With the recent serious economic problems in Asia, the APEC Conference held in Vancouver, Canada this week has become more important, and more visible. The intent of this analysis is to explore the impact of APEC on Thailand and the issues of concern to Thailand.
APEC, or the Asia-Pacific Economic Cooperation, was founded in 1989. At that time, it had only 12 members, but it has ended expanded to 18 members, including Hong Kong and the United States. The pact was formed to promote economic cooperation in the region, and in relationship to the United States. It has generally supported free trade efforts and the expansion of trade, although critics indicate it has been overly fond of rhetoric and less interested in hammering out action plans and concrete agreements (Much ado: APEC, 1996). President Clinton raised the APEC conference to full summit status in 1993.
The Asian miracle started to become an Asian crisis during the early part of this year. In Thailand, problems began in February and escalated through the middle of the year. Essentially, the problem started when foreign investors began to lose confidence in Thailand. They started pulling money out of the country which created a panic in which foreign investors and Thai companies began converting their bahts to dollars. The Thai central bank responded by buying up baht with its dollar reserves, trying to prop up the currency. It also raised interest rates (Sapsford, McDermott and Williams, 1997).
This did not work, however, and the efforts to restore the currency and some stability failed, followed by a major crash in the stock market and in land values. On July 2, the central bank stopped supporting the baht because its reserves were depleted. At that point, the currency lost 16% of its value. The currency rate changed from 25 baht per dollar in June of 1997 to approximately 40 baht per dollar by November of this year (Sapsford, McDermott, and Williams, 1...