*

Ian Coxhead is an associate professor of Agricultural and Applied Economics at the University of Wisconsin. Jiraporn Plangpraphan is a senior researcher in TDRI’s division of Natural Resources and Environment. Partial funding for the study on which this report is based was provided by TDRI and the University of Wisconsin’s International Institute. Please address correspondence to coxhead@facstaff.wisc.edu.

1

Paradoxically, the lifting of restrictions on capital outflows often leads to capital inflows. This was the case in Thailand. Until 1990, Bank of Thailand permission was required for outgoing capital movements, Thai citizens were forbidden to hold foreign currency-denominated accounts or to purchase foreign currency for investment overseas, and individuals were barred from carrying currency with value more than 500 Baht ($20) out of the country (Warr and Bhanupong 1996). In Bartolini and Drazen (1997), the relaxation of controls on capital outflows is interpreted as a signal that future government policies will be more conducive to investment, hence stimulating a capital inflow.

2

During Thailand’s rapid growth, poverty has declined, with the possible exception of a period from 1982-1986, to levels which can only be regarded as trivially low (Ammar 1996, Warr and Bhanupong 1996). On the other hand, income distribution has worsened. The ratio of wealthiest to poorest quintile shares rose from 8.9 in 1975-1976 to 14.0 in 1990. The Gini ratio, another univariate measure of income distribution, has risen relentlessly, in 1990 reaching a level usually associated only with Latin American economics (Medhi 1994).

3	Econometric models of agricultural land demand and land expansion in Mundlak (1997) and in Panayotou and Chartchai (1990) either ignore agricultural labor altogether, or take agricultural wages as given and do not offer explanations for their determination. In Martin and Warr (1994), labor is intersectorally mobile, but land is implicitly regarded as fixed in agriculture.

4	The phrase “irrational exuberance” was coined by US Federal Reserve chairman Alan Greenspan in 1997 in a reference to the US economy; nevertheless, it seems to fit the Thai case rather well.

5	For an analysis of the macroeconomic implications of a temporary resource boom see the discussion of the Indonesian oil economy in the 1970s and 1980s by Woo, Glassburner and Nasution (1994).

6	Unsubscripted variables refer to current values. Only lagged values are subscripted, e.g., WA-1.