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Professor Peter G. Warr
Like many of its predecessors, Thailand’s new government proclaims itself the friend of the poor. This begs a basic question: what would it really take to reduce poverty?
The most basic feature of poverty incidence in Thailand is its concentration in rural areas. The latest available data relate to 1999. Poverty incidence (the percentage of the population with incomes below the official poverty line) was 15.9 per cent across the whole Kingdom. In rural areas it was 21.5 per cent (this is the percentage of the rural population with incomes below the poverty line) and in urban areas 3.1 per cent. Of the total Thai population of 63 million people, 31.5 per cent live in urban areas and the remaining 68.5 per cent in rural areas. This means that the number of people below the poverty line in urban areas is 0.61 million and the number in rural areas is 9.17 million. In other words, 93 per cent of all poor people live in rural areas. If you live in a rural area you are 7 times as likely to be poor as if you live in an urban area.
These points become even more dramatic if we compare that portion of the total urban population that lives in Bangkok with the portion that lives outside it. The data say that 15.7 per cent of the total population live in Bangkok, amounting to almost exactly half of the urban population. But Bangkok accounts for only 2.5 per cent of the total number of urban poor. If you are an urban resident, you are 20 times as likely to be poor if you live outside Bangkok than if you live inside it. If you are a rural resident you are 140 times as likely to be poor as a Bangkok resident!
The government’s election promise to give one million baht of government money to each rural village may or may not prove to be feasible in terms of the government’s finances, but even if it is delivered this amount could only provide temporary assistance to the poor. Thailand has 65,000 villages. If this amount was spread evenly across the rural population it would be equivalent to 1,538 baht per person, equivalent to twice the monthly income per person designated as the poverty line. That amount is significant, but hardly a long term solution to poverty. Moreover, this amount would be a net transfer to rural residents only if the taxes needed to finance it fell entirely on urban and not rural residents.
The solution to poverty in Thailand must involve raising the living standards of rural people. Government transfers may help marginally but genuine solutions require raising the economic productivity of the rural population.
WATCHPOINT: Thailand’s new Prime Minister, a millionaire. has just survived an apparent death threat. Will rural poverty lead to violence against the wealthy in Bangkok?
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