Resumen de Provincial Clustering in the Southern of Thailand: Concept and Empirical

Kiatkajon Chairat, Sumalee Santipollavut, Supachart Sukharomana

• The aim of this paper is to estimate the effect of provincial clustering (groups) in Southern Thailand on economic development under two issues: economic growth and total factor productivity (TFP). The economic development is analysed in two periods: before and after the organisation of the provinces into groups. After considering different grouping formations, the differences among four cases are compared: the first and second include a non-grouping classification, three existing provincial clusters, and the last two groups suggest three and four groups of provincial clustering to formulate the basic concept of cluster. The result suggests that the effect of clustering on economic growth in terms of return to scale is the highest in the four-group provincial cluster as shown by the coefficient estimate. The total factor productivity (TFP) component shows that the share of labour and growth rate of output in four-group provincial clustering to be higher than in the others, while the growth rate of TFP is the highest in the three-group provincial cluster. From the overall results, the four-group provincial clustering offers the strongest effect on economic development.