The study reviews past estimates of shadow prices in Thailand
and their use in World Bank appraisals. Applying the Squire-van der Tak
methodology, it proceeds to estimate conversion factors for project analysis
in Thailand. Efficiency conversion factors were estimated for broad
categories of commodities, as well as for selected sub-categories, including
construction, electricity, transportation and rice. Estimates were also
made of the shadow wage rate and of the opportunity cost of capital and
land, drawing on an assessment of factor markets in Thailand. An annex
also provides estimates of social conversion factors allowing for growth
and income distribution considerations.
Besides providing up-to-date estimates of shadow prices (conversion
factors) for use in economic (and social) analysis of projects in Thailand,
the study provides a case study of application of the Squire-van der Tak
methodology. It also confirms the findings of other studies that Thailand
is a country with relatively undistorted prices, as indicated by the fact
that there is relatively little dispersion in conversion factors and that
most of them are close to unity.