Thailand Ranked 7th in Countries with Highest Informal Sector

2 August, 2010
Thailand Outlook

According to a survey conducted on the global informal economy between 1999 and 2007, Thailand is ranked 7th among the countries with highest ratio of revenue generated by the informal sector to the overall economy, with the informal sector responsible for producing 57.2 percent of the gross domestic product.

According to a survey conducted on the global economy between 1999 and 2007, Thailand is ranked 7th among the countries with the highest ratio of revenue coming from the informal sector, to the national economy, as it accounts for 57.2 percent of the gross domestic product, or the GDP.

The survey has also indicated that more than 50 countries have an informal sector to economy ratio that exceeds 40 percent of the total GDP.

Georgia is at the top of the list, with informal labor comprising 72.5 percent of the national GDP in 2007.

As a result, the country has lost billion of dollars in tax revenue that could have been spent on infrastructure and development.

Meanwhile, the country with the lowest ratio of the informal sector to the economy is the United States where it only accounts for 9 percent of the 14.26 trillion dollar GDP.

The country has been able to collect up to 1.2 trillion dollars in tax revenue annually.

Compared to other economies in the region, Cambodia ranked 12th with 54.3 percent of its GDP and the Philippines ranked 25th with 48.4 percent of GDP.

It should be noted that between 1999-2007, the global informal sector appeared to be growing.

For example, in the United States, it grew from 8.6 percent to 9 percent. In developing economies, the informal sector expanded from an average 36.6 percent in 1999 to 38.6 percent in 2007.

At the same time, the informal sectors for the 25 member nations of the Organization for Economic Co-operation and Development, or OECD, increased from 16.8 percent in 1999 to 18.7 percent in 2007.

Experts have pointed out that the reason that the informal economy is growing is because many businesses are attempting to get around the increasingly stricter tax regulations and collections over the last ten years by going informal.