Amidst the analysis of the intrigues, machinations and strategic moves surrounding Thailand’s current political crisis, it is useful to reflect on some of the underlying, more structural forces at work. My emphasis is on the origins and consequences for Thai politics of what Pasuk Phongpaichit and Chris Baker have termed Thailand’s “informal mass.” In their article “Thaksin’s Populism” in the February issue of the Journal of Contemporary Asia, Pasuk and Chris estimate that agricultural workers (who work part-time in urban areas) and those working full-time in informal urban occupations constitute some two thirds of Thailand’s labor force.

Two features of Thailand’s development strategy help to account for such a large informal sector. First, as Pasuk and Chris note, the low level of investment in Thai agriculture has, with some exceptions, resulted in a relatively inefficient rural sector. Second, in industry, Thai policymakers have emphasized attracting export-oriented industries which, although sometimes producing high-technology goods (e.g. hard disk drives), operate in Thailand mainly to access infrastructure (clusters), good macroeconomic policies, and relatively low-wage labor. Especially since the late 1990s, Thailand’s locally owned supplier base has been weakened if not wiped out. Thus, despite its intensive growth during the 1980s, Thailand’s export structure was closer to that of the Philippines than Taiwan, Singapore, South Korea or even Malaysia. Thai firms did not use their temporary low cost advantage as a transition to more durable competitive advantages based on productivity and quality. Thai political leaders’ commitment to building knowledge-based resources have lagged behind those made 20 years ago in the East Asian NICs when those economies were at levels and structures of economic development roughly similar to those of Thailand in the late 1990s.

This pattern has not impeded Thai growth through diversification. Indeed, the Thai economy is one of the most flexible in the world, ranking among the top exporters of products ranging from rice, to sugar, to rubber, to disk drives, to pick-up trucks, to prawns. But this diversification has not brought with it the development of a manufacturing or agro-industrial base that can absorb large numbers of floating workers.

This dynamic has both economic and political consequences. First, research has demonstrated that sectoral diversification constitutes the key force for national growth only up to a certain income level, past which growth occurs through more concentration, involving domestic linkages and agglomeration. Diversification seems to be key for low-income countries, while deep competencies in a narrower range of sectors becomes more important over time as countries seek to improve their positions within global value chains. Second, Thailand’s “informal mass” is likely to constitute a drag on economic growth in light of the finding that the essence of development is the shift from low productivity farming, absorbing the bulk of the labor force, to high productivity farming absorbing little. Third and related, the persistence of low productivity in agriculture and weak labor absorption in industry contributes to inequality which in turn discourages growth. And finally, a weak supplier base (lack of “dense set of input-output linkages between sectors”) limits the expansion of domestic demand and thus increases vulnerability to export volatility.

Political consequences seem to be especially troubling. First, inequality, reflected today in Thailand’s rural-urban divide, contributes to the country’s political instability. Second, the organizational weakness of Thailand’s working class limits demands for wage increases and thus pressure to improve productivity. Third, the weakness of Thailand’s domestic capitalists, at least in manufacturing, undermines its interests in growth-promoting reforms and its organizational capacity to collaborate in the formulation and implementation of such reforms. Finally and most broadly, Thailand’s weakly integrated domestic production structure can also discourage cross-class alliances and thus the potential for a broad constituency for growth promotion.

These conditions seem to lead to a kind of instability that makes it difficult for key actors to coalesce in more cohesive, program-based political institutions. One alternative is, as Pasuk and Chris have noted, a populist one involving personalized leadership of popular sectors against established elites. As seen in the PAD’s response to Thaksin, such an alternative is resisted by important segments of the Thai elite. And as seen in Thaksin’s own performance, the populist alternative does little to move Thailand towards more sustainable growth.

Richard F. Doner is an Associate Professor in the Department of Political Science at Emory University.