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Labor-intensive industries in middle-income countries: traps, challenges, and the local garment market in Thailand

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  • Kenta Goto
  • Tamaki Endo

Abstract

How can labor-intensive industries in middle-income countries avoid the ‘middle-income trap’ and evolve as dynamic industries? This article addresses this question by focusing on the local garment industry in Thailand. Thailand's garment industry became fully integrated into international production networks in the 1980s, and was once among the main drivers of its manufacturing-based export growth. However, with rising wages and labor shortages, there is strong need to upgrade and shift from labor-intensive assembly to higher value-added functions. In contrast to the export-oriented sector, the local garment markets are primarily served by small informal garment suppliers. Nevertheless, some of the suppliers undertake functions that are typically more knowledge intensive, including designing and marketing. In this context, this paper discusses what implications this local-based industry has in overcoming possible middle-income traps, and suggests that domestic oriented policies could play key roles.

Suggested Citation

  • Kenta Goto & Tamaki Endo, 2014. "Labor-intensive industries in middle-income countries: traps, challenges, and the local garment market in Thailand," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 19(2), pages 369-386, April.
    • Handle: RePEc:taf:rjapxx:v:19:y:2014:i:2:p:369-386
    DOI: 10.1080/13547860.2014.880283
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    References listed on IDEAS

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    1. Archanun Kohpaiboon & Pisut Kulthanavit & Juthathip Jongwanich, 2012. "Structural Adjustment and International Migration: An Analysis of the Thai Clothing Industry," Oxford Development Studies, Taylor & Francis Journals, vol. 40(2), pages 231-260, June.
    2. Giuliani, Elisa & Pietrobelli, Carlo & Rabellotti, Roberta, 2005. "Upgrading in Global Value Chains: Lessons from Latin American Clusters," World Development, Elsevier, vol. 33(4), pages 549-573, April.
    3. Suphat Suphachalasai, 1990. "Export growth of Thai clothing and textiles," The World Economy, Wiley Blackwell, vol. 13(1), pages 51-73, March.
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    Cited by:

    1. Samutpradit, Saisawat, 2024. "Employment effects of minimum wages in a dual economy: Evidence from Thailand," Journal of Development Economics, Elsevier, vol. 168(C).
    2. Tiara Maharani & Maman Setiawan, 2019. "The Relationship Between Labor Wage and the Labor Productivity of the Indonesian Textile and Garment Industry," Working Papers in Economics and Development Studies (WoPEDS) 201902, Department of Economics, Padjadjaran University, revised Jan 2020.

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