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

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  • Ramstetter, Eric D.

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.

Suggested Citation

  • Ramstetter, Eric D., 2024. "Stories about Institutions and Patterns of Slow Economic Growth from 21st Century Thailand," AGI Working Paper Series 2024015, Asian Growth Research Institute.
  • Handle: RePEc:agi:wpaper:02000104
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    More about this item

    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;
    All these keywords.

    JEL classification:

    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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