Understanding the Impact of Multi-Nodal Urban Systems on Thailand's Urban Economies: Insights from a Dynamic Recursive Spatial General Equilibrium Model

Putu Sanjiwacika Wibisana and Steven Louis Rubinyi

No 11437, Policy Research Working Paper Series from The World Bank

Abstract: Thailand's transition to high-income status is, at its core, an urban challenge. Bangkok generates nearly half of the national gross domestic product, yet its dominance is increasingly constrained by congestion, environmental stress, and diminishing returns to further concentration. Successive National Spatial Development Strategies have called for a more multi-nodal urban hierarchy, but the analytical basis for evaluating that ambition has remained thin. This paper builds and calibrates a Dynamic Recursive Spatial Quantitative General Equilibrium model for Thailand's urban system from 2025 to 2050, and uses it to evaluate three counterfactual policy portfolios that allocate the same aggregate productivity-investment envelope (roughly 2.3 percent of 2030 urban gross domestic product) across Bangkok and the eleven designated secondary cities in different proportions: a Bangkok-leaning portfolio (80/20), a balanced portfolio (50/50), and a secondary-leaning portfolio (20/80). The Bangkok-leaning portfolio leads through 2045, but the secondary-leaning portfolio overtakes it between 2045 and 2050, delivering a 12.38 percent gain in national gross domestic product per capita above the no-investment baseline against 11.62 percent for the Bangkok-leaning alternative. The balanced portfolio is dominated by both skewed alternatives in 2050, reflecting a threshold property of agglomeration economies. A two-dimensional envelope-by-split sweep shows that the relative ranking is genuinely contingent on the scale and horizon of the commitment: below a certain tipping point, the Bangkok-leaning portfolio dominates; above it, the secondary-leaning portfolio does. A modest, well-allocated spatial-investment program is unlikely to be the engine of Thailand's high-income transition; sufficient scale of commitment is a precondition.

Date: 2026-08-10
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