Why Thailand’s War on Poverty is Entering a Critical Stage

Thailand has come a long way in recent years.

In 2000, the kingdom’s poverty rate was 20 percent. Today, according to the Asian Development Bank, that rate has been cut in half to 11 percent. For a country with over 68 million citizens, it’s a reduction representing millions of improved lives.

And Thailand has other statistics in its favor. According to TradingEconomics.com, Thailand’s annual economic growth since 2013 has remained steady at about 3.4 percent. Thailand’s unemployment rate has averaged less than 1 percent since 2011, and its youth unemployment rate is only 2.5 percent. Additionally, average disposable incomes rose 50 percent between 2006 and 2014.

Put simply, capitalism and economic development have helped Thailand’s people become richer and happier.

Nevertheless, Thailand must take new steps in the coming years if it is to capitalize on these human gains. Because not all of the news is so good.

For a start, the passing last week of the revered King Bhumibol Adulyadej has cast a shadow over Thailand’s political and economic stability. Until now, serving as the figurehead of the ruling military government, the king provided a semblance of unity. But his death risks the re-eruption of long brewing political tensions.

That insecurity threatens Thailand’s access to already weak levels of foreign investment. In 2015, foreign investment fell by a massive 78 percent from 2014, denying the private infrastructure that Thailand needs for new economic growth. With emerging competition across the region — most notably from Vietnam — Thailand needs foreign investment to boost its lagging capacity in mega resorts.

Put simply, capitalism and economic development have helped Thailand’s people become richer and happier

Instability also threatens Thailand’s tourism sector. Suffering in recent years as prospective visitors took note of the 2014 military coup, tourism only truly rebounded this year. And to ensure its tourism sector is now protected, Thailand will have to reassure international tourists it is safe for visits. The best way to do that is a transition back to democracy based on the rule of law. But in the short term, the Thai military must prioritize stability.

Another challenge is Thailand’s export market. Although Thailand achieved dramatic increases in exports between 2003 and 2013, its exports have been on a downward track since. And accounting for around 65 percent of Thailand’s GDP, export decline is a big problem. In response, Thailand will have to diversify its export market away from cheap, low-value goods. If it fails to do so, Thailand risks a China-style race to the bottom.

Unable to match increasing wages with correlative productivity/goods-value gains, China’s economy is sputtering. And a concern for Thailand is that its 35 percent increase in average monthly wages between 2012 and 2016 has come alongside declining productivity. To address that output gap, Thailand needs economic diversification and greater-value exports. But to do that, it will have to improve its education system. As the Oxford Business Group notes, while Thailand has successfully funded beneficial projects to improve skills, much is yet to be done.

The key here is that Thailand must do more to invest in human potential. And it must be aggressive.

Transparency International continues to describe corruption as a problem in Thailand. That corruption matters in an economic sense as an obstacle to the expanding and efficient allocation of resources. Second, Thailand’s northeastern population remains less educated and more economically disadvantaged than in other parts of the country. Those rural areas along Thailand’s border with Laos have always lacked good infrastructure. But successive Thai governments have systematically neglected them. That’s a great waste of potential human capital.

The solution, of course, is targeted infrastructure investment and improved education. Unfortunately, Thailand’s education system is far from ideal. In March, an editorial in The Bangkok Post lamented Thailand’s inadequate education system. Rural students, it argued, remain far less likely to receive a quality education than their urban counterparts. And bureaucrats in Bangkok retain far too much control over teaching decisions at local levels. As a consequence, increased resources are not producing associated education gains. If Thailand doesn’t address this failure, its economy and its future generations will suffer.

Ultimately, Thailand has a lot going for it. With a trade-friendly, tourist-friendly geographical location and a hardworking people, the kingdom has great potential. The free enterprise system (read here Elizabeth Warren!) has brought and continues to offer the Thai people a future of opportunity and wealth. But that future is not certain.

Unless its government makes hard choices, Thailand’s war on poverty will stagnate. And too many better lives will never come to be.

Tom Rogan is a foreign policy columnist for National Review, a domestic policy columnist for Opportunity Lives, a panelist on The McLaughlin Group and a senior fellow at the Steamboat Institute. Follow him on Twitter @TomRtweets.