A collage with various landmarks from Thailand

Avoiding the middle-income trap and seeking competitiveness

Since the 1980s, the economic performance of Thailand has been largely dependent on exports and foreign investments. In the last three decades, the country successfully transformed its industry from agriculture to export-oriented manufacturing, becoming a key production base for leading Japanese, American and European automotive and electronics firms.

The country is however now at risk of falling into the 'middle-income trap', with firms struggling to compete in export markets against lower-cost producers elsewhere, and experiencing a slow-down in their growth rates. Recommendations from the Asian Development Bank (ADB) for Thailand to remain competitive include shifting towards knowledge-based economic activities and higher-quality jobs.

Creating the conditions for innovation

To fuel growth and drive productivity, creating the conditions for innovation has become an essential part of Thailand’s economic policy mantra. Since 2002, the Office of the National Economic and Social Development Board (NESDB) has embraced the notion of innovation as part of its long-term vision for development. To facilitate Thailand’s shift towards a more knowledge-based economy, the promotion of innovation was highlighted in the Ninth National Economic and Social Development Plan (2002-2006) as one of the key national guidelines for development in science and technology.

To tackle the potential economic slowdown that the middle-income trap can foster, the Thai Government launched the Thailand 4.0 campaign to promote an ‘innovation-driven economy’, focusing on ten targeted industries (including, among others, the digital economy, biofuels and biochemicals, smart electronics, and foods for the future). In parallel, the area-based Eastern Economic Corridor (EEC) has been tasked with fostering a new wave of foreign direct investment (FDI) to further enhance the innovation capacity of the country.

In 2018, the Thai Government launched the first-ever Thailand National Strategy (2018-2037), a plan that runs in line with Thailand 4.0 and the Eastern Economic Corridor (EEC) project, aimed at bringing Thai society into the digital world and achieving more advanced living standards. This has become the backbone of policies and structural shifts within the Thailand Government.

An innovation system in search of new opportunities

While several innovation programmes were launched over the last few years (e.g. Food Innopolis, Innovation Coupon, and Talent Mobility), Thailand’s innovation system is relatively limited compared with other Asian countries of similar size and level of development. Key constraints have been identified in the institutional system, budget allocation and human resources for innovation, but are yet to be tackled effectively. Nonetheless, progress made to address these challenges is fast catching.

Amid the growing interest in innovation policy and the current economic challenges, there is a real opportunity to support Thai policymakers to develop new capabilities by embedding new ideas or approaches within the various innovation programmes. The Frugal Innovation programme, for example, will create new possibilities for Thai policymakers to overcome shortcomings in areas such as innovation funding or ecosystem connections.

Authors

Florence Engasser

Florence Engasser

Florence Engasser

Senior Foresight Analyst

Florence is a Senior Foresight Analyst within Nesta’s Discovery Hub, which aims to create a link between Nesta’s current portfolio and our pipeline of future work.

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Benjamin Reid

Benjamin Reid

Benjamin Reid

Head of International Innovation - Development Programmes

Benjamin is head of the International Innovation team within Nesta's Policy and Research division, examining new global trends and practices in innovation, with an emphasis on emerging…

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Silvia Pau

Silvia Pau

Silvia Pau

Assistant Programme Manager, A Fairer Start mission

Silvia is an Assistant Programme Manager.

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Paulina Gonzalez-Ortega

Paulina Gonzalez-Ortega

Paulina Gonzalez-Ortega

Design Lead, International Innovation

Paulina was the Design Lead for the Global Innovation Policy Accelerator, a 14-country collaborative development programme for senior innovation policymakers.

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Nathan Kably

Nathan Kably

Nathan Kably

Senior Strategy Analyst

Nathan worked on the design and delivery of Nesta's strategy

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Anna Schlimm

Anna Schlimm

Anna Schlimm

Learning Experience Designer, Global Innovation Policy Accelerator

Anna was a Learning Experience Designer for the Global Innovation Policy Accelerator.

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