Double Dualism, Economic Growth Slowdown, and Falling Income Inequality in Thailand

Abstract

Thailand has experienced a decline in income inequality coupled with unimpressive economic growth since the end of the 1997/98 Asian financial crisis. This paper uses the structuralist approach to understand how these concurrent economic phenomena have become deeply intertwined. We argue that this intertwining results from Thailand’s economic structure, manifesting two types of dualism: (i) the dualism of the formal–informal sectors and (ii) the dualism of the dynamic–stagnant sectors. A decline in the informal sector in recent years coincides with a decrease in income inequality. Further, the second type of dualism between the dynamic and stagnant sectors has emerged since 2000. The stagnant sectors’ employment share has grown faster than that of the dynamic sectors, resulting in a slowdown in economic growth and less inequality. The decline of the informal sector and the rise of the stagnant sectors are the primary engines weighing down economic growth and reducing income inequality in Thailand.