Misallocation and manufacturing TFP in Thailand

Using data from Thailand's 2007 Industrial Census, this research studied resource misallocation across manufacturing plants and its impact on manufacturing total factor productivity (TFP). It is found that there is more resource misallocation across plants in Thailand than in China, India, and the US, as well as in some other countries. When resource misallocation in Thailand is hypothetically reduced to the extent observed in the USA, manufacturing TFP increases by about seventy per cent. It is also found that manufacturing plants under government ownership or located in the northern region of Thailand have lower productivity, yet face lower input and output distortions than other plants. Also, medium-sized plants face higher distortions than smaller and larger plants.