Thailand

This Selected Issues paper reviews Thailand’s progress in structural transformation and its recent slowdown. It examines the empirical drivers of structural transformation and quantifies their contributions, with the objective of informing policies to reinvigorate the process. The analysis highlights several policy priorities to promote structural transformation. Accelerating trade liberalization, including deeper integration into global and regional markets, can facilitate the reallocation of labor toward more productive sectors. Investing in education, particularly at the primary and secondary levels, is essential for building a workforce capable of transitioning to higher-productivity employment. Enhancing financial inclusion and expanding access to credit for productive investments can broaden opportunities to improve labor allocation efficiency. Lessons from regional peers offer valuable insights for effective policy design and implementation. Thailand’s structural transformation has slowed but remains incomplete. With targeted and well-coordinated policies that promote labor movement toward its most productive uses, Thailand can unlock substantial productivity gains—which would provide a much-needed boost to its economic growth.