The manufacturing sector has become increasingly important to the Thai economy since the 1980s: in 1987 it comprised about 22 per cent of GDP and brought in 50 per cent of foreign exchange earnings. Manufactured exports largely consist of labour intensive industries, such as clothing and textiles, integrated circuit assembly and jewellery, which together accounted for around 54 per cent of manufacturing exports and 27 per cent of the country's total export earnings in 1987.

The clothing and textile industry has become particularly important to the Thai economy in recent years. Clothing and textile exports grew so rapidly that in 1985 they became the highest foreign exchange earning commodity. In 1986 the clothing and textile industries contributed about 26 per cent to GDP from manufacturing and had the highest employment share in the manufacturing sector with around 500,000 workers. In 1988 exports of textiles and clothing increased to $2.4 billion compared with $0.8 billion in 1984. (All dollar values are in U.S. dollars.) Since 1986 clothing exports have become the highest export commodity; the export value was $1.9 billion in 1988.

The clothing and textile industry is likely to become the largest manufacturing industry if Thailand follows the industrial development path of Japan, Hong Kong, the Republic of Korea and Taiwan.

Nominal protection has been high for clothing and textiles, and production capacity has been controlled to limit domestic competition. The tariffs on spinning, weaving, clothing and man-made fibres have been high. This could have been expected to restrict export growth. High protection on intermediate products such as fabric could have been expected to reduce the competitive edge of downstream industries, notably clothing. High tariffs on clothing suggested that there was no incentive to export. From 1978 to 1986, moreover, the production capacity of spinning and weaving was controlled. Neither expansion nor new establishments were permitted.