Over the course of the past decade, the percentage of Thailand's population living below the poverty line was reduced by half, from 27.2 percent in 1990 to 11.4 percent in 1996, before rising to 12.9 percent (or about 8 million of Thailand's population of 61.4 million people) in 1998.  Overall, the economic crisis that broke in Thailand in July 1997 appears to have returned the Thai population to roughly 1996 levels of income and welfare.  The rapid reduction in the poverty rate since 1990 reflects other gains in the Thai economy.  Primary school enrollment reached universal levels in the 1990s.  The health system evolved into a relatively sophisticated mix of public and private provision and financing.  Owing in part to ADB's Social Sector Program Loan ($500 million), approved in March 1998, the Government took the first steps in establishing an integrated social protection program including social security, education, health and labor schemes which function as a de facto, if limited, social safety net.

Although millions in Thailand have escaped poverty during this period, such progress obscures the fact that certain inequities have been exacerbated (e.g., between urban and rural areas, between regions, between well-educated workers and those with little education, and between households of different socioeconomic status).  In 1981, for example, the top decile of Thai households earned 17 times as much as the bottom 10 percent; by 1994, the multiple was 37 times, making Thailand one of the least egalitarian countries in the world.  During the same period, the average income of the top decile of the country's households tripled; by contrast, the incomes of the bottom decile hardly changed.  Moreover, half of the estimated income gains during this period went to just one-tenth of the population. The poverty rate for households headed by individuals with no education fell by 38 percent during this period.  In contrast, the poverty rate for households headed by individuals with a lower elementary to junior secondary education was reduced by 60 percent.

Poverty remains acute in some areas; recent studies suggest that 92 percent of poverty in Thailand is rural, with the Northeast having the highest incidence of poverty at 19 percent, and the highest concentration of poor people.  Due to the economic crisis, poverty increased most in the South and Central regions during 1996-1999, followed by the Northeast.  The regional income gap is also large and widening.  In 1996, over 50 percent of total GDP was concentrated in the Bangkok Metropolitan Region.  In terms of average monthly income per household, in 1981 the gap between the Bangkok Metropolitan Region and the North and Northeastern regions was 2.1-fold and 2.4-fold, respectively; by 1998, this gap widened to 2.8-fold and 3.2-fold, respectively.

It is a cause for concern among policymakers and planners alike that the gap in terms of the quality of life enjoyed by the urban rich and the remainder of Thai society has widened considerably.  This is a pattern observed in many countries going through rapid socioeconomic and technological change: those well-positioned to take advantage of the changes become much better-off than those less well positioned.  Thailand, like other countries before it, is taking steps to redress the balance.  Essential improvements are required nonetheless in institutions that regulate production and provide supporting government services in rural areas, in government taxation and agricultural pricing policies, and in the environment for development of small- and micro-enterprises.  Such improvements have all proven very effective elsewhere in encouraging broad-based equitable economic growth and in improving the living standards of the poor.  In particular, worldwide experience with micro-finance shows that effective and efficient provision of micro-financial services by commercial banks, nongovernment organizations (NGOs), credit cooperatives, and savings services to the entrepreneurial poor can be done on a sustainable and profitable basis.  There is a growing awareness in Thailand of the importance of micro-finance because it contributes simultaneously to both poverty alleviation and private- and financial-sector development.

Source: Asian Development Bank