THE IMPORTANCE OF PUBLIC INVESTMENT FOR REDUCING RURAL POVERTY IN MIDDLE-INCOME COUNTRIES: THE CASE OF THAILAND - Descarga este documento en PDF. Documentación en PDF para descargar gratis. Disponible también para leer online.

This study estimates the impacts of different types of government expenditure onagricultural growth and rural poverty in Thailand. The results show that, despiteThailand’s middle-income status, public investments in agricultural R&D, irrigation,rural education, and infrastructure (including roads and electricity), still have positivemarginal impacts on agricultural productivity growth and rural poverty reduction.Additional government spending on agricultural research and developmentimproves agricultural productivity the most and has the second largest impact on ruralpoverty reduction. Investments in rural electrification reduce poverty the most and havethe second largest growth impact. These two investments dominate all others and arewin-win for growth and poverty reduction. Road expenditure has the third largest impacton rural poverty reduction, but only a modest and statistically insignificant impact onagricultural productivity. Government spending on rural education has only the fourthlargest impact on poverty, but a significant economic impact through improvedagricultural productivity. Irrigation investment has the smallest impact on both ruralpoverty reduction and productivity growth in agriculture. Additional investments in theNortheast region contribute more to reducing poverty than investments in other regions.This is because most of the poor are now concentrated in the Northeast and it has sufferedfrom under investment in the past. The poverty reducing impacts of infrastructureinvestments, such as electricity and roads, are particularly high in this region. Thegrowth impacts of many investments are also greatest in the Northeast than in otherregions, hence there is no evident tradeoff between investments for growth andinvestments for poverty reduction.Thailand is a middle-income country and it is insightful to compare these resultswith similar studies undertaken in low-income countries like India, China, and Uganda.Some of the results are similar, for example, the high returns to public investments inagricultural research and some kinds of rural infrastructure arise in most countriesbecause of the inherent market failures associated with these types of public goods. Butothers results are different. For example, the returns to public investment in education in Thailand are quite low, partly because of increasing private investment but also theinappropriate composition of much public spending on education. Within infrastructure,results from low-income countries often show higher returns to road investments thantelecommunications and electricity. But in the case of Thailand, it is investment inelectricity that shows the highest return. Thailand has invested heavily in rural roads anda dense road network has already been built, suggesting that additional investment mayyield diminishing returns. Also, there has been significant investment by the privatesector in rural telecommunication, leading to a much-reduced role for the public sector.This situation differs from many low-income countries, especially in Africa, where theprivate sector is still embryonic and the public sector must play a dominant investmentrole for the foreseeable future.

Subject(s): Community/Rural/Urban Development

Food Security and Poverty

Issue Date: 2004-06

Publication Type: Working or Discussion Paper

PURL Identifier:

Total Pages: 55

Series Statement: DSGD Discussion Paper


Record appears in: CGIAR > International Food Policy Research Institute (IFPRI) > DSGD Discussion Papers

Autor: Fan, Shenggen ; Jitsuchon, Somchai ; Methakunnavut, Nuntaporn


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