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The Structural Transformation of Thailand: The Role of Policy Distortion

Author

Listed:
  • NAVARAT TEMSUMRIT

    (Department of Economics, Kasetsart University, Bangkok, Thailand)

  • HONGSILP SRIKET

    (Department of Economics, Kasetsart University, Bangkok, Thailand)

Abstract

Thailand and the Republic of Korea were developing at a similar pace during the 1960s. However, the Republic of Korea’s economic development rapidly expanded from the 1970s onward, leaving Thailand lagging far behind. This paper investigates the labor productivity slowdown in Thailand using a nine-sector, structural transformation model setting with policy distortions. Our findings suggest that the economic underdevelopment of Thailand, when compared with the Republic of Korea, lies in a tendency toward relative labor productivity slowdowns resulting from both direct and indirect policy distortions in the agriculture sector. The agriculture sector has consistently been overlooked by the government in favor of the infant industrial sector for many decades. Moreover, as the agriculture sector accounts for a relatively considerable share of employment, the magnitude of the negative impact from policy distortions is amplified, inducing a delay in Thailand’s structural transformation.

Suggested Citation

  • Navarat Temsumrit & Hongsilp Sriket, 2023. "The Structural Transformation of Thailand: The Role of Policy Distortion," Asian Development Review (ADR), World Scientific Publishing Co. Pte. Ltd., vol. 40(01), pages 203-245, March.
    • Handle: RePEc:wsi:adrxxx:v:40:y:2023:i:01:n:s0116110523500087
    DOI: 10.1142/S0116110523500087
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    More about this item

    Keywords

    comparative economic development; structural transformation; Thai economy;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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