Thailand and the Middle-Income Trap: An Analysis from the Global Value Chain Perspective

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Upalat Korwatanasakul


The study provides a critical analysis through the lens of the global value
chain (GVC) framework with empirical data on value-added trade to explain Thailand's
middle-income trap (MIT) by matching GVC data at the firm, industry, and country
levels with the economic development trajectory. The results show that participation in
GVCs contributes to initial industrialisation and economic development. However, it
does not guarantee subsequent technological upgrading, as there is a risk of falling into
the middle-income technology trap (MITT). Thailand is highly dependent on passive
technology and specialisation imposed by headquartered countries, trapping the country
in the middle of value chains with limited knowledge and technology transfer. As a result,
Thailand has fallen into the MITT, where it cannot sustain growth and catch up with
the more innovative advanced economies, leading to it falling into the MIT. To escape
both traps, the government can consider policies that address inadequate knowledge and
technology transfer and the lack of capacity of local firms.


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