle compared to their peers in upper-middle income countries like Mexico, Turkey, and Brazil. This is due to a low national income tax, low cost of local food, transport fuel, household essentials, a fully subsidized single payer public-healthcare and comprehensive social welfare benefit with direct cash transfer. With an income per capita of 28,681 PPP Dollars (World Bank, 2017) or 10,620 nominal US Dollars, Malaysia is the third wealthiest nation in Southeast Asia after the smaller city-states of Singapore and Brunei. Malaysia has a newly industrialized market economy, which is relatively open and state-oriented. The Malaysian economy is. 28.

(39) highly robust and diversified with the export value of high-tech products in 2015 standing at US$57.258 billion, the second highest after Singapore in ASEAN. Despite government policies to increase income per capita in order to hasten the progress towards high income country by 2020, Malaysia's growth in wages has been very slow, lagging behind the OECD standard. Academic research by the IMF and World Bank have repeatedly called for structural reform and endogenous innovation to move the country up the value chain of manufacturing into allowing Malaysia to escape the current middle income trap. Due to a heavy reliance on oil exports for central government revenue, the currency fluctuations have been very volatile, noticeably during the supply glut and oil price collapse in 2015. However the government stepped up measures to increase revenue by introducing the Sales and Service Tax (SST) at 6% rate to reduce deficits and meet federal debt obligations and Table 2.4 present Malaysia Macroeconomic trends. Table 2.4: Malaysia Macroeconomic trends. Year. GDP (Billion). GDP per capita (US Dollar). 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018. 231 202 255 298 314 323 338 296 297 315 354. 8,475 7,292 7,041 10,399 10,817 10,970 11,319 9,797 9,671 10,118 11,239. Total exports (Billion). Total imports (Billion). Foreign Direct Investment (Million). 156 124 165 187 196 206 209 176 168 195 272. 199 157 199 228 228 228 234 199 190 218 247. 7,513 114 10,886 15,119 8,876 11,296 10,619 9,857 13,470 9,368 8,570. Source: World Bank 29. GDP growth rate (%). Wage and salaried workers (% of total employment). 4.83 -1.51 7.42 5.29 5.47 4.62 6 5.09 4.22 5.89 4.72. 74.59 74.82 74.83 76.78 75.03 74.36 75.42 73.89 74.37 74.57 74.75.

(40) B. Malaysia Exports – Imports 1. Exports Comprised of two similarly sized land masses in Southeast Asia, namely Peninsular Malaysia and East Malaysia, Malaysia shipped US$247.3 billion worth of goods around the globe in 2018. From a continental perspective, 72.2% of Malaysian exports by value in 2018 were delivered to fellow Asian countries while 10.6% was sold to importers in Europe. 2. Imports Located in Southeast Asia near powerful trade partners including Thailand, Singapore, Vietnam and the Philippines, Malaysia imported US$217.5 billion worth of goods from around the globe in 2018. Table 2.5: Totals Malaysia Exports & Imports of goods, and services (In US Billion) Exports Imports. 2008. 2009. 2010. 2011. 2012. 2013. 2014. 2015. 2016. 2017. 2018. 156 199. 124 157. 165 199. 187 228. 196 228. 206 228. 209 234. 176 199. 168 190. 195 218. 272 247. Source: World Bank. VII. Economy of Cambodia A. Overview Economy of Cambodia The economy of Cambodia at present follows an open market system (market economy) and has seen rapid economic progress in the last decade. Cambodia had a GDP of $18.05 billion in 2015. Per capita income, although rapidly increasing, is low compared with most neighboring countries. Cambodia's two largest industries are textiles and tourism, while agricultural activities remain the main source of income for many Cambodians living in rural areas. The service sector is heavily concentrated on trading 30.

(41) activities and catering-related services. Recently, Cambodia has reported that oil and natural gas reserves have been found off-shore. Currently, Cambodia's foreign policy focuses on establishing friendly borders with its neighbors (such as Thailand and Vietnam), as well as integrating itself into regional (ASEAN) and global (WTO) trading systems. Table 2.6 present Cambodia Macroeconomic trends. Table 2.6: Cambodia Macroeconomic trends. Year. GDP (Billion). GDP per capita (US Dollar). 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018. 10 10 11 13 14 15 17 18 20 22 25. 746 738 786 882 951 1,014 1,094 1,163 1,270 1,384 1,512. Total exports (Billion). Total imports (Billion). Foreign Direct Investment (Million). GDP growth rate (%). Wage and salaried workers (% of total employment). 7 6 7 9 11 10 11 13 14 16 19. 5 4 5 7 8 7 7 9 10 12 14. 815 928 1,404 1,539 2,004 2,068 1,853 1,823 2,476 2,788 3,103. 6.69 0.09 5.96 7.07 7.31 7.36 7.14 7.04 6.95 6.81 7.52. 34.79 37.43 40.3 43.17 46.03 46.49 46.95 47.47 47.97 48.39 48.81. Source: World Bank B. Cambodia Exports – Imports 1. Exports Located on the Indochina peninsula in southeastern Asia, the Kingdom of Cambodia shipped an estimated US$19 billion worth of goods around the globe in 2018. That dollar amount reflects a 177.4% increase since 2014 and a 5.9% uptick from 2017 to 2018. 31.

(42) The latest available data from 2016 shows that 81.5% of products exported from Cambodia were bought by importers in: United States (21.3% of the global total), United Kingdom (9.5%), Germany (9%), Japan (8.2%), Canada (6.5%), China (6.1%), Thailand (4.2%), Spain (4%), Belgium (3.9%), France (3.6%), Netherlands (3%) and Vietnam (2.3%). 2. Imports In 2017 Cambodia imported $12B, making it the 83rd largest importer in the world. During the last five years the imports of Cambodia have increased at an annualized rate of 0.5%, from $11.5B in 2012 to $12B in 2017. The most recent imports are led by Gold which represent 17.6% of the total imports of Cambodia, followed by Light Rubberized Knitted Fabric, which account for 12.5%.Cambodia mainly imports petroleum. products,. fabrics,. vehicles,. wholesale. yarn,. cigarettes,. electrical. communications equipment and medicine. Cambodia’s main import partners are China, Thailand, Hong Kong, Vietnam, Taiwan and South Korea. Table 2.7 present Totals Cambodia Exports & Imports of goods, and services.. Table 2.7: Totals Cambodia Exports & Imports of goods, and services (In US Billion) Exports Imports. 2008. 2009. 2010. 2011. 2012. 2013. 2014. 2015. 2016. 2017. 2018. 7 5. 6 4. 7 5. 9 7. 11 8. 10 7. 11 7. 13 9. 14 10. 16 12. 19 14. Source: World Bank. 32.

(43) VIII. Economy of Lao PDR A. Overview Economy of Lao PDR The economy of Lao PDR is rapidly growing lower-middle income developing economy. Being one of five remaining socialist states, the Laos economic model resembles the Chinese and Vietnamese socialist-oriented market economies by combining high degrees of state ownership with an openness to foreign direct investment in a predominately market-based framework. Following independence, Laos established a Soviet-type planned economy. As part of economic restructuring that aimed to integrate Laos into the globalized world market, Laos underwent reforms called the New Economic Mechanism in 1986 that decentralized government control and encouraged private enterprise alongside state-owned enterprises. Currently, Laos ranks amongst the fastest growing economies in the world, averaging 8% a year in GDP growth. It is also forecasted that Laos will sustain at least 7% growth through 2019 as well. Key goals for the government includes pursuing poverty reduction and education for all children, also with its initiative to become a "land-linked" country. In the current period, the economy of Laos relies largely on foreign direct investment to attract the capital from overseas to support its continual economic rigorousness. The long-term goal of the Lao economy as enshrined in the constitution is economic development in the direction of socialism by creating the material conditions to move towards socialism. A landlocked country, it has inadequate infrastructure and a largely unskilled work force. Nonetheless, Laos continues to attract foreign investment as it integrates with the larger ASEAN. 33.

(44) Economic Community, its plentiful, young workforce, and favorable tax treatment. Table 2.8 present Lao PDR Macroeconomic trends.. Table 2.8: Lao PDR Macroeconomic trends. Year. GDP (Billion). GDP per capita (US Dollar). 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018. 5 6 7 9 10 12 13 14 16 17 18. 900 948 1,141 1,381 1,589 1,839 2,018 2,159 2,339 2,457 2,568. Total exports (Billion). Total imports (Billion). Foreign Direct Investment (Million). GDP growth rate (%). Wage and salaried workers (% of total employment). 2 1 2 2 3 3 4 5 5 6 5. 3 3 4 4 6 7 8 7 7 7 7. 227 318 278 300 617 681 867 1,078 935 1,693 1,320. 7.82 7.5 8.53 8.04 8.03 8.03 7.61 7.27 7.02 6.89 6.50. 14.65 15.07 15.65 16.16 16.69 17.11 17.54 18 18.53 19.01 19.49. Source: World Bank Data. B. Lao PDR Exports – Imports 1. Exports A landlocked Southeast Asian nation on the Indochinese peninsula, the Lao People’ Democratic Republic shipped an estimated US$5.6 billion worth of goods around the globe in 2018. That dollar amount reflects a 116.5% increase since 2014 and a 7.5% gain from 2017 to 2018. 2. Imports Laos’ main imports partner is Thailand (66 percent). Other imports partners include China and Vietnam. Top products Laos imports such as Petroleum oils, Automobiles with diesel engine, Telecommunication equipment, Non-alcoholic beverages, and Cement. 34.

(45) Table 2.9: Totals Lao PDR Exports & Imports of goods, and services (In US Billion) 2008. 2009. 2010. 2011. 2012. 2013. 2014. 2015. 2016. 2017. 2018. 1.52 1.49 2.65 2.73 Imports Source: World Bank. 2.30 3.51. 2.45 4.49. 2.97 6.14. 3.16 7.16. 4.16 7.73. 4.62 7.46. 5.20 6.62. 5.83 6.92. 5.42 7.10. Exports. IX. Economy of Myanmar A. Overview Economy of Myanmar Myanmar is an emerging economy with a nominal GDP of $69.322 billion in 2017 and an estimated purchasing power adjusted GDP of $327.629 billion in 2017 according to World Bank. For 2018 estimate, the countries per capita will be $6,509 in PPP per capita and $1,490 in nominal per capita. Escalating conflict in Rakhine State has added to the complexity of issues impacting Myanmar, where almost one-third of the country is conflict-affected. Populations in other parts of the country– such as Kachin, Kayah, Kayin and Shan – are experiencing, or are prone to, humanitarian crisis. The Rakhine crisis alone has led to more than 700,000 people fleeing into Bangladesh, with around 150,000 internally displaced people remaining in Rakhine. Economic growth remains strong by regional and global standards but is slowing. Myanmar’s economy grew at 6.8 percent in 2017/18, driven by strong performance in domestic trade and telecommunications, but offset by slowing growth in manufacturing, construction and transport sectors. Real GDP growth is projected to moderate to 6.2 percent in 2018/19. The medium-term macroeconomic outlook nevertheless remains positive. Economic growth is set to recover to 6.6 percent by 2020/21, driven by an expected pickup 35.

(46) in foreign and domestic investment responding to recent government policy measures. Building on the continuing implementation of the Myanmar Sustainable Development Plan, the government’s policy intent was reflected in recent reforms including implementation of the new Myanmar Companies Law, opening of the insurance sector and wholesale and retail markets to foreign players, services sector liberalization, and loosening restrictions on foreign bank lending and Table 2.10 shown Myanmar Macroeconomic trends. Table 2.10: Myanmar Macroeconomic trends. Year. 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018. GDP (Billion). GDP per capita (US Dollar). 32 644 37 741 50 988 60 1,186 60 1,176 60 1,171 65 1,260 60 1,139 63 1,196 69 1,299 71 1,326 Source: World Bank. Total exports (Billion). Total imports (Billion). Foreign Direct Investment (Million). 4 4 5 9 9 12 16 17 16 19 20. 7 7 9 9 9 11 11 11 12 14 17. 863 1,079 901 2,520 1,334 2,255 2,175 4,084 3,278 4,002 1,291. GDP growth rate (%). Wage and salaried workers (% of total employment). 10.26 10.53 9.63 5.59 7.33 8.43 7.99 6.99 5.87 6.37 6.20. 33.82 34.59 35.34 36.09 36.71 37.3 37.98 38.52 38.05 36.76 37.48. B. Myanmar Exports – Imports 1. Exports A sovereign state in Southeast Asia, the Republic of the Union of Myanmar shipped an estimated US$15.4 billion worth of goods around the globe in 2018.. 36.

(47) That dollar amount results from a 34.3% gain since 2014 and also signals a 10.8% uptick from 2017 to 2018. From a continental perspective, 84.4% of Burmese exports by value were delivered to Asian countries while 11.2% were sold to Europe importers. Myanmar shipped another 2.5% worth of goods to North American. Smaller percentages went to Africa (1.3%), Latin America (0.2%) excluding Mexico but including the Caribbean, then Oceania led by Australia (0.2%). 2. Imports a Southeast Asian country surrounded by India, Bangladesh, Thailand, Laos and China, the Republic of the Union of Myanmar imported an estimated total US$24.2 billion worth of goods in 2018. That dollar amount reflects a 48.9% increase since 2014 and a 25.5% gain from 2017 to 2018.Top suppliers accounting for 88.1% of Myanmar’s international purchases were: China (31.8%), Singapore (15.2%), Thailand (11.3%), Japan (5.5%), Malaysia (5.2%), India (5.1%), Indonesia (4.8%), United States (3.6%), Vietnam (3%) then South Korea (2.7%) and Table 2.11 present Totals Myanmar Exports & Imports of goods, and services. Table 2.11: Totals Myanmar Exports & Imports of goods, and services (In US Billion) Exports Imports. 2008. 2009. 2010. 2011. 2012. 2013. 2014. 2015. 2016. 2017. 2018. 4 7. 4 7. 5 9. 9 9. 9 9. 12 11. 16 11. 17 11. 16 12. 19 14. 20 17. Source: World Bank. 37.

(48) X. Economy of Vietnam A. Overview Economy of Vietnam The socialist-oriented market economy of the Socialist Republic of Vietnam is the 45th-largest economy in the world measured by nominal gross domestic product (GDP) and 33rd-largest in the world measured by purchasing power parity (PPP). The country is a member of Asia-Pacific Economic Vietnam has become a leading agricultural exporter and served as an attractive destination for foreign investment in Southeast Asia. In a similar fashion to other Communist countries after the end of the Cold War, the planned economy of Vietnam lost the momentum for productivity and sustainable growth. In the current period, Vietnam's economy relies largely on foreign direct investment to attract the capital from overseas to support its continual economic rigor. Foreign investment on the luxury hotel and sector and resorts will rise to support high-end tourist industry and Table 2.12 shown Vietnam Macroeconomic trends.. 38.

(49) Table 2.12: Vietnam Macroeconomic trends. Year. GDP (Billion). GDP per capita (US Dollar). 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018. 99 1,149 106 1,217 116 1,318 136 1,525 156 1,735 171 1,887 186 2,030 193 2,085 205 2,192 224 2,366 245 2,564 Source: World Bank. Total exports (Billion). Total imports (Billion). Foreign Direct Investment (Million). GDP growth rate (%). Wage and salaried workers (% of total employment). 81 70 85 107 114 132 148 166 175 212 244. 63 57 72 97 115 132 150 162 177 214 214. 9,579 7,600 8,000 7,430 8,368 8,900 9,200 11,800 12,600 14,100 15,500. 5.66 5.39 6.42 6.24 5.24 5.42 5.98 6.67 6.21 6.81 7.07. 32.43 33.64 33.86 34.68 34.78 34.86 35.67 39.34 41.24 42.84 43.40. B. Vietnam Exports – Imports 1. Exports The eastern-most nation on Southeast Asia’s Indochina Peninsula, the Socialist Republic of Vietnam shipped an estimated US$290.4 billion worth of goods around the globe in 2018. That dollar amount reflects a 93.3% gain since 2014 and a 35.7% improvement from 2017 to 2018. 2. Imports Vietnam imported an estimated US$255.8 billion worth of goods from around the globe in 2018, up by 73% since 2014 and up by 21.5% from 2017 to 2018. Vietnamese imports represent 1.4% of overall global imports which totaled an estimated $17.788 trillion for 2018 and Table 2.13 present Totals Vietnam Exports & Imports of goods, and services.. 39.

(50) Table 2.13: Totals Vietnam Exports & Imports of goods, and services (In US Billion) 2008. 2009. 81 70 Imports 63 57 Source: World Bank Exports. 2010. 2011. 2012. 2013. 2014. 2015. 2016. 2017. 2018. 85 72. 107 97. 114 115. 132 132. 148 150. 166 162. 175 177. 212 214. 244 214. XI. Thailand’s Border Trade with Neighboring Countries In the first four months of 2017, Thailand’s border trade with its neighboring countries was valued at 354.6 billion baht, an increase of about 4 percent over the same period in 2016. Out of the value, 222.3 billion baht involved exports, up by 10.5 percent, and 132.3 billion baht involved imports, a decline by 4.6 percent. Thailand gained a trade surplus of 90 billion baht with neighboring countries during the period. The country has common borders with Malaysia, Myanmar, Laos, and Cambodia, with its provincial customs offices supervising cross-border trade. All the customs offices also have temporary and permanent border checkpoints to facilitate border trade, which is considered important for enhancing the country’s competitiveness. Thailand’s border trade with Malaysia from January to April 2017 was worth 186 billion baht, an increase of 14.5 percent over the same period of 2016. Major Thai exports to Malaysia include rubber and rubber products, iron and steel, electric-circuit boards, and processed wood. Imports from Malaysia include computers, industrial machines, auto parts, and air-conditioners. In the first four months of this year, border trade with Myanmar was valued at 58.5 billion baht, a decrease of 10.3 percent. As for border trade with Laos, it was valued at 65.5 billion baht, an increase of 0.4 percent. Thailand’s border trade with Cambodia was valued at 44.5 billion baht, a decline of 5 percent. 40.