During the rapid economic growth of Thailand that started in the latter half of the
1980s, income inequality increased very rapidly. At the same time, the industrial
sector absorbed underemployed labour force in rural areas in the early 1990s. It
was expected, therefore, that income inequality would decrease soon in Thailand.
However, statistical indicators do not show clear and consistent downward trends
in the mid-1990s. We examine whether Thailand has passed the turning point
of the Kuznets’ curve. We generalize the Kuznets’ hypothesis by redefining the
agricultural sector as low-productivity sector and the industrial sector as highproductivity
sector. Consequently, the Kuznets’ curve does not necessarily appear
only once but can appear several times when new high-productivity industries
appear. With this idea we will argue two points. One is that income inequality
increased rapidly in the latter half of the 1980s because of the emergence of
export-oriented manufacturing industries established by foreign direct investment
(FDI). The second contention is that income inequality did not decrease clearly in
the 1990s, even though the labour market might have passed the turning point,
because the Thai economy shifted to domestic-orientation, which led to the currency
crisis in 1997