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The role of wages, skills development and R&D on productivity: evidence from Thai manufacturing firms

Yot Amornkitvikai (College of Population Studies, Chulalongkorn University, Bangkok, Thailand)
Charles Harvie (Economics Discipline, School of Business, Faculty of Business and Law, University of Wollongong, Wollongong, Australia)
Piyapong Sangkaew (Department of Economics, School of Business and Communication Arts, University of Phayao, Phayao, Thailand)

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 3 March 2022

Issue publication date: 24 February 2023

673

Abstract

Purpose

The objectives of this study are to investigate the role of wages, skills development and R&D on the productivity of Thai manufacturing firms, using data from the 2017 Industrial Census of Thailand.

Design/methodology/approach

The paper uses two-stage least squares (2SLS) to examine the role of wages, skills development and R&D, as well as other vital factors, impacting productivity as measured by labour productivity and total factor productivity.

Findings

Thai manufacturing firms' technology in aggregate exhibits decreasing returns to scale. Increasing wages and skills development promote the labour productivity and total factor productivity (TFP) of Thai manufacturers. R&D is also shown to be vital in promoting the labour productivity and TFP of large firms, but not small firms. Foreign direct investment (FDI) and government support can significantly increase large and medium-sized firms' labour productivity and TFP. Financially constrained firms tend to perform more productively. However, older firms, larger firms, labour supply shortages and political instability adversely affect labour productivity and TFP.

Practical implications

Upskilling and improving HRD policies could move Thailand towards a knowledge-based and high-income country in the future. Intellectual property protection should be strengthened to boost the country's R&D. The government should consider lifting restrictions on FDI to encourage international openness. The Thai Board of Investment’s promotion should target Thai manufacturing firms and FDI.

Originality/value

This study is the first to examine in detail the role of wages, skills development and R&D on the productivity of Thai firms based on the 2017 Thailand Industrial Census.

Keywords

Acknowledgements

The authors wish to acknowledge comments received on earlier drafts of the paper by the editor and two anonymous reviewers, and to Thailand's National Statistical Office for access to 2017 Thailand Industrial Census data.

Funding source: The Ratchadapisek Sompoch Endowment Fund through Collaborating Centre for Labour Research at Chulalongkorn University (CU-Collar). Award number: 763008.

Citation

Amornkitvikai, Y., Harvie, C. and Sangkaew, P. (2023), "The role of wages, skills development and R&D on productivity: evidence from Thai manufacturing firms", Journal of Economic Studies, Vol. 50 No. 2, pp. 324-342. https://doi.org/10.1108/JES-06-2021-0282

Publisher

:

Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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