Thailands Middle-Income Trap: Firms Technological Upgrading and Innovation and Government Policies

Abstract

Once recognized as a high-performing newly industrializing economy, Thailand is currently in the middle-income trap. The country has remained at the middle-income level for more than 15 years. A major reason for such development is a relatively low technological learning of firms in Thailand. After a financial crisis in 1997, certain improvements transpired; for example, transnational corporations and large local firms started to invest increasingly in building rather sophisticated technological capabilities in product and process design, advanced engineering, and R&D. However, Thailand is still lacking a critical mass of innovative firms, which can pull the country out of the trap. On the government side, perpetuated ineffective science, technology, and innovation policies have been implemented for several decades.