I. INTRODUCTION
Thailand's economy is defined by more than a decade of continuous and rapid economic growth starting in 1985, followed by a brutal recession that started near the end of 1997. During the boom years, economic growth averaged more than 7 percent annually, one of the highest rates in the world. Many different factors added to the rapid growth of Thailand's economy; low wages, policy reforms that opened the economy more to trade, and careful economic management resulted in low inflation and a stable exchange rate. These factors encouraged domestic savings and investment and made the Thai economy an ideal host for foreign investment. As industry expanded, many Thai people who previously had worked in agriculture began to work in manufacturing, slowing growth in the agriculture sector. Meanwhile, manufacturing growth spurred the expansion of service sector activities.
In the early 1990s a series of economic policy reforms introduced by the Thai government made it easy and attractive for foreign banks to offer loans to Thai banks. The Thai banks used the capital to lend money to domestic finance companies, property developers, and other investors, starting an investment boom. The consequential outflow of capital caused the Thai banking system to crash in the middle of 1997. Thailand's economy remained deep in recession through 1998, with gross domestic product shrinking an estimated 8.5 percent that year.
By 2001 Thailand's per capita income reached $1,940, making it an upper-middle income developing economy. Although Thailand was technically still a poor country, the urban middle class enjoyed income gains and made the country one of the world's large markets for luxury cars and other expensive consumer goods. However, the gains of g ...