Thammasat University students interested in economics, ASEAN studies, Thailand, political science, history, sociology, and related subjects may find it useful to participate in a free 12 August Zoom webinar on What Causes Structural Change? An Analysis for Thailand.

The event, on Monday, 12 August 2024 at 9am Bangkok time, is presented by ISEAS – Yusof Ishak Institute, Singapore.

The TU Library collection includes several books about different aspects of structural change in Thailand.

Students are welcome to register for the event at this link:

https://us06web.zoom.us/webinar/register/7917217894692/WN_oubdram1R9ODAv_MO81l-w#/registration

As explained on the event website,

About the Webinar

Many Southeast Asian countries have recently or are currently undergoing rapid structural change. Structural change is the contraction of agriculture as a share of aggregate economic output and the corresponding expansion of the combined shares of industry and services. The webinar will analyse its economic causes in the context of Thailand, a country experiencing rapid structural change over recent decades. It will look into the relative explanatory power of five potential contributors to structural change, suggested by simple economic theory, but using data for Thailand: (a) differential growth rates of aggregate supplies of physical capital, labour and land; (b) differential growth rates of total factor productivity between sectors; (c) changes in rates of trade protection across sectors; (d) changes in relative international prices; and (e) differences in expenditure elasticities of demand between final consumer goods (Engel’s law). The webinar will also examine what this means for Thailand’s future economic prospects and implications for policy.

About the Speaker

Peter Warr is John Crawford Professor of Agricultural Economics, Emeritus, at the Australian National University. He studied at the University of Sydney, the London School of Economics and Stanford University, where he received his PhD in applied economics. His current research is on the relationship between economic policy and poverty incidence in Southeast Asia.  […]

The TU Library collection includes a number of books by Professor Warr.

In 2020, Professor Warr coauthored a paper, Benign growth: Structural transformation and inclusive growth in Thailand for the World Institute for Development Economic Research (UNU-WIDER).

The article’s abstract:

Between 1981 and 2017, real gross domestic product in Thailand grew at an average annual rate of 5.7 per cent. Agricultural output grew more slowly than industry or services, and its gross domestic product share consequently declined. Industry’s gross domestic product share increased, and the share of services remained relatively constant. Agriculture’s employment share declined, but most new jobs were in services. Concurrently, poverty incidence declined dramatically. Income inequality increased until the late 1980s, then gradually declined, reaching a level in 2017 that was well below the 1981 level. Economic growth combined with structural change contributed to poverty reduction, but the magnitude of this impact depends heavily on the poverty line used in calculating poverty. The Thai data support the Kuznets hypothesis of an inverted U-shaped relationship between average income and inequality but suggest no long-term ‘Kuznetsian tension’ between the rate of structural change and the level of inequality.

The article’s Introduction begins:

Structural change is a ubiquitous feature of growing economies. Thailand certainly qualifies as a growing economy. In 2017 real gross domestic product (GDP) per person was 13 times the level in 1951, having grown for two-thirds of a century at an average annual rate of 4 per cent. The growth has been far from uniform over time, between economic sectors, and between regions. The structure of the Thai economy has transformed radically, with agriculture contracting as a share of both GDP and employment, while the combined shares of industry and services expanded. The rate of this structural change has been strongly correlated with the overall rate of growth—the faster the growth, the more rapid the structural change. Not surprisingly, structural change in sectoral terms has also been correlated with the rate of urbanization.  Economic growth has coincided with a massive reduction in the incidence of poverty.

The rate of poverty reduction has been strongly correlated with changes in the overall rate of growth, and structural change has undoubtedly affected this relationship. Earlier empirical research has indicated that the degree to which aggregate poverty incidence is reduced by a 1 per cent contribution from a given sector to aggregate GDP growth is highest for agriculture, followed by services, with industry far behind. The decline in the GDP share of agriculture has meant that agriculture’s contribution to overall GDP growth has similarly contracted. Do these structural changes mean that the poverty-reducing power of economic growth has also fallen?

The story on economic inequality is more nuanced. Thailand’s recorded level of economic inequality is high by international standards, both across regions and across households. Average incomes per person among people living in or close to the capital city, Bangkok, have remained well above those of residents elsewhere in the country, especially the north and north-east regions.

At the national level, measured economic inequality among households has declined over the long term. Over the medium term, it increased from the early 1960s until about 1986, then levelled off until about 1992, and subsequently declined steadily until 2017, reaching a level lower than any previously recorded. In his celebrated 1955 article, Simon Kuznets advanced the hypothesis of an inverted U-shaped medium-term relationship between economic inequality and levels of national income.

The Thai data are consistent with this account. Our interest in this study is in the medium- to long-term relationships between growth and structural transformation as well as the outcomes of poverty incidence and inequality. We are less interested in the short-term, year-to-year, fluctuations in these variables, which are sensitive to other short-term shocks, unrelated to the underlying relationships of interest. Accordingly, the Thai historical data are divided into four distinct periods, according to the country’s aggregate economic performance. We study whether a correlation exists between average annual rates of growth and structural change within each of these four periods and the corresponding poverty and inequality outcomes.

Sections 2 and 3 of the paper review the record of Thailand’s aggregate economic growth and structural change, respectively. Section 4 analyses the relationship between these events and changes in labour productivity, at both the aggregate and sectoral levels. It is shown that the movement of labour from the low levels of average productivity seen in agriculture to the higher levels seen in industry and services has been a major contributor to overall productivity growth, in addition to productivity growth within these sectors themselves. Section 5 studies the evidence on poverty incidence and economic inequality in Thailand and their possible relationship to growth and structural change. Section 6 explores the political economy implications of economic growth and structural change, as experienced in Thailand. The discussion stresses the regional dimensions of both economic growth and structural change as a driver of political events in Thailand. Section 7 concludes.

(All images courtesy of Wikimedia Commons)