External finance in Thailand's development

Since the 1970s the fluctuations of international finance have been important to the economic fortunes of developing countries, including Thailand. Since 1987 Thailand has experienced high growth, fed by high capital inflows. This book makes a detailed study of the macroeconomic impact of capital inflows during recent years and during an earlier period, in the late 1970s, when growth, and capital inflows, were high. The book shows that questions on the impact of external finance cannot be adequately analysed at the level of economic aggregates. External finance is broken down into its main components: the impact of aid is very different from that of direct foreign investment. Macroeconomic aggregates are also broken down as the response of the government to capital inflows is quite different from that of private corporations. The book analyses the policies that have accompanied the capital inflows. It concludes that a cautious fiscal policy and an exchange rate policy that avoids excessive appreciation of the real exchange rate are central to a macroeconomic environment conducive to a positive impact of capital inflows.