Strengthening innovation in science and technology is essential if Thailand wants to move up the value chain from resource-driven growth, using low-cost labour and capital, to productivity-driven growth.
The National Science Technology and Innovation Policy Office (STI) has outlined strategies in its National STI Policy and Plan 2012-21 to help the country make the transition and escape the middle-income trap. In fact, the country has been in the lower-middle income club for more than 20 years and was only upgraded in 2011 to upper-middle income by the World Bank. With average per capita income of US$4,210 per year, Thailand is still far from achieving high-income status. (The World Bank defines upper-middle income as ranging from $3,976 to $12,275 and high-income $12,276 or more).
Innovation almost always tops the list of factors that ensure high and sustainable long-term growth. An innovative company or economy commands high productivity, measured by total factor productivity (TFP) in growth accounting and is thus competitive in the global market. Countries that have not been caught in the middle-income trap typically display high TFP growth spanning several decades, usually associated with their continued accent in the product cycle. Thailand certainly does not fit such a profile yet.
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