Yesterday I read a very interesting article about rural incomes in Thailand. Here is the reference: Supattra Cherdchuchai, Keijiro Otsuka, and Jonna P. Estudillo. 2008. Income dynamics, schooling investment, and poverty reduction in Thai villages, 1987-2004. In Rural poverty and income dynamics in Asia and Africa, edited by K. Otsuka, J. P. Estudillo and Y. Sawada. New York, NY: Routledge.

The article is based on surveys of about 300 households in six villages (three each in Suphan Buri and Khon Kaen). The first survey was conducted in 1987 and the second in 2004. Two of the six villages (one in each province) are located in agriculturally favourable irrigated areas. Another two (again, one in each province) are in less favourable rain-fed areas and the final two are flood prone (Suphan Buri) and drought prone (Khon Kaen) respectively.

The main findings of the study are striking:

  • There has been a significant reduction in poverty in all areas. Using the regional poverty line developed by the National Economic and Social Development Board the rate has declined from 42% in 1987 to 13% in 1984 in Suphan Buri and from 78% to 20% in Khon Kaen.
  • The main cause of the reduction in poverty is the very significant increase in non-farm income. In Suphan Buri this increased from 6% of household income in 1987 to 39% in 2004. In Khon Kaen the increase was from 30% to 80%.
  • Given the importance of non-farm income in poverty alleviation, “the difference in poverty incidence between favourable and unfavourable [agricultural] areas has declined.” In 1987 average household income in unfavourable areas was 48% of average income in favourable areas. By 2004 this had increased to 55% (these figures are from the book’s concluding chapter).
  • The influence of farm size and availability of irrigation on household income has declined. By contrast the influence of the quantity and quality (education) of human capital has “significantly increased.”
  • Education has an “important positive effect” on non-farm earning. Children of better educated and better-resource farmers tend to have better education. As a result land ownership and access to irrigation (by enabling investment in education) can have an indirect effect on non-farm income.

From my reading there are three important messages here:

  • The non-farm sector is now the “main game” for rural livelihoods. Supporting the more even regional development of this sector should be a central policy goal.
  • At the same time, supporting more productive forms of agriculture will facilitate greater local investment in education and other forms of “human capital” improvement, especially for poorer farmers.
  • High quality rural schooling is crucial for ongoing poverty alleviation and rural eocnomic growth.