Thailand: From Investment-led Growth to Innovation-led Growth

The development strategy with focus on private investment in Thailand could be traced back to the first National Economic and Social Development Plan (1961–66), which underscored the role of private sector in industry and commerce. It was laid down that the government would operate only in those areas where the private sector was not equipped, such as the development of infrastructure. This approach towards private investment continued in the subsequent plans and later the liberal approach was extended to foreign capital. Thus, Thailand has a longer history of liberal trade and investment policies as compared to ASEAN New Comers like Cambodia, Laos, Myanmar and Vietnam. This development strategy is shown to have enabled the Thai economy to record remarkable growth rate (Jitsuchon and Sussangkarn 1993, Jitsuchon 1994) as compared to many other developing countries and not to speak of ASEAN New Comers. During 1960–73, for example, the Thai economy recorded an annual average growth rate of over 8 per cent. Though the recorded growth rate in the following decade (1974–85) was slightly lower (6.3 per cent), there was a marked revival during 1986–96 with an annual average growth rate of over 9 per cent without any parallels in the rest of the world. This was followed by the financial crisis resulting in a negative growth rate (–0.9 per cent) during 1997–2000.