Abstract:
The two decades o£ Thailands economic development based on the unbalanced growth strategy had brought about the drastic changes in its economic structure which is over more dependent on its foreign sector. As a result, any fluctuation in world economy had inevitably affected Thailands economic stability. The cronic unfavourable balance of trade is one of the important factors which contributed to' the serious problem of balance of payment deficit facing the country. while the economic development has been progressing with agricultural sector as the major source of foreign currency earning, it is still insufficient to meet import demand for capital and intermediate goods needed for industrial production. This is perhaps due to the fact that industrial development in Thailand had not created a full linkage effect. It is quite apparent, therefore, that the more expanded economy, the more dependent Thailand become on imported goods particularly from Japan which is its major trading partner. It is the purpose of this thesis to use the economic relation between Thailand and Japan as a case study to measure the degree of structural interdependence and also to evaluate the repercussions between their production structures from the changes in either country's import demands. The study of economic impact is focused on the income and employment generating effects. The study is quantitative in nature utilizing the International Input Output Model to analyse the data from the international input output table between Thailand and Japan of the year 1975 (dividing into 69 sectors), and trade data from Thai Customs Department covering the period 1975-1981. The conclusion of the study gives a strong support to the hypothesis that the more differences in industrial structures, the more interdependence between the countries involved. Comparatively, Thailands production structure is predominantly agricultural while Japan has the full-range industrialisation and advanced technology. As a consequent, Thailands industrial productions continue to depend much on raw materials and technology from Japan. Trade between Thailand and Japan can thus be regarded as characterized by the vertical relationship such that Thailands import of producer goods from Japan is,-relatively much greater than its export of consumer goods to Japan. This vertical inter dependence is one of the crucial factors which led Thailand to unilateral dependent on Japan thereby reducing Thailands bargaining power. This is evidenced by Thailand's large and growing trade balance deficit with Japan. It is hoped that this empirical study is useful not only as an academic exercise but also as one of the basis for government to formulate policy and analyze its implication. Since to have any success in rectifying the fundamental problem inherited in Thailand-Japanese trade relation, such policy formulation must take into consideration all aspects of the inter relationship which includes trade, investment and industrial development.