Analysis of Key Factors to Develop an International Trade Policy of Thailand for Joining the Asean Economic Community (AEC)

Abstract

Thailand is planning to join the Asean Economic Community (AEC). With the goal to open the market to reduce or quit regulatory or various measures to control the trade, which it is barriers to services and investment between the members of the 10 ASEAN countries. Thailand, thus, needs to know her strengths and weaknesses completely in order to make policy adjustment for the next five years. Problems that may be caused by participating the AEC to Thailand such as the labor shortage, particularly workers from Burma who might be moving back to Myanmar, the exports of Thailand may lose a lot of volume due to the opening of the ASEAN countries together, and lose of market share in domestic form importing goods from ASEAN countries. Based on the concerns mentioned above, this study is aimed to find the key factors affecting economic growth of Thailand and to provide suggestions to the Thai government in international trade development. LISREL model will be used for examining the relationship among economic variables, such as labor, foreign investments, export and import volume, government spending, tariff rate, and the influence of specific variable effects on the economic growth of Thai’s agriculture sector. Data for analysis are separating by the year (1997) of the Asian financial crisis in order to compare with the results in changes of international trade policy. The factors that significantly influence the growth of the Thai economy in each of the periods are expect to be identified from the LISREL results, which may help the Thai government making better decisions for negotiation under the AEC rules.

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