The Growth-Equity Trade-Off in Modern Economic Development: The Case of Thailand
Author(s)
Krongkaew, Medhi; Kakwani, Nanak
Abstract
The trade-off between economic growth and income inequality is quite clear in the case of Thailand during the last four decades of its development. Rapid economic growth had brought about rapid reduction in poverty while income inequality had risen. The paper also shows that when poverty reduction is decomposed into two separate effects of growth and income distribution on poverty reduction, the growth impact on poverty reduction was lessened by the incidence of high income inequality. In short, the growth in Thailand was not a pro-poor growth. The high income inequality can be explained, in part, by unequal returns to productive inputs in imperfect markets and unfair competition, by unequal landownership and unsuccessful land reforms, and by political and administrative structures that protect the positions and interests of the relatively well-off. To help reduce the growth-equity trade-off, future growth in Thailand must be pro-poor or more pro-poor.
