Thailand’s Path to Economic Recovery and Advancement: Diagnostic Study on the Middle Income Trap and Prospects for Post-Covid Economic Growth
Keywords:
thailand, economic development, development policy, productivity, inequalityAbstract
For more than a decade before the Covid-19 pandemic and recession, Thailand was moving into a more advanced development phase. Unable to sustain growth based primarily on cheap labor and capital accumulation, the country needed to transform to a more knowledge- based, innovation-driven economy able to compete in the rapidly evolving global economy. Yet, structural transition to this new phase has been difficult and slow. Unfortunately, the current crisis will make this problem worse. Following an initial surge in growth as the economy recovers, the long-term problem of flattening productivity and slow growth will almost certainly reemerge to threaten future prosperity. Thailand needs to accelerate the pace of reforms essential to encourage industrial upgrading. A diverse set of challenges need to be addressed to restructure the Thai economy. This paper focuses on three reforms necessary for lowering the limits on future growth: 1) speeding up the pace of innovation, 2) removing constraints to competition, and 3) reducing inequality.
References
Amares, N. & Manopiyaanan, W. (2015). Labor Movement and Thailand’s Competitiveness, BOT Focused and Quick FAQ, 92, November. (In Thai)
Apaitan, T., Disyatat, P. & Samphantharak, K. (2016). Dissecting Thailand's International Trade: Evidence from 88 Million Export and Import Entries, PIER Discussion Paper, No. 43.
Apaitan, T., Ananchotikul, N. & Disyatat, P. (2017). Structural Transformation in Thailand: A Perspective Through Product Innovation, Working Paper, Puey Ungphakorn Institute for Economic Research (PIER).
Apaitan, T., Banternghansa, C., Paweenawat, A. & Samphantharak, K. (2019). Towards a Competitive Thailand: The Role of Market Power and Business Dynamism, manuscript.
Arnold, E., Bell, M., Bessant, J. & Brimble, P. (2000). Enhancing Policy and Institutional Support for Industrial Technology Development in Thailand. Volume 1. The Overall Policy Framework and the Development of the Industrial Innovation System. Project Report. Brighton: Technopolis.
Bank of Thailand (2019). Aging Society and Thai Labor Market Challenge, Economic Structure with Policy Implication Research Program, Monetary Policy Section. [in Thai]
Banternghansa, C. & Samphantharak, K. (2019). Understanding Corporate Thailand II: Ownership Networks. PIER Discussion Paper.
Banternghansa, C., Samphantharak, K, & Paweenawat, A. (2019). Understanding Corporate Thailand I: Finance. PIER Discussion Paper No. 112.
Bresnahan, T. & Gambardella, A. (eds.). (2004). Building High-Tech Regions., Cambridge: Cambridge University Press.
Chantapong, S. et al. (2015). Thai Economy’s Structural Adjustment Process: An Analysis from Labor Market Perspective, Bank of Thailand’s Research Program on Thailand’s Future Growth, Bank of Thailand. (In Thai)
Chantapong, S. & Lertpeantham, K. (2018). Skills Mismatch Trap and Challenges of Education 4.0, MPG Economic Review, July 2018, The Bank of Thailand. (In Thai).
Chantapong, S. & Pornpatanapaisankul, K. (2019). Skill upgrade: Big Question in Techological Disruption Era, Bank of Thailand. (In Thai)
Charoenporn, P. (2017). Research Direction for Overcoming the Middle Income Trap, Strategic Research Issue: SRI-12, Thailand Research Fund. (In Thai)
Cirera, X. & Maloney, W. (2017). The Innovation Paradox: Developing Country Capabilities and the Unrealized Promise of Technological Catch-Up. Washington, DC: World Bank.
Credit Suisse (2018). Global Wealth Databook 2018. Zurich: Credit Suisse Research Institute.
Doner, R., Intarakumnerd, P. & Ritchie, B. (2013). University- Industry Linkages in Thailand: Sources of Weakness in Economic Upgrading, Science, Technology and Society, 18(2), 213-229.
Frey, C. & Osborne, M. (2013). The Future of Employment: How Susceptible Are Jobs to Computerisation? manuscript, Oxford Martin School, The University of Oxford.
Goni, E. & Maloney, W. (2014). Why don't poor countries do R&D ?, Policy Research Working Paper No. 6811. Washington, DC: World Bank Group.
Goni, E. & Maloney, W. (2017). Why don’t poor countries do R&D? Varying rates of factor returns across the development process. European Economic Review, 94(C), 126-147.
Intarakumnerd, P. (2018). Mismanaging Innovation Systems: Thailand and the Middle-income Trap. Routledge.
Intarakumnerd, P. (2019). Thailand’s Middle-Income Trap: Firm’s Technological Upgrading and Innovation and Government Policies, Seoul Journal of Economics, 32(1), 107-135.
Jitsuchon, S. (2012). Thailand in Middle-Income Trap. TDRI Quarterly, 27(2), 13-20.
Jitsuchon, S. (2013), Public Policy for Breakthrough Growth, Thai Universities for Healthy Public Policies, Thai Health Promotion Foundation. (In Thai)
Jitsuchon, S. (2020). Thai Inequality 2020: What We Should Know, Bangkok Post, January 22nd, 2020.
Jitsuchon, S. & Bisonyabutr, N. (2013). New Development Model: Towards Quality Growth Based on Productivity Improvement, TDRI Yearly Conference 2013, Bangkok: Thailand Development Research Institute. (In Thai)
Lall, S. (2000). The Technological Structure and Performance of Developing Country Manufactured Exports, 1985-1998, QEH Working Paper Series, no.44
Laovakul, D. (2016). Concentration of Land and Other Wealth in Thailand, in Pasuk Phongpaichit, P. and Baker, C. (Eds.) Unequal Thailand: Aspects of Income, Wealth, and Power, 32–42. Singapore: NUS Press.
Lathapipat, D. (2011), Education Opportunity Inequality and Wage Trends in Thailand, in Puapongsakorn, N. (ed.) Report on Thai Livelihood in Two Decades of Development.
Lee, K., Wong, C. Y., Intarakumnerd, P. & Limapornvanich, C. (2018). Is the Fourth Industrial Revolution a Window of Opportunity for Upgrading or Reinforcing the Middle-Income Trap?: Asian Model of Development in Southeast Asia, Journal of Economic Policy Reform, Forthcoming.
Leepipatpaiboon, P. & Thongsri, N. (2018). Industrial Robots and Its Impacts on Labor Market, manuscript, The Bank of Thailand. (In Thai)
Paweenawat, S., & Vechbanyongratana, J. (2013). Over‐Education in Thailand. Paper presented to ANU‐DPU Conference on Education and Labour Market Outcomes, Bangkok, March 18–19.
Paweenawat, S., Devahastin Na Ayudhya, C., Wasi, N., Treeratpituk, P. & Nittayo, C. (2019). Have We Reached Our Potential? A Perspective from Worker- and Firm- Level Data, manuscript.
Paweenawat, S. & Vechbanyongratana, J. (2018). Private Returns to STEM Education and Implications for Middle-Income Trap Countries: Evidence from Thailand, Working Paper.
Pholpirul, P. & Rakumnuaykit, P. (2016). Human Capital and Labor Productivity in Thailand’s Manufacturing Sector, Thailand Research Fund. (In Thai)
Phongpaichit, P. (2011). Inequitable and Unsustainable: The Thai Economy at Another Cross Road, presented at a conference on ‘Thailand Update’, Australian National University, September.
Phongpaichit, P. (2016). Commentary Note on Thailand’s Current Inequality Situation and Its Prospects, Thammasat Review of Economic and Social Policy, 2(1), 4-16.
Phongpaichit, P. & Benyaapikul, P. (2013). Political Economy Dimension of a Middle Income Trap: Challenges and Opportunities for Policy Reform: Thailand, Bangkok: The Asia Foundation.
Pitidol, T. & Techasunthornwat, C. (2017). Growth and the Anti-democratic Sentiment of Upper- middle Class in Thailand, Thai Research Fund. (In Thai)
Pootrakul, K. (2013). The quality of growth from the perspective of income distribution: problems and solutions. Paper presented at the Bank of Thailand annual seminar, 19 September. (In Thai)
Samphantarak, K. (2020). Thailand’s Corporate Sector and International Trade, in Chachavalpongpun, P. (Ed.) Routledge Handbook of Contemporary Thailand. New York: Routledge.
Satimanon, T. (2017). Thailand’s Labor Mismatch: Contemporary Situations and Solutions, NIDA Case Reseasrch Journal, 9(1), 1-38.
Satitniramai, A. (2020). Thai State Formation and the Political Economy of the Middle Income Trap, in Chachavalpongpun, P. (Ed.) Routledge Handbook of Contemporary Thailand. New York: Routledge.
Tangkijvanich, S., Ratanakumfu, S. & Rakkiatwong, N. (2013). Toward Innovation and Technological Development of Manufacturing Sector, TDRI Yearly Conference 2013, Bangkok: Thailand Development Research Institute. (In Thai)
Wang, S., Hansl, B., Milne, P., Zaidi, S. & Yang. J. (2020). Taking the Pulse of Poverty and Inequality in Thailand, Washington, D.C.: World Bank Group. http://documents.worldbank.org/curated/en/614661586924075867/Taking-the-Pulse-of-Poverty-and-Inequality-in-Thailand
Warr, P. (2020). Economic Development of Post-war Thailand. in Chachavalpongpun, P. (Ed.) Routledge Handbook of Contemporary Thailand. New York: Routledge.
World Economic Forum (2018a), The Future of Jobs Report 2018, Geneva: World Economic Forum.
World Economic Forum (2018b), The Next Economic Growth Engine: Scaling Fourth Industrial Revolution Technologies in Production, Geneva: World Economic Forum
World Bank (2016). Getting Back on Track: Reviving Growth and Securing Prosperity for All, Thailand Systematic Country Diagnostic. Bangkok: World Bank Group.
