# Driving economic growth through quality jobs

- Link: https://www.thailand-business-news.com/economics/282484-driving-economic-growth-through-quality-jobs
- Published: 2026-07-21T07:05:24+07:00
- Author: Thailand Development Research Institute

* Thailand’s economy has slowed sharply over decades, with growth falling from 
   around 7% to roughly 2%, driven by repeated crises, structural weaknesses, and
   a shifting global trade environment. Stagnation has worsened household debt, 
   suppressed wages, deepened inequality, and contributed to broader social and 
   institutional problems.
 * The author argues that stimulus spending alone is insufficient and that Thailand
   must reform its production base across agriculture, industry, and services. Priorities
   include modernising farming toward high-value outputs, expanding film and food
   sectors, linking foreign investment to local supply chains, and improving labour
   force participation and productivity to raise growth potential toward 4.7%.

Thailand’s economy, once a regional powerhouse, is now gasping for air. Yet the 
next wave of growth is within reach. With the right fuel and new engines, we can
regain momentum. But first, we must understand what went wrong.

Economies rarely collapse overnight. They fade when they cannot recover from shocks
or adapt to new realities. That is Thailand’s story. 

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Repeated crises — from the 1997 Tom Yam Kung crash and the 2008 financial crisis
to the Covid-19 pandemic — pushed growth from 7% to 5%, then below 4%, and now just
around 2%. During the Covid years, growth per person was only 0.1%.

Meanwhile, global trade has flipped. The era of globalisation is giving way to geopolitical
rivalry and protectionism. With outdated engines, Thailand has slipped to the bottom
of Asia; only Japan grows more slowly. Stay on this path, and Vietnam’s per-capita
income will overtake ours within 20 years. The middle-income trap will tighten. 
High-income status will drift out of reach.

### Systems crack

When growth stalls, households feel it first. Inequality ensures that. Household
debt now exceeds 80% of GDP. Banks avoid SME lending. Governments turn to subsidies,
pushing public debt even higher. This cannot hold.

The problem is not unemployment. It’s low wages. Workers cannot survive without 
overtime. Labour’s share of GDP keeps shrinking, deepening inequality and social
strain.

Corruption rises when an economy is stuck: police acting like crime syndicates; 
clergy scandals; judicial lapses, even sports associations accused of cheating athletes.
Slow growth cracks the system far beyond economics.

With people trapped in insecure jobs and neighbouring countries hosting scam hubs,
Thailand is now entangled in transnational scamming and money-laundering networks.
The lack of a serious crackdown raises doubts about the government itself.

If growth keeps sinking, Thailand risks sliding into a “grey economy.” Add marijuana,
casinos, and call-centre scams, and quality investors and tourists will stay away.
Reviving the economy requires real growth engines.

The heart of a new development model is simple: build enough “good” jobs. Jobs with
middle-class incomes, stability, benefits, and skills. Good jobs stabilises society
and make politics less volatile. They give people something to build on. 

This is what political parties should compete to deliver.

### Limits of stimulus

Why are we growing so slowly? If we assume Thailand is still a high-potential economy,
every downturn looks cyclical, and stimulus seems like the answer. That has been
the playbook for decades. 

But if Thailand is actually low-potential, stimulus is not enough. We must reform
production and restructure the economy.

Picture Thailand as an airplane. One wing carries four “spending engines”: consumption,
private investment, public spending, and exports. All are stalling. Household debt
limits consumption. Tight lending limits private investment. High public debt limits
state spending. Exports suffer from global slowdown and protectionism.

The other wing holds four “production engines”: agriculture, industry, services,
and public services. They are underpowered. To fly again, the captain must strengthen
production, not spending.

### Structural fault lines

Where are the bottlenecks?

Agriculture relies too much on commodities, rising and falling with global prices.
Rubber exports remain below their level 10 years ago.

Industry is squeezed by global technological shifts, especially in autos. Competition
is fierce, but our productivity is stuck because we cannot keep pace.

Tourism, once the crown jewel, has not regained pre-Covid revenue. Safety concerns
drag it down.

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Across sectors, three problems stand out: a shrinking labour force, weak investment,
and low productivity.

Labour has been falling for decades due to low fertility. Preventable deaths from
road accidents and pollution remain shockingly high. Many workers leave the labour
force by age 55. Military conscription removes 70,000 productive workers each year.
As education quality plunges, it can no longer offset a shrinking workforce.

Investment is weak. Public investment is limited by tight budgets and low tax revenue,
much of which goes to fixed expenses such as salaries. Extending retirement age 
will strain budgets further. 

Thailand has foreign direct investment, but much does not links to local supply 
chains. Some firms register here only to access tax incentives. On top of that, 
rigid regulations deter genuine investors.

Meanwhile. productivity suffers from misallocated resources, underinvestment in 
R&D, and failure to turn research into products.

### Lean development

Globalisation’s retreat makes everything harder: US tariffs at 90-year highs, Europe’s
green rules, China’s oversupply pushing prices down, and cheap imports flooding 
Thailand destroying local businesses. With a weakened WTO, countries now rely on
bilateral deals.

It’s clear. Thailand must build new growth engines. We cannot rely on massive industrial
expansion as before. A better starting point is “lean development”: use the people
we have more efficiently, remove waste, and make every baht count. Then modernise
agriculture, industry, and services step by step. 

This is urgent. Most listed companies are struggling. One-third of manufacturing
firms and more than a quarter of consumer companies are loss-making. Real estate
and construction face the same fate.

### New growth hopes

So how do we build a new growth engine?

First, modernise agriculture. Today, subsidies trap 30% of workers in low-earning
farming. We need smaller, higher-value production like Japan’s melons, uni, and 
Kobe wagyu. Thai bamboo, biochar, sea crabs, and bananas show similar promise: they
use fewer workers but generate more income.

Thai food offers even bigger potential. We have one restaurant per hundred people—
street food not included. Yet Singapore has more eateries on the Michelin Bib Gourmand
list. 

The difference is state support: investing in quality, preserving heritage recipes,
using technology, and promoting restaurants abroad. With a small domestic market,
we must also look outward and expand online.

Film production is another bright spot. In the first nine months of this year, 450
foreign shoots brought in about seven billion baht. Jurassic Park, White Lotus, 
and Alien Earth were filmed here. Most spending stays in Thailand, creating high-
income jobs and distributing earnings widely. With more state support, also for 
Thai producers, film could become a major growth engine.

Industry must modernise too : competing on quality, not price; expanding into ASEAN
markets; shifting to green products; and building stronger Thai brands. Combustion
engines will remain in demand in developing countries for at least a decade, while
new opportunities emerge in green steel, pet food, and other eco-products. 

### Call to action

To recover, Thailand must act on three fronts: labour, investment, and productivity.

We must cut preventable deaths, reduce PM2.5, expand childcare and senior care to
raise female participation, reform conscription, attract skilled workers, and improve
education quality.

We must stop losing revenue through unnecessary tax privileges. Thailand has capital,
but wastes it propping up outdated subsidies instead of modernising agriculture.
Link foreign investors to local supply chains, clear regulatory bottlenecks and 
investment will follow.

Finally, productivity must rise. Freer trade helps, as many current rules hold us
back. R&D must turn ideas into products.

If we succeed on these fronts, Thailand’s growth potential could rise from 2–2.3%
to about 4.7% — enough to escape the middle-income trap by 2041.

Within 15 years, our economy will shift toward modern services. Workers will move
from low-value jobs. Domestic spending will strengthen. Exports will matter less
in a world of rising barriers.

Thailand cannot stay on the old path. Our task now is to build new engines — ones
that create “good” jobs. That means new skills, new innovation, and less red tape.

If we act, those engines are within reach. They are ours to build — piece by piece,
sector by sector, job by job. The only question is whether we are ready to begin.

Note: Somkiat Tangkitvanich, PhD, is president of the Thailand Development Research
Institute (TDRI). This article is an edited version of his keynote speech at TDRI’s
Annual Conference on Reimagining Thailand’s Development Model, held on November 
17. TDRI’s policy analyses appear in the Bangkok Post on alternate Wednesdays.

[Read More ](https://tdri.or.th/en/2026/01/fueling-economic-growth-with-good-jobs/?rand=86529)