Social Accounting Matrix for Thailand’s SMEs: Multiplier and Income Distribution Analysis

Abstract

This research aims to construct the Social Accounting Matrix (SAM) for small and medium enterprises (SMEs) in Thailand for the year 2010. The matrix represents the circular flow of 26 production activities in the SMEs and large enterprises (LEs), income, and expenditure in the Thai economy. It also shows income distribution and the redistribution between economic agents since all households are equally divided into 5 different income groups.  This research has some distinctive features in that our SAM incorporates the interrelationship between SMEs and LEs; therefore, SAM-based multipliers for both SMEs and LEs can be calculated and the distribution of income can be analyzed. This study constructed an unconstrained SAM multiplier model. The results indicated that an output multiplier for LEs (which was to be closer to 2.26) was larger than that for SMEs (2.03). For value-added multipliers, a multiplier for SMEs (0.73) was also slightly larger than that for LEs (0.72). Finally, an income multiplier for LEs (0.63) was smaller than that for SMEs (0.67). We also simulated six alternative scenarios for the export expansion in the agricultural, manufacturing, and service sectors, in both SMEs and LEs, by one billion Thai baht. The results indicated that an increase in agricultural exports in the LEs will bring about the largest increase in total value added (a 0.0082 percent increase from the baseline). For the impact on the distribution of household income, a rise in exports of services in the LEs will substantially reduce income inequality and the Gini coefficient will decrease by 0.00075 percent.