Stories about Institutions and Patterns of Slow Economic Growth from 21st Century Thailand

Eric D. Ramstetter

No 2024015, AGI Working Paper Series from Asian Growth Research Institute

Abstract: This essay examines how institutions and economic trends have evolved during a period of slow economicgrowth after 2006, focusing on comparisons to 2000-2006, when the economy recovered from the Asianfinancial crisis, and the economic boom during 1990-1996. Private fixed investment declined sharply andremained low after 1996, contributing to relatively low growth. Institutional instability, particularly inpolitical and financial markets, increased investor uncertainty and contributed to low growth. In contrast,important improvements in infrastructure, labor productivity and wages, education, health, and povertyreduction continued to boost growth after 2006. Income distribution among households and regions alsotended to improve, although changes were small. Thailand's large international trade, policies that limit bothimport and domestic competition, and the need to strengthen environmental protection present importantpolicy challenges.The political alignments after the 2023 election offer hope that political parties and other politicalinstitutions can mature, stabilize, and help promote rebounds in private investment and growth, while helpingpromote further gains in education, health, and human capital formation. Literature on development andgrowth emphasizes the key roles of strengthening and stabilizing institutions that foster peace (the lack ofviolence, actual or threatened) and human capital formation (through healthcare, education, etc.) becausepositive externalities are often large in related markets. Fostering continued wage increases driven bycorresponding increases in labor productivity (benefitting both producers and consumers) is anotherimportant challenge for high-income developing economies like Thailand.

Keywords: JEL classfication: O53; O11; O12; O15; O24; O25; O43; O44; Thailand; Institutions; Economic Growth; Physical & Human Capital Formation; Income Distribution; Industrial & International Trade Policies (search for similar items in EconPapers)
Date: 2024-07
New Economics Papers: this item is included in nep-gro and nep-sea
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