Firms' Financial Performance and Structural Change: The Case of Thailand

Abstract

A key aspect of the development process is structural change. For most countries, this takes the form of a decline in the contribution of the agriculture sector in the economy accompanied by the rise of the shares of manufacturing and services. The theories and empirics of structural change have mostly focused on economy-wide and sectoral-level analysis. There is a scarcity of studies on the microeconomics of structural change due to the lack of long-term panel data at the firm level. This study undertakes a microeconometric analysis of structural change by studying how financial performance at the firm-level as defined by ROA and ROE is affected by structural change in the Thai economy. A key finding of this study is that trends in the financial performance of firms provide additional insights into micro-level aspects of structural change in the economy.