Thailand’s poorest hail US$14 billion cash handout scheme - ‘we can breathe’. Despite early success, Thailand’s growth has stagnated – as flashy developments siphon resources away from innovation and productivity | South China Morning Post

Asian Angle | Why Thailand failed to escape the middle-income trap

Published: 12:30pm, 20 Oct 2024

Despite early success, Thailand's growth has stagnated – as flashy developments siphon resources away from innovation and productivity

Despite being one of the first populous Southeast Asian countries to achieve middle-income status in the early 1990s, Thailand has struggled to escape the middle-income trap. Its gross domestic product per capita last year was about US$7,000 – just over half of China and neighbouring Malaysia.

The Asian financial crisis in 1997-98, which originated in Thailand, savaged the country's economy, destabilised its banks and financial system, and set back its development prospects. It took Thailand nearly a decade to regain its pre-crisis level of GDP per capita. Since then, growth has averaged just over 4 per cent annually – too low for a middle income economy.

Last month, the World Bank released its World Development Report 2024 titled "The Middle-Income Trap". The report highlights the central challenge for economies like Thailand's: while high investments and technology diffusion can elevate a country from low- to middle-income status, advancing to high-income status – with a GDP per capita of at least US$14,000 – requires developing domestic innovation capacity.

Thailand's poorest hail US$14 billion cash handout scheme - 'we can breathe'

Critics say the move to give Thailand's poorest a US$300 cash subsidy papers over structural issues that are holding back the economy

Published: 5:26pm, 4 Oct 2024Updated: 6:31pm, 4 Oct 2024

Cooking oil, rice and fertiliser were the first purchases made by 74-year-old Sopak Ruangsang with her 10,000 baht (US$300) cash subsidy, one of the 14.5 million poorest people in Thailand to benefit from an initial round of the kingdom's biggest ever direct handout.

Sopak next paid down debts and helped neighbours in her close-knit community in Isaan region who did not qualify for the cash handout this time around.

"After that, I helped pay for my grandchildren's school fees and that's pretty much all of it gone," she told This Week in Asia.