State Modernization vs. Social Development: Two Directions in Thailand's Development

Abstract

Following the currency crisis in 1997, Thailand has employed two different approaches to respond to external shocks to its economy. The first approach aims to construct a strong state that can effectively manage crises and seeks to become a high-income country through industrial upgrading. This approach was manifested in the Kingdom of Thailand Modernization Framework (KTMF) initiated by the Thaksin government. The second approach relies on more flexible social networks, favoring resilience rather than economic growth to ensure social development. The Sufficiency Economy Philosophy proposed by King Bhumibol was representative of this approach. Tending to avoid extreme thought and actions, Thais have preferred a middle path when pursuing development policies. This is visible in the balancing act between the Eastern Seaboard Projects (typical of Newly Industrializing Countries) and Kosit's rural development project (typical of Newly Agro-Industrializing Countries) in the early 1980s, and then again between the state strategy of Thailand 4.0 (2017-36) on the one hand, and the World Bank joint proposal for inclusive growth (2016) and the BCG Economy Model (2019), on the other. However, such Thai-style balancing policies have revealed their limitations in the face of structural problems, such as labor shortages due to the aging society and the lack of human resource development in the realm of digital innovation.