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Thailand

Skilled workforce and strong R&D keys to Thailand 4.0 success

Dilaka Lathapipat's picture



Several of the government’s recent economic initiatives have the potential to kick-start Thailand’s economy. To achieve the economic transformation it has been aspiring for, having a skilled workforce and much more strategic investments in research and development (R&D) will be important.

Following nearly four decades of impressive economic growth at 7.7 percent, the Thai economy has slowed sharply to 3.3 percent over the last decade from 2005-2015. At this rate of growth, it would take Thailand well over two decades to achieve high-income status.

A new World Bank report “Getting Back on Track: Reviving Growth and Securing Prosperity for All” cites that a main reason for the slowdown is a loss of competitiveness.

Ten years ago, Thailand was ahead of its neighbors and peers on virtually all the competitiveness indicators tracked by World Economic Forum in its Global Competitiveness rankings.

Today, other middle-income countries have caught up, while more advanced economies in the region have surged further ahead, particularly in technological readiness, higher education and training, innovation, financial market development, institutions, and business sophistication.

Looping in local suppliers rather than forcing out international firms

Anabel Gonzalez's picture



An instructor at the Savar EPZ training center in Dhaka, Bangladesh, helps young women being trained to make shirts. Photo Credit: © Dominic Chavez/The World Bank


Increasing economic prosperity for developing countries is related not only to rising trade, but also – and more important – to transforming the traditional composition of what they produce and export. In the world today, many developing countries strive to diversify away from exporting commodities toward higher-value-added goods and services.

The evolution of trade and investment flows over the last three decades shows that foreign direct investment (FDI) can be a powerful driver of exports, a creator of well-paid new jobs and a crucial source of financing. More important, FDI may become a very rapid and effective engine to promote the transfer of technology, know-how and new business practices, helping to raise productivity and setting a country on the course of convergence. This is particularly the case of efficiency-seeking FDI – that is, FDI that locates productive processes in a country seeking to enhance its ability to better compete in international markets-.
 
The benefits of FDI are further leveraged when local firms can catalyze the presence of foreign investors to connect to global and regional value chains (GVCs). As a result of new international firms investing in a host country, great new opportunities arise for local enterprises to supply the inputs – be it goods or services – that their international counterparts need.

This has been the experience of Bangladesh, where local suppliers have grown in tandem with foreign investors in the garment sector. It is through linkages with international investors that local firms can gradually be lured into producing new goods and services that, until then, were not produced in the host country.  This is how economic diversification and greater value added are generated.

Multinational enterprises (MNEs) and their key partners (Tier 1 suppliers) are generally keen to source locally if a competitive local supplier can be found. However, they are also reluctant to absorb high search-and-find costs, and they will typically not invest in assisting local suppliers with upgrading efforts. Likewise, local firms are generally keen to supply to foreign firms, but are often not ready to make the necessary investments in technology and in processes to meet strict quality standards without a clear line of sight on potential payoff for such investment.

Providing better education for children in Thailand’s small schools

Lars Sondergaard's picture



During a recent trip to Udon Thani, we visited several small schools in the outskirts of the city. In several ways, these small schools were typical of Thailand’s 15,000 schools with less than 120 students.
 
In past decades, the schools had nearly three times as many students but, over time, their enrollment numbers had gradually fallen as a result of shrinking birth numbers; and with better roads that allowed some families to place their children in better schools located in Udon Thani city itself.  
 
Several other schools were located in their close vicinity. In fact, a total of seven schools – many of which had also shrunk into small schools – were now located within a 3-kilometer radius.
 
The schools struggled to provide quality education for their students because they had a hard time attracting and retaining qualified teachers. During our visit, the principal of one of the schools explained that the school had no qualified English language teacher and that many of their teachers were recent, and mostly inexperienced university graduates. The principal feared that many of these new teachers would only stay at the school for a short while before seeking to move to Udon Thani city or another urban area, and to teach at a city school.

Which region in the world has the smartest kids? According to the OECD, it’s East Asia

Harry A. Patrinos's picture
Students from Tran Dai Nghia High School near Can Tho, Vietnam (Photo: D7K_4030 by makzhou, used under CC BY-NC 4.0 / cropped from original)


With the release last month of the latest PISA (Program for International Student Assessment) results by the OECD (Organisation for Economic Co-operation and Development), it is apparent that many of the highest achieving students in the world are in East Asia.
 
Just as in the recently released TIMSS (Trends in International Mathematics and Science Study) results, Singapore leads the world in every subject in PISA, outperforming other economies and countries by a significant margin. Students in Singapore perform at a level that is up to two years ahead of their regional and OECD counterparts in science, mathematics and reading. Moreover, almost all Singaporean students have reached a basic level of proficiency or higher. And they just keep getting better, having significantly reduced performance below basic proficiency.
 
Japan also outperforms most participating economies in science, mathematics and reading. However, its score in reading has declined since the last round. Still, as in Singapore, 90% of students have reached a basic level of proficiency or above.

Services as a new driver of growth for Thailand

Ulrich Zachau's picture

There’s a good chance you work in the service sector. Services account for 17 million jobs in Thailand, or approximately 40 percent of the Thai labor force. It encompasses diverse industries such as tourism, retail, health, communications, transportation and many sought-after professions such as architects, engineers, lawyers and doctors. Many Thai parents aspire for their children to join the service sector, and the sector carries many of Thailand’s economic hopes and ambitions.

2016: A unique opportunity to get it right on forests and climate change

Ellysar Baroudy's picture
Moniz Phu Khao Khouay, Vientiane Province
Forest monitoring efforts in Phu Khao Khouay, Vientiane Province, Laos PDR. Photo credit: Hannah McDonald

If ever there was a year to make significant progress on forest conservation and climate change, it was 2016. Coming on the heels of the historic COP21 Paris Agreement, 2016 was a year to demonstrate the commitment the World Bank Group has to support countries as they take forward their nationally determined contributions to address our global climate change challenge. It’s gratifying to look back on 2016 and feel that we contributed to harnessing this momentum and sense of urgency; especially in showing how sustainable land use, including sustainable forest management, is critical to achieving the ambitious targets set out in the Paris Agreement.

Is public procurement a rich country’s policy?

Simeon Djankov's picture
Kazakhstan. Photo: Kubat Sydykov / World Bank

How large is the share of public procurement to GDP in middle-income and low-income countries and how it is evolving? If sizable, can public procurement be used as a policy tool to make markets more competitive, and thus improve the quality of government services? Can it be used to induce innovation in firms? Can it also be a significant way to reduce corruption?

Embracing diversity through new LGBTI surveys in Thailand

Piotr Pawlak's picture
Photo: Talashow / Shutterstock


Social inclusion: a core development objective in its own right, the foundation for shared prosperity, and a major player in poverty alleviation.
 

 
As we observe the International Day for Tolerance this month, let’s remind ourselves that tolerance for diversity represents the first step on the path to social inclusion, and that diversity should not just be tolerated—it should be embraced and celebrated.
 
Yet, around the world, lesbian, gay, bisexual, transgender or intersex (LGBTI) people confront multifaceted challenges that prevent them from fully participating in markets, services, and spaces. In some countries, although tolerated, these groups are often at risk of increased discrimination, exclusion, violence, and other vulnerabilities. This robs them of dignity and prevents them from capitalizing on opportunities to lead a better life.
 
For instance, Thailand is a country with multiple regional linguistic, geographical and socio-economic diversities, natural beauty and historical riches, and many localized traditions and cultural practices. Often called the “Land of Smiles,” Thailand, in the eye of the outsider, is a paradise of tolerance, where many sexual orientations and gender identities/expressions are truly to be seen. However, while the demand and support for positive self-identity are growing in Thailand, people with diverse sexual orientations, gender expressions, and identities experience varying degrees of social inclusion.

The FinTech revolution: A perspective from Asia

José de Luna-Martínez's picture



Will cash and checks still exist 15 or 20 years from now given the increasing digitization of money? Is the smartphone our new bank? Will many people working in the financial sector industry lose their jobs due to growing use of technology, robots, algorithms, and online banking? Is financial technology (FinTech) the solution to providing financial services to the 2 billion people in the planet that still lack access to finance? Will digital currencies and other innovative FinTech products pose systemic risks in the future? What is the best approach to regulate FinTech companies?

Thailand’s small school challenge and options for quality education

Dilaka Lathapipat's picture



Despite Thailand’s success in expanding educational access, new empirical evidence suggests that much more needs to be done to maximize the potential of its students. The 2012 PISA reading assessment reveals that almost one-third of Thai 15 year-old students were “functionally illiterate,” lacking critical skills needed for employment tasks that require reading skills beyond a basic level. Furthermore, the performance gap among schools has been widening in recent years. Unsurprisingly, the disadvantaged and poorer-performing students are concentrated in small rural village schools.


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