Thailand is parliamentary democracy with a constitutional monarchy. The king has ensured some political continuity, although there have been 17 military coups (the last in 1991) since the absolute monarchy was abolished in 1932. Civilian government was restored in 1973, but the administrations have tended to be short lived and unstable. In January 2001 a general election was held with a new electoral system, under which the number of seats in the House of Representatives (the lower house) was increased and it was ruled that members of parliament (MPs) must resign their seats in they accept cabinet positions. An Election Commission was formed and empowered to oversee polling and prevent fraud. The election resulted in a resounding victory for the newly formed Thai Rak Thai(TRT), under the leadership of a former telecommunications tycoon, Thaksin Shinawatra. Based traditionally on agricultural export, the Thai economy was transformed into one of the most diverse economies in South-east Asia in the 25 years to 1998. By the 1970s the active promotion of foreign investment had already created an industrial sector based on import substitution. In the 1980s an export-oriented manufacturing sector, based on labour-intensive output such as textiles and garments, began to develop. After 1990 the fastest growth was in higher- technology goods such as computer accessories and motor vehicle parts. Since 1996 successive governments have paid a high price for the earlier neglect of the need for structural reform, ranging from the fostering of backward industrial linkages the provision of higher education. This left industry unable to asborb the technology needed for higher value added production. In the 1990s pegging the baht to a strengthening Us dollar eroded the competitiveness of low-cost goods, and import-dependent high-technology products were unable to fill the gap. The ever-widening current-account deficit and dependence on short-term capital inflows to finance it paved the way for the currency turmoil of 1997-98. As export earnings fell and capital was withdrawn, Bank of Thailand (BOT, the central bank) data revealed that GDP contracted by 1.4% in 1997 and massive 10.5% in 199, compared with and average annual growth rate of 8.5% in 1990-96. After the crisis struck in mid-1997, consensus gathered around the need for prioritising structural reform. The subsequent recession forced some restructuring, but a steady recovery in 1999-2000 dulled reforms' zeal. In 2001 the slowing economy, driven by a downturn in export demand, refocused the administration on the need for structural reform, particularly on the need to invest in education, agriculture, technology and small to medium-sized enterprises. Robust economic growth in 2002-03 has again dampened the administration's willingness to push ahead with reforms.

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