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20 Mar 2008

Thai Economy

Inequality in Income: Hindrance to Sustainable Development (Current Issue No.2054)

When it comes to a success in economic development, KASIKORN RESEARCH CENTER (KResearch) views that poverty and inequality in income within the Thai society will remain a key hindrance for growth. Unless the problems have been addressed properly, the country's sustainable development may be at risk, which will exacerbate the chronic social problems and life quality. Even though the growth-led policies from 1986 to 2006 helped reduce poverty, problems in ineffective distribution of wealth have so far been left unresolved. The wider income gap may impede the country's future development. The latest data for 2006 revealed some facts regarding income inequality in Thailand. It showed that 20 percent of the country's population in the lowest income bracket account for merely 3.8 percent of national income, whereas those in the highest income bracket represent 56.3 percent of the country's overall income. That is to say, one-fifth of the country's populace in the highest income bracket receives more than half of the overall national income. So far, there were no clear signs in sight for any significant success in narrowing income disparities.
As a way out, KResearch takes the view that the government's policies to inject funds into the grassroots economy via SML Village Fund projects and other programs have good intentions as they would create greater opportunities for the poor to better access funding sources. Even so, to overcome income inequality sustainably requires the availability of better educational opportunities for the entire populace, as well as human resource development via upgrades in education to higher standards (educational reform). Moreover, a knowledge-based community should be promoted to enhance our human capital along with increased opportunities toward financial capital. Statistical results have proven that the quality of education has much to do with the nation's income equality.

Nevertheless, educational reform is a time-consuming process and ongoing dedication is needed to ensure tangible results. Given this, national long-term strategies should be mapped out. If successfully implemented, not only will the problem of wealth distribution be mitigated, but the national development can also be made sustainable.

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Thai Economy