"Triangle of Impossibility" Economic Model
The "Triangle of Impossibility" economic model theorizes that it is dangerous, if not impossible for a small economy to maintain three desirable (politically) yet contradictory national goals. When it does, the end result is a macroeconomic crisis like the one currently going on in Thailand today (Na Thalang, 1997, 14). The three paths that Thailand is pursuing, suggests Na Thalang, are a fixed foreign exchange regime, free capital movement, and an independent monetary policy. After a brief economic snapshot of Thailand, these three divergent paths will be explored to determine if: A) the theory is valid, and B) if it serves as a rational basis for understanding the economic crisis in Thailand.
Until this year, when most people heard the name Thailand, they had to be reminded it was once Siam. That usually triggered a mental connection to the musical comedy, "The King and I" which is an unfortunate homogenization of a thoughtful book by British teacher Anna Leuenowens, who was hired in the 1860s by Siam's forceful and Western-leaning king, Mongkut, to teach his royal children about the Western world. This, remember, was at a time when Siam's neighbors (Japan, China, Korea) had shut the doors to the outside world. Mongkut and his son who succeeded him were quick to open the nation to Western technology which helped develop an industrial base that includes textiles, cement, electronics, petroleum, refining, transportation equipment, tourism, food processing. Because of this openness, Siam was the only nation in Southeast Asia to escape colonial rule:
Thailand has not escaped military coupsCmore than a dozen since 1932, when a revolution transformed the government from an absolute to a constitutional monarchy. Resentment against leaders of the most recent coup, in 1991, sparked demonstrations by a pro-democracy movement. Investments from Japan, Taiwan, and South Korea powered ...