Thammasat Review of Economic and Social Policy

Innovation and Productivity in the Service Sector: The Case of Thailand

Peera Charoenporn, Supawat Choksawatpaisan — Tue, 05 Mar 2024 00:00:00 +0700

Various literature investigates the determining factor of research and development (R&D) and the impacts of R&D on firms' innovation performance and productivity. However, most available studies focus on manufacturing firms; little is considered about firms in the service sector. The gap is more evident in the case of service firms in developing countries. This study analyzes the data from the Thailand R&D/Innovation Survey 2011–2018 and applies a structural model that describes the link between R&D expenditure, innovation output, and productivity (the CDM model). The study found a link between R&D activities, innovation output, and productivity in the service sector. The results show that firms with higher R&D intensity tend to offer superior innovation performance. Firms' characteristics and behavioral factors, such as size, openness strategy, foreign share, and exporting behavior, increase the propensity to invest in R&D activity. In addition, innovation output has a positive impact on firm productivity. This study highlights the importance of promoting R&D activities and innovation as the basis for improved productivity of service firms in Thailand and highlights some differences in R&D activities and innovations between the service sector and the manufacturing industry.

The CPTPP and Vietnam: Impact, Covid-19 Pandemic and Causes of Resilience

Tran Van Hoa, Jo Vu, Pham Quang Thao — Tue, 05 Mar 2024 00:00:00 +0700

The paper assesses, using national accounting and UNCTAD data, the impact of the CPTPP on Vietnam since its ratification on 14 January 2019, through the Covid-19 pandemic and the country’s surprising observed resilience. It first briefly summarises the main features of the CPTPP and then discusses the empirical evidence of the major effects on Vietnam through three main pillars of open-market growth (commodity trade, foreign direct investment, and service trade) that the country had experienced to 2023. It finally analyses useful lessons learned to enhance the agreement’s major benefits or to mitigate the consequences of adverse crises. Importantly, it suggests the opportunities and challenges not only for Vietnam but also for potential new participating members.

Fostering Active Ageing in Thailand's Informal Economy: A Policy Imperative

Euamporn Phijaisanit — Tue, 05 Mar 2024 00:00:00 +0700

Ageing societies pose a unique challenge for Thailand, where a large informal sector excludes most workers from mandatory retirement ages and social security coverage. While extending retirement ages is a pertinent consideration for the formal sector, policy considerations should also encompass the informal sector. Specifically, policies should strive to enhance the physical and cognitive abilities of older workers in the informal sector through appropriate guidance, empowering them to prolong their working years and bolster their financial security. Despite the availability of voluntary social security schemes, enrollment rates among informal workers remain low due to a combination of factors, including lack of awareness, perceived benefit inadequacy, financial burden, and reliance on alternative social welfare programs. Even those receiving the government's old-age allowance may struggle financially.

This article highlights the underutilized potential of Thailand's extensive informal sector as a source of employment opportunities for older adults. Despite cross-country data suggesting a positive association between a large informal sector and high elderly employment rates, Thailand's labor force participation rate (LFPR) for individuals aged 65 and above remains comparatively low among similar developing nations. Furthermore, the LFPR decline for people transitioning from age group 55-64 to 65 and above is sharper in Thailand than in many other countries. The Active Ageing Index (AAI) can serve as a tool to investigate the factors contributing to Thailand's relatively low old-age LFPR by evaluating active ageing scores across various aspects. By identifying the missing elements in specific localities, the AAI and its sub-indices can guide local-area policy prioritization to address these gaps and enhance national policy effectiveness in promoting higher LFPR in old age. Fostering an active-ageing ecosystem within the informal sector will empower older individuals to continue working for longer periods and mitigate poverty risks in their later years.

EDITORIAL INTRODUCTION

Pornthep Benyaapikul — Tue, 05 Mar 2024 00:00:00 +0700