1. Growth and Structural Change, 1970-2003
Thailand’s economic growth averaged 7.5 percent per year in the quarter century that
preceded the 1997 financial crisis (table 1). However, output fell sharply in both 1997 and 1998
and did not recover to its 1996 level until 2002. The severity of the crisis will have a major
effect on any analysis of Thailand’s growth experience. As shown in figure 1, the output losses,
relative to Thailand’s prior growth path, appear to be permanent; that is, the growth rate has
recovered but along a lower path than existed prior to 1997. Furthermore, a long term growth in
employment averaging less than half that of output implied substantial labor productivity gains
in the years prior to the 1997 crisis, but evidence of significant productivity improvement in
subsequent years is largely absent. Over the 1996-2003 period, output growth averaged 1.5
percent per year and employment growth was 1.3 percent.