Relationships between development policy, SMEs and total factor productivity in Thailand

Abstract

Abstract The paper aims to investigate relationships between development policy, SMEs, total factor productivity, and total output in Thailand. By comparing the trends in total factor productivity growth of industrialized economies (i.e. OECD, Korea), this study aims to showcase the importance of total factor productivity progress in Thailand, thereby enabling useful policy decisions. The study employs annual time series data for 1975–2016 retrieved from the World Development Indicator. Results of the study show that manufacturing and development policy lead to total factor productivity growth in the short-run in Thailand. Findings of the study suggest that manufacturing (i.e. product innovation) and development policy (i.e. tax incentive) are positively related to total factor productivity growth in the short-run and economic development in the long-run. These capacities are determined by the same set of conditions that are closely linked to the state of total factor productivity and development policy.