Growth, Structural Change and Inequality The Experience of Thailand

The impressive economic growth record of Thailand before 1997 was dominated by the increasing importance of modem industrialization, as well as the expansion of other sectors. This occurred at the expense of agriculture, which accounts for the largest employment pool. At the same time, the country failed to distribute the benefits of the growth equitably. While poverty tended to improve, income inequality worsened. The problem has attracted considerable interest among economists and policy-makers. This study examines the changing structure of the Thai economy and the relevant development policies over the past four decades. The results show that various policies have been behind the success in non-agricultural sectors. Expansion in non-agricultural sectors has raised the return to production factors in the sectors, squeezed the return to agriculture, limited agricultural development, and disequalized the distribution of income. This evidence raises concern about the success of the country's development plans.