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Structural Transformation — How Does Thailand Compare?

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  • Mr. Vladimir Klyuev

Abstract

Thailand stands out in international comparison as a country with a high dispersion of productivity across sectors. It has especially low labor productivity in agriculture—a sector that employs a much larger share of the population than is typical for a country at Thailand’s level of income. This suggests large potential productivity gains from labor reallocation across sectors, but that process—which made a significant contribution to Thailand’s growth in the past—appears to have stalled lately. This paper establishes these facts and applies a simple model to discuss possible explanations. The reasons include a gap between the skills possessed by rural workers and those required in the modern sectors; the government’s price support programs for several agricultural commodities, particularly rice; and the uniform minimum wage. At the same time, agriculture plays a useful social and economic role as the employer of last resort. The paper makes a number of policy recommendations aimed at facilitating structural transformation in the Thai economy.

Suggested Citation

  • Mr. Vladimir Klyuev, 2015. "Structural Transformation — How Does Thailand Compare?," IMF Working Papers 2015/051, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2015/051
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    References listed on IDEAS

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    1. World Bank, 2012. "Leading with Ideas : Skills for Growth and Equity in Thailand," World Bank Publications - Reports 2732, The World Bank Group.
    2. Era Dabla-Norris & Giang Ho & Kalpana Kochhar & Annette Kyobe & Robert Tchaidze, 2014. "Anchoring Growth: The Importance of Productivity-Enhancing Reforms in Emerging Market and Developing Economies," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 5(02), pages 1-29.
    3. Sra Chuenchoksan & Don Nakornthab, 2008. "Past, Present, and Prospects for Thailand’s Growth: A Labor Market Perspective," Working Papers 2008-07, Monetary Policy Group, Bank of Thailand.
    4. repec:hoo:wpaper:e-92-3 is not listed on IDEAS
    5. Matsuyama, Kiminori, 1992. "Agricultural productivity, comparative advantage, and economic growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 317-334, December.
    6. Nakarin Amarase & Tosapol Apaitan & Kiatipong Ariyapruchya, 2013. "Thailand's Quest for Economic Growth: From Factor Accumulation to Creative Destruction," Working Papers 2013-02, Monetary Policy Group, Bank of Thailand.
    7. Margaret S. McMillan & Dani Rodrik, 2011. "Globalization, Structural Change and Productivity Growth," NBER Working Papers 17143, National Bureau of Economic Research, Inc.
    8. Agnes Isnawangsih & Mr. Vladimir Klyuev & Ms. Longmei Zhang, 2013. "The Big Split: Why Did Output Trajectories in the ASEAN-4 Diverge after the Global Financial Crisis?," IMF Working Papers 2013/222, International Monetary Fund.
    9. Era Dabla-Norris & Giang Ho & Kalpana Kochhar & Annette Kyobe & Robert Tchaidze, 2014. "Anchoring Growth: The Importance of Productivity-Enhancing Reforms in Emerging Market and Developing Economies," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 5(02), pages 1-29.
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    Cited by:

    1. Sukampon Chongwilaikasaem & Chaleampong Kongcharoen & Nakarin Amarase, 2022. "Relationship between Conflict and Labor Market in the Deep South of Thailand," PIER Discussion Papers 193, Puey Ungphakorn Institute for Economic Research.
    2. Waleerat Suphannachart, 2017. "What Drives Labour Productivity in the Ageing Agriculture of Thailand?," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 7(1), pages 1-6.
    3. Valerie Mueller & Emily Schmidt & Dylan Kirkleeng, 2020. "Structural Change and Women’s Employment Potential in Myanmar," International Regional Science Review, , vol. 43(5), pages 450-476, September.

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