State, capital and labour: Reinterpreting the middle income trap in Thailand

Abstract

Despite generally stellar economic growth over the last several decades, Thailand has struggled to participate in higher-value-added activities that require increasingly more sophisticated technologies and higher quality human capital. This has led analysts to question whether Thailand is stuck in a middle-income trap. This chapter attempts to unpack this issue from a labour-centric perspective. It does so through a historically and politically informed reading of the existing literature in development studies and public policy. The chapter's core argument is that Thailand is likely to remain stuck in the middle-income trap because of its decadeslong reluctance to more actively engage labour in its industrialisation process, thereby stunting long-term skills formation. Although considerable progress has been attained with labour mainly relegated to a sideshow, recent challenges suggest that some bolder policies to more properly include labour into political and economic decisions are to be considered more seriously. One of the most practical policy measures is to experiment with a Nordic model, combining the interests of state, capital and labour, in one or two industries where the adjustment cost (from the current model where labour is given less weightage) is relatively minor. Depending on the success and speed by which the implementation is conducted, one can then expand such policies to other 'more sensitive' industries at a national and/or regional level.