Prediction of the Impact of External Factors on the Thai Economy and Recommendations Based on the Suff i ciency Economy Principle

Abstract

Thailand’s dependence on foreign countries increases the degree to which external factors affect its economy. In this regard, the application of the suff iciency economy principle will be the key to sustainable economic growth. The present study aimed, therefore, to predict the impact of external factors on the Thai economy and to make recommendations based on the suff iciency economy principle using a simulation of the economic conditions between 2009 and 2013. This quantitative and qualitative research applied a simultaneous equation model of econometric principles utilizing a systematic method. The three-stage least squares (3SLS) were also calculated. The results showed that external factors deprived the Thai economy of suff iciency, possibly leading to an economic crisis. It is recommended that a mixed policy embracing the suff i ciency economy principle should be adopted; however, the implementation of the suff iciency policy should take into consideration the economic conditions of the country. That is, it should be carried out during a period of rapid economic expansion when suff iciency is being ignored. On the other hand, the adoption of this policy may not bring about desirable outcomes during a recession as it has a tendency to reduce private sector investment.