Yet, during the early 1990s signs began to
emerge that, behind Thailand’s remarkable growth, a
series of long-term problems were emerging such as
rising costs of production, lack of skilled labor,
overloaded infrastructure, congestion and pollution.
Furthermore, the opening of such low-cost locations as
Vietnam and China undermines Thailand’s comparative
advantage in labor-intensive manufacturing and inhibits
the transition to more skill- and capital-intensive
activities. All these factors lead to a slowing of growth.
In 1996 there was a sharp slowing of the rate of export
growth, although the impact of this on economic growth
was masked by the rapid expansion of the property and
financial sectors. However, in 1997, this page of
Thailand’s economic history closed with the start of the
financial crisis in July of that year