ABSTRACT
Thailand is a patient with flu and arthritis – the flu being an export slowdown caught from the global economy and the arthritis being the country’s own structural problems (Prasarn Trairatvorakul, ex-governor of the Central Bank of Thailand, cited in Suttinee Yuvejwattana 2015). In 2014, overseas export sales fell again for the second consecutive year. It was the first back-to-back decline in almost two decades, whereas Vietnam and the Philippines performed well. Thailand was also forecast to have the slowest economic growth in ASEAN apart from Singapore, which is the only nation in the region considered fully developed (Suttinee Yuvejwattana 2015). In this context, the chapter argues that if the Thai state cultivates no clear development strategy, Thailand will be ensnared in perpetuity in a middle-income trap and become a sick man of Asia. Indeed, the only clear economic strategy of Thai state today is export-oriented industrialization relying on labor-intensive industry. However, the global economic scenario has been subject to dramatic alteration over the past decade. Labor-intensive industry carries no innovation dynamic which is central to success in today’s global economy. Furthermore, with labor shortage in the country from demographic change, Thailand’s increasing labor costs are diminishing its competitiveness in relation to China, Vietnam and other ASEAN countries.
