February 2008 - Sustaining strong economic performance by enhancing productivity through innovation, buttressed by higher rates of private investment, is an objective for the Thai economy and is reflected in the country’s Tenth Economic and Social Development Plan. This objective needs to be made central and urgent if Thailand is to join the ranks of the high income countries within the next two decades.

A handful of economies in East Asia, including the Republic of Korea, Taiwan (China) and Singapore, have already made the transition to high levels of per capita income. For Thailand to emulate some of the more successful economies in the region, it must embrace the challenge of achieving rapid growth led by gains in productivity. The measures proposed in this report and the further analytic work which it highlights should help Thailand reach this objective in an increasingly competitive global environment.

Promoting innovation as a key source of future Total Factor Productivity growth is a high priority policy objective. Other middle-income countries are racing to establish niches where they acquire technological leadership and scale-economies to drive productivity growth, as well as raise incomes. Thailand cannot afford to fall behind in this race, especially if it wants to avoid the fate of many middle-income countries in Latin America and Middle-East that have already experienced economic stagnation. The competition facing Thailand today is intense and the time for action is now.