Question

With so many Thai businesses closed down during, what do you think is the best way for the economy improve, and to boost productivity. Be specific with your comments about technology, human capital, labour, natural resources, and physical capital.

Answer 1

To help the economy to improve and boost productivity, it is important to devise short run and long run strategy. It is a well known fact that it is the demand that creates supply. So, the first attention in the short run should be to help create demand in the economy. It can be done, by direct fund transfer to the those consumer segments who are worst affected in the economy, increase in government spending or reduces taxes for the consumers to increase their disposable income. At the same time, firms should also be given incentives in terms of relief in taxation and loans at lower interest rates. It will boost the economy and firms will be able to utilize the existing capacity, technology and capital. At the same time, the government should work on the long run strategy where the first focus should be upon human capital development and higher education and or skills development programs should be promoted with adequate subsidization. It will make individuals to become superior skilled,  equipped with advanced knowledge and techniques. As a result, individuals, can increase productivity, command higher wages (leading to higher demand) and economy expands. At the same time, the firms should be encouraged to make investments and it will happen via physical capital such as buying of new machines, equipment and other devices that can increase capacity and productivity further increases. It is complemented by highly skills workforce via human capital development.

Concurrently, the government should promote domestic R&D firms and agencies to come up with updated technologies that can help increase productivity. For this different types of grants should be given to them and over a set period of time, new techniques will be developed, to be used by the firms and productivity reaches to the next level. It reduces the cost and exports also increases, along with the increase in domestic demand. It is further aided by exploration of natural resources and finding upon those, refined products based on natural resources should be produced. It can be done to move in upward of the value chain due to highly skilled manpower in the country. It can bring more of forex revenue to the country. So, all the initiatives taking place in the long run and supported by stable demand in the short run, the economy expands while productivity increases. So, economic development in the country takes place.