Conflict, Legitimacy and Government Reform: Equitable Allocation of ...

58 KPI Congress XI
Nevertheless, modern Thai governments still could not prevent
deterioration of income inequality. Why?
When comparing to other countries, public expenditure of Thailand
at the level of only 18 per cent of GDP is still very low. This level is
below 26 per cent of developing countries in Asia and 36 per cent of
developed countries. The majority of public expenditure goes to wages
and salaries of government employees which are on an upward trend,
while in developed countries, public spending on subsidies and money
transferred to welfare programs is as high as 50 per cent.
Economists said public spending can make income distribution
more equitable (Methee, 1979; TDRI, 1999; Peter Warr, 2003). It was
observed that spending on education is the most efficient, followed by
health care. Other studies also revealed that spending on the agricultural
sector significantly increased income of lowest-income groups in the rural
sector.
However, historically such public spending was not enough to
mitigate inequality stemming from other factors and the consequence of
tax burden borne by the poor that has reduced their income in relative
terms.
Such conclusion is substantiated by a research study entitled ‘Fiscal
policies of Thailand and Impacts on Poor People’ which was conducted
by Hyun Hwa Son, a South Korean economist. It was found that during
1990s public spending of Thailand favored the rich and provided greater
benefits to urban workers than rural people. State subsidies for electricity,
water, transportation, hospitals and education under present schemes
literally benefit well-to-do people more than the underprivileged.
This study did not even take into consideration indirect benefits of
public spending which tend to fall into the hands of the rich more than
the poor. Obvious examples are road construction and electric train when
land prices along the routes went up. In such case, people who don’t own
land will not receive this benefit.