Compataive analysis of the forms and objectives of the United States and Japanese foreign aid to Thailand during 1970-1980

Abstract

Foreign aid has been an integral component in the relationship between the big developed country and the small developing countries for quite sometime now. But over the years, foreign aid had undergone a transformation that have turned it into an economically driven instrument, manipulated by the powerful doners to extract as much benefit as they can. Such self-interest has caused adverse effects on recipient economies, such as distorted economic policies, and over reliance on the donors. But despite its shortfall, foreign aid is still necessary for most third-world countries, as it offers them a lifeline, and buys them some time to cope with their problems. However, foreign aid is a double-edged sword that can help, or just as easily harm, a recipient economy, so careful consideration will have to be taken. This thesis attempts to identify, analyze and compare the foreign aid received by Thailand from the United States and Japan over the crucial period of the 1970s. This is because it seem that foreign aid had played a part in helping the Thai economic success of the 1980s, and the smooth transition from an agricultural economy to a rapidly industrializing one. Thailand although not a big recipient, was an aid recipient non-the-less and it seems she had more success than most, as evident from her impressive economic performance during the 1980s. It is questionable if this was a direct benefit from foreign aid, but this thesis argues that foreign aid, at least to a certain degree, contributed to Thailand's success, by providing a solid foundation upon which Thailand's growth and development was built upon. The United States and Japan, as the two biggest foreign aid donors of the world, naturally played a very influential role in Thailand. Their reasons for giving aid and the forms of their aid are undoubtedly different, but all contributed to Thailand's development. A close examination reveals that the U.S. main concerns and reasons for giving aid to Thailand was one of security, as evident from the dominant of military aid and the U.S. aid soaring to a peak during the Vietnam War, and dropping dramatically immediately after the War. Japan, on the other hand, seems to have a longer-term interest, undoubtedly because Thailand is home to many raw materials that are needed for the Japanese industries, and Thailand was also one of the few countries after the Second World War that did not have a negative sentiment towards Japan. The final analysis shows that Thailand's economic success had been based on the right combination of inputI, both from the United States and Japan, as well as the Thai government itself. If Thailand was the flower, then the United States was the soil, and Japan the water. Too much soil, or bad soil, i.e. tied-aid, will harm the flower, and too much water, i.e. investment, will have the same effect too. But with the right combination and conditions, the flower will blossom, and blossom, Thailand did. Both the American and the Japanese aidwere significant to Thailand's development and growth in their own ways, and it seemed they complimented each other well, and that without one or the other, the whole picture would have been a very different one indeed.