Regional convergence and spatial dependence in Thailand: global and local assessments

Abstract

This article studies the evolution of per-capita income disparities and spatial dependence across 77 provinces of Thailand over the period 1995–2017. Results show that – on average – regional income disparities are decreasing over time and initially poor provinces are catching up with rich provinces, indicating the presence of sigma and beta convergence. However, when we study the evolution of disparities – beyond the average – we reject the hypothesis that all provinces would eventually converge to a common long-run equilibrium. The evolution of these disparities suggests the existence of three local equilibria or convergence clubs. Further analyses based on global and local indicators of spatial association reveal significant spatial dependence in the evolution of disparities and the location of the convergence clubs. This article concludes arguing that an excessive focus on global or average assessments can be incomplete, and that spatial dependence has played a significant role in the formation of local convergence clubs. Furthermore, as different clubs may need different policy treatments, there is no one-size-fits-all territorial policy for reducing regional disparities in Thailand.

Keywords:

• Regional inequality
• club convergence
• spatial dependence
• Thailand

KEYWORDS:

• O47
• R11
• R12

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 See Johnson and Papageorgiou (2020) for a recent survey of the convergence literature.

2 See Anselin, Sridharan, and Gholston (2007) for an succinct introduction to exploratory spatial data analysis (ESDA) methods.

3 See Appendix A for further details of the interpolation process of the new province, Buengkan.

4 At this point, it is noteworthy to mention that Rayong is one of the major provinces under the government’s regional development project called Eastern Economic Corridor. In this regard, this province has become a destination or center for both private and foreign investment. On the other hand, Narathiwat is known as one of the poorest provinces in Thailand located at bordered areas of the South region, where the long political conflict and fragility are the major factors.

5 Although the Thiessen polygon is the main spatial connectivity structure used in this paper, we also use other criteria for robustness and comparison. See Appendix C for further details.

6 We also find that beta convergence occurs when we divide the sample into sub-periods. Specifically, the speed of convergence for the 1995–2006 sub-period is 1.00% per year while for the the 2007–2017 sub-period is 1.24%. Thus, the speed of convergence has slightly accelerated in recent years. See Appendix B (Figures 11-12) for the respective figures in each of these sub-periods.

7 Other spatial weight matrices apart from queen-contiguity spatial weights are included rook-contiguity, k-nearest neighbors (i.e., the four and six nearest provinces) and distance-based spatial weights (i.e., provinces within 112 km). Results of global Moran’s I with different spatial weight matrices are provided in Appendix C.

8 Following Aginta, Gunawan and Mendez (2021) and Fufa and Kim (2018), we apply the methods of beta and sigma convergence to characterize in more detail the convergence patterns of each club. This within-club analysis is essential for our study as it enables us to compare local patterns with global patterns of convergence.

9 See Jones and Pimdee (2017); Tipayalai (2020) for illustrations of Thailand 4.0 policy.

10 See Mendez (2020); Mendez and Kataoka (2021); Aginta, Gunawan and Mendez (2021) for illustrations of this argument in the context of the convergence patterns of the subnational regions of Indonesia.

Additional information

Funding

This study was supported by Japan Society for the Promotion of Science.

Notes on contributors

Katikar Tipayalai

Katikar Tipayalai is a lecturer at Faculty of Economics, Chulalongkorn University, Thailand. She earned her PhD in International Development from the Graduate School of International Development, Nagoya University, Japan. Her research interests include labor migration, human capital and economic growth, regional development and inequality.

Recent publications:

Tipayalai, K. 2020. “Impact of international labor migration on regional economic growth in Thailand.” Journal of Economic Structures 9 (15): 1–19.

Carlos Mendez

Carlos Mendez is an Associate Professor at the Graduate School of International Development, Nagoya University, Japan. He completed his PhD in the same institution. His research interests focus on the integration of econometrics, spatial data science and machine learning methods to understand and inform the process of development of countries, regions and industries.

Recent publications:

Mendez, C., and Santos-Marquez, F. 2022. “Economic and Social Disparities across Subnational Regions of South America: A Spatial Convergence Approach.” Comparative Economic Studies 1–24.

Mendez, C. 2020. “Regional efficiency convergence and efficiency clusters: Evidence from the provinces of Indonesia 1990–2010.” Asia-Pacific Journal of Regional Science 4 (2): 391–411.

Mendez, C., and Kataoka, M. 2021. “Disparities in Regional Productivity, Capital Accumulation, and Efficiency across Indonesia: A Club Convergence Approach.” Review of Development Economics 25 (2): 790–809.