Wednesday, September 5, 2007

Under Thaksin, Thailand's poverty fell at historic clip, despite relatively sluggish economy

Partly in rebuttal to my previous post, "Was rising income equality to blame for the Thai coup?", people at various blogs (Hobby at BP, R&W) have noted that the decrease in poverty during the tenure of Thaksin (2001-2006) was not exceptional; they point to the fact that poverty has been declining in Thailand for some two decades. And Ten Kate made much the same point in the Asia Sentinel.

Having examined at the data, I believe one point has not been sufficiently emphasized in this debate: although economic growth during Thaksin's tenure was relatively modest, the rate of poverty abatement was not.

The Thai economy almost doubled between 1990 and 1995 (from 2.2 to 4.2 trillion baht.)* But from 2000 to 2005, the economy grew more slowly (from 4.9 to 6.9 trillion baht.) Effectively, Thai GDP grew by 91% during the earlier period, but only by 41% during a period largely coinciding with Thaksin's rule.

Here's where it gets interesting.

From 1990 to 1994, the percent of Thais living in poverty fell from 34% to 18%.** From 2000 to 2004 the percent in poverty fell from 21% to 11%. During both periods, the percentage of Thais classified as poor decreased by almost half, despite the slower economic growth of the second period.

This data leads me to conclude that poverty reduction under Thaksin was all the more impressive an achievement, given that the economy was not growing as fast during his tenure.

* Thai GDP data is from the IMF (via Wikipedia).
** Poverty rate data is from NESDB (via Bangkok Pundit).

Update: "Zen and the Meaning of Poor People's Debt in Thaksin's Thailand" follows up on this post.