Impacts of FTA on Economic and Social Variables Using CGE Model

The purposes of this study are to examine changes in Thailand's economic structure in order to design the proper and efficient policies of Free Trade Agreement (FTA), and to investigate the impacts of FTA between Thailand and the main exporting countries including China, the United States of America, Japan, Malaysia, and Hong Kong which mainly highlights the impacts on macroeconomic variables, sectoral production, social welfare, poverty, and income inequality. Research methodologies are the descriptive analysis, Revealed Competitive Advantage (RCA) Index, and Computable General Equilibrium (CGE) model.The results reveal that there is a significant change in Thailand's economic structure between 1961-2014. The proportion of agricultural output to Gross Domestic Product (GDP) dramatically declines as a result of slower increase of agricultural output compared to other sectors; meanwhile, the share of Thailand's GDP derived from industrial sector definitely increases as a result of the continual Thailand's national economic and social development plans since 1961 aimed at increasing the volume of light and heavy industries , the promotion of international trade, and Foreign Direct Investment (FDI) aimed at attracting investors from abroad, especially Japan. From CGE model, Thailand's real GDP is slightly increased due to an expansion of export after signing FTA with its main trading partners. However, the impacts on income inequality is still in question as the returns on unskilled labors is likely to be lower than skilled labor and capital owner. Thus, current government and trade negotiator should take social problems due to FTA in their mind prior to trade deal commitment