IDEAS home Printed from https://ideas.repec.org/p/eab/financ/22054.html
   My bibliography  Save this paper

Competitiveness, Income Distribution, and Growth in Thailand : What Does the Long-run Evidence Show?

Author

Listed:
  • Piriya Pholphirul

    (Thailand Development Research Institute)

Abstract

The paper addresses three fundamental issues under a long-run perspective : (1) growth and productivity, (2) competitiveness, and (3) income distribution. Unit labor costs (ulcs) and unit capital cost (ukcs) are calculated as the indicators of competitiveness in Thailand. Both series explain that Thailand did not gain in competitiveness during its boom period. However, during the 1997 financial crisis, when the Baht currency depreciated, both series dropped significantly. The paper also discusses the dynamics of labor share and capital share in national income as well as the functional distribution of income. Some major features of Thailands long-run economy are the following : (i) increasing average wage rates, (ii) stabilizing profit rates (slightly increasing during the boom decade after having dropped sharply during the 1997 crisis), (iii) substantially increasing capital-labor ratio, (iv) decreasing capital productivity and increasing capital-output ratio, (v) increasing labor productivity, and (vi) increasing mark-up.Functional income distribution can be determined during the periods studied. The gains in labor were greater than that of capital in the Thai economy, especially during the period of crisis when profit rates dropped substantially. The paper also documents the growth in income per capita decomposed by ranges of labor market indicators. Labor productivity is observed as the only factor contributing to per capita output. Overall, to achieve the medium to long-term growth potential projected by the National Economic and Social Development Board (NESDB), Thailand needs to improve capital productivity and increase its capital stock. This paper is organized as follows : after the Introduction, Sections II-III construct labors shares, capital share, and ulc series, and observe the long-run pattern of the variables. Section IV analyzes the determinants of long-run competitiveness and growth. The determinants include wage rate, profit rate, capital-output ratio, capital-labor ratio, labor productivity, and capital productivity. Section V observes the degree of functional income distribution including its longterm evolution during the last 20 years. Section VI computes the degree of markup, which also implies the dynamism of the monopoly power of business in the Thai economy. Section VII analyzes the sources of growth in per capita income categorized by different labor compositions. Section IX estimates the medium-term growth potential as projected by the NESDB. Section X concludes the report.

Suggested Citation

  • Piriya Pholphirul, 2005. "Competitiveness, Income Distribution, and Growth in Thailand : What Does the Long-run Evidence Show?," Finance Working Papers 22054, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:financ:22054
    as

    Download full text from publisher

    File URL: http://www.eaber.org/node/22054
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Alan B. Krueger, 1999. "Measuring Labor's Share," American Economic Review, American Economic Association, vol. 89(2), pages 45-51, May.
    2. Frances Stewart, 2003. "Income distribution and development," Chapters, in: John Toye (ed.), Trade and Development, chapter 10, Edward Elgar Publishing.
    3. Stephen S. Golub & Janet Ceglowski, 2002. "South African Real Exchange Rates And Manufacturing Competitiveness," South African Journal of Economics, Economic Society of South Africa, vol. 70(6), pages 1047-1075, September.
    4. Ahluwalia, Montek S., 1976. "Inequality, poverty and development," Journal of Development Economics, Elsevier, vol. 3(4), pages 307-342, December.
    5. B, Felipe & M, Rodrigo, 1997. "Income Distribution Investment, And Growth," Harvard Institute for International Development (HIID) Papers 294416, Harvard University, Kennedy School of Government.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sandrine Michel, 2015. "Education in Thailand: When economic growth is no longer enough," Post-Print hal-01671765, HAL.
    2. Phijaisanit, Euamporn, 2015. "How can promoting desirable elderly employment opportunities alleviate the shortfalls of Thailand’s ageing society?," MPRA Paper 89824, University Library of Munich, Germany, revised 2016.
    3. Tanida Arayavechkit & Somprawin Manprasert & Jaree Pinthong, 2015. "Intertwining Inequality and Labor Market under the New Normal," PIER Discussion Papers 6., Puey Ungphakorn Institute for Economic Research, revised Oct 2015.
    4. Piriya Pholphirul, 2007. "Labour-market issues under trade liberalization: implications for Thai workers," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 14(1), pages 41-71, June.
    5. Chitralada Chaiya & Mokbul Morshed Ahmad, 2021. "Success or Failure of the Thai Higher Education Development—Critical Factors in the Policy Process of Quality Assurance," Sustainability, MDPI, vol. 13(17), pages 1-29, August.
    6. Bruno Jetin, 2012. "Distribution of income, labour productivity and competitiveness: is the Thai labour regime sustainable?," Cambridge Journal of Economics, Oxford University Press, vol. 36(4), pages 895-917.
    7. Tanida Arayavechkit & Somprawin Manprasert & Jaree Pinthong, 2015. "Intertwining Inequality and Labor Market under the New Normal," PIER Discussion Papers 6, Puey Ungphakorn Institute for Economic Research.
    8. Siwapong Dheera-Aumpon, 2014. "Misallocation and manufacturing TFP in Thailand," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 28(2), pages 63-76, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cheikh Tidiane Ndiaye & Armand Akomavo Dagoudo & Babacar Mbengue, 2021. "Growth and Income Distribution Inequalities in Sub-Saharan Africa: A Dynamic Model Approach [Croissance et inégalités de distribution des revenus en Afrique subsaharienne : une approche par les mod," Working Papers hal-03202484, HAL.
    2. Ananya Ghosh Dastidar, 2004. "Structural Change and Income Distribution in Developing Economies: Evidence from a Group of Asian and Latin American Countries," Working papers 121, Centre for Development Economics, Delhi School of Economics.
    3. Frances Stewart, 2003. "Income distribution and development," Chapters, in: John Toye (ed.), Trade and Development, chapter 10, Edward Elgar Publishing.
    4. Kyoji Fukao & Cristiano Perugini, 2021. "The Long‐Run Dynamics of the Labor Share in Japan," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 67(2), pages 445-480, June.
    5. Ghosh, sudeshna, 2017. "Education Attainment Forecasting and Economic Inequality United States," MPRA Paper 89712, University Library of Munich, Germany.
    6. Haddad, Lawrence & Kanbur, Ravi, 1992. "Is There an Intrahousehold Kuznets Curve? Some Evidence from the Philippines," Public Finance = Finances publiques, , vol. 47(Supplemen), pages 77-93.
    7. Walker, Douglas O., 2007. "Patterns of income distribution among world regions," Journal of Policy Modeling, Elsevier, vol. 29(4), pages 643-655.
    8. Morley, Samuel A., 2000. "The effects of growth and economic reform on income distribution in Latin America," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    9. Hans Binswanger & Ernst Lutz, 2003. "Agricultural trade barriers, trade negotiations and the interests of developing countries," Chapters, in: John Toye (ed.), Trade and Development, chapter 8, Edward Elgar Publishing.
    10. Bourguignon, Francois, 2005. "The Effect of Economic Growth on Social Structures," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 27, pages 1701-1747, Elsevier.
    11. Kwong-Leung Tang, 1998. "East Asian Newly Industrializing Countries: Economic Growth and Quality of Life," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 43(1), pages 69-96, February.
    12. Temple, Jonathan & Ying, Huikang, 2014. "Life During Structural Transformation," CEPR Discussion Papers 10297, C.E.P.R. Discussion Papers.
    13. Gupta, Dipak K. & Madhavan, M. C. & Blee, Andrew, 1998. "Democracy, economic growth and political instability: An integrated perspective," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 27(5), pages 587-611.
    14. Epstein, Gil S. & Spiegel, Uriel, 2001. "Natural inequality, production and economic growth," Labour Economics, Elsevier, vol. 8(4), pages 463-473, September.
    15. Patricia Justino & Julie Litchfield & Laurence Whitehead, 2003. "The Impact of Inequality in Latin America," PRUS Working Papers 21, Poverty Research Unit at Sussex, University of Sussex.
    16. Isaac Ehrlich & Jinyoung Kim, 2007. "The Evolution of Income and Fertility Inequalities over the Course of Economic Development: A Human Capital Perspective," Journal of Human Capital, University of Chicago Press, vol. 1(1), pages 137-174.
    17. Rémi Bazillier & Nicolas Sirven, 2006. "Les normes fondamentales du travail contribuent-elles à réduire les inégalités ?," Revue Française d'Économie, Programme National Persée, vol. 21(2), pages 111-146.
    18. Kacem, Rami Ben Haj, 2013. "Monetary versus non-monetary pro-poor growth: Evidence from rural Ethiopia between 2004 and 2009," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 7, pages 1-22.
    19. Chun-Hung A. Lin & Suchandra Lahiri & Ching-Po Hsu, 2017. "Happiness and Globalization: A Spatial Econometric Approach," Journal of Happiness Studies, Springer, vol. 18(6), pages 1841-1857, December.
    20. Rusli Abdulah, Rusli, 2013. "Faktor-Faktor Yang Memengaruhi Ketimpangan Pendapatan Di Jawa Tengah [Inequality Determination in Central Java, Indonesia]," MPRA Paper 77956, University Library of Munich, Germany.

    More about this item

    Keywords

    Growth and productivity; competitiveness; Income Distribution; Equity; competition policy; Infrastructure and Regulations;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eab:financ:22054. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Shiro Armstrong (email available below). General contact details of provider: https://edirc.repec.org/data/eaberau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.