Through the lens of industries: The Impacts of the 1997 Asian Financial Crisis and the 2008 Global Financial Crisis on Thailand
Purpose of the paper
This research paper is going to do the comparative study of the impacts of Thai industries within the two most globally effective financial crises: the Asian Financial Crisis in 1997 and the 2008 Global Financial Crisis.
Research Questions
The hypothesis addressed in the paper is that Thailand’s progressive government regulations stimulated by the Asian financial crisis, have played a beneficial role in helping this country recover from the global financial crisis occurred later. To analyze the credibility of this hypothesis, the paper is going to focus on two main questions: (1) What are the differences in the adverse and positive impacts of the two financial crises on major industries (agriculture, manufacturing, service) of Thailand?; and (2) What are the differences of transmission mechanisms between these two financial crises (解释是哪种transmission mechanism)? Has this transmission mechanism evolved?
Importance of this study
There have been many in-depth published studies and analyses on the impacts of Thailand on the Asian financial crisis or the global financial crisis, but there is a gap of comparing them. Haughton and Khandker’s (2013) study analyze the effects of the 2008 great recession from the of microeconomic perspective by actual data analysis, manifesting that among various social groups in Thailand, most people, including low-income households and non-urban residents, are not threatened with a reduction in real expenditure, and even have a positive effect.
This finding is dramatically opposite with the severe economic deterioration of Thailand experienced in 1997, inspiring my study to analyze if there was a connection between Thailand’s government regulations improved by the Asian financial crisis and the benign influences caused by the 2008 global crisis. Since comparing Thailand's performance in the two crises with the impact on the country's economy leaves room for debate in this area. Therefore, doing comparative research is helpful for providing a more general contexts of crises, enabling policymakers to grasp more development patterns of industries, guiding the long-term development and structural adjustment of industries in Thailand and various countries around the world may get implications.
Methodology
This study would start with a brief discussion about the background and progress of the two financial crises through document analysis and literature reviews, reveal their influences on Thailand afterwards (讨论the third-generation model of crisis与两个crises的相关性, 再结合relative key terms). In the second part of the paper, it is going to theoretically analyze the transmission mechanisms and channels of financial crises in industries. To achieve this purpose, this study will then conduct empirical analysis, including the application of the vector autoregressive (VAR) model to verify the transmission channels of financial crises on major industries (Chudik & Fratzscher, 2011), and further analyze whether the two financial crises have a significant impact on major industries. Since the VAR model has shown a good performance in measuring Thailand’s economic growth led by exports in large time span (Romyen et al., 2019), this model would be helpful for capturing the impacts of the two crises on Thailand and making a more intuitive horizontal comparison. Meanwhile, the study would apply the data collection techniques from the Thai official survey to achieve quantitative credibility and reliability, using survey data provided by the World Bank/Bank of Thailand/IMF (哪个好做图用哪个; looking at real GDP per capita, % of employment and unemployment in three industries, well-being of people in these industries). In the third section, the study would discuss if Thailand applied the lessons learned from the Asian Crisis and response better to the 2008 global crisis.
References
Chudik, A., & Fratzscher, M. (2011). Identifying the global transmission of the 2007–2009 financial crisis in a GVAR model. European Economic Review, 55(3), 325-339.
Edey, M. (2009). The global financial crisis and its effects. Economic Papers: A journal of applied economics and policy, 28(3), 186-195. https://ideas.repec.org/a/eee/eecrev/v55y2011i3p325-339.html
Haughton, J., & Khandker, S. R. (2013). The surprising effects of the Great Recession: losers and winners in Thailand in 2008–09. World Development, 56, 77–92. https://doi.org/10.1016/j.worlddev.2013.10.018
Romyen, A., Liu, J., & Sriboonchitta, S. (2019). Export–Output Growth Nexus Using Threshold VAR and VEC Models: Empirical Evidence from Thailand. Economies, 7(2), 60. https://doi.org/10.3390/economies7020060