PUBLICATIONS & REPORTS

Contents Introduction

This essay examines how institutions and economic trends have evolved during a period of slow economic growth after 2006, focusing on comparisons to 2000-2006, when the economy recovered from the Asian financial crisis, and the economic boom during 1990-1996. Private fixed investment declined sharply and remained low after 1996, contributing to relatively low growth. Institutional instability, particularly in political and financial markets, increased investor uncertainty and contributed to low growth. In contrast, important improvements in infrastructure, labor productivity and wages, education, health, and poverty reduction continued to boost growth after 2006. Income distribution among households and regions also tended to improve, although changes were small. Thailand’s large international trade, policies that limit both import and domestic competition, and the need to strengthen environmental protection present important policy challenges. The political alignments after the 2023 election offer hope that political parties and other political institutions can mature, stabilize, and help promote rebounds in private investment and growth, while helping promote further gains in education, health, and human capital formation. Literature on development and growth emphasizes the key roles of strengthening and stabilizing institutions that foster peace (the lack of violence, actual or threatened) and human capital formation (through healthcare, education, etc.) because positive externalities are often large in related markets. Fostering continued wage increases driven by corresponding increases in labor productivity (benefitting both producers and consumers) is another important challenge for high-income developing economies like Thailand.