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The International Journal of the Royal Society of Thailand
Volume XII, 2020

From the 1960s to the 1990s, Thailand became a much less equal society.
In 1962, at the first calculation based on household survey data, the Gini Index
(a measure of income distribution in which a higher figure means greater

inequality) was 0.413, around the average for developing countries. In 1992 it
had risen to 0.536 , among the highest in the world, surpassed only by some
2
countries in Africa and Latin America. The deterioration was especially
steep from the mid-1980s onwards, the era of breakneck growth fueled by
market liberalization and the inflow of East Asian investment.

Many factors contributed to this trend, but five were paramount. First,
government promoted growth by granting favors to capital while repressing labor
(Glassman, 2004; Jetin, 2012). Second, growth was heavily concentrated around
Bangkok, and measures to counter this concentration were weak and ineffective.
Third, as Thailand was enveloped by globalization, the prices, profits, and
salaries for some adjusted towards international levels, and urban property
values boomed. Fourth, from the mid-1970s onwards, world agricultural prices
fell, dragging down farm incomes (Medhi, 1993; Ikemoto, 1991; Ikemoto and
Uehara, 2000). Finally, there was no political interest or will to combat growing
inequality. It was not seen as a problem, and not raised as an issue in the
development plans of the Cold War era. Here neighboring Malaysia provides
the telling contrast. The trend of its Gini Index over this era is almost a mirror
image of that of Thailand. It started much higher, around the level of Thailand’s
peak, and ended much lower. Erik Kuhonta (2011) has argued that the racial
riots of 1969 convinced Malaysia’s leaders that inequality had to be reduced,

resulting in policies such as universal health care, land reform, tax changes, and
the positive discrimination of the bumiputera policy. By contrast, Thai government
policies tended to confirm rather than counter inequality. The tax structure, heavily
dependent on indirect taxes, weighed more heavily on the poor than the rich,
who benefited from copious loopholes. Government spending was concentrated
in Bangkok, and later in some large and urbanized provinces whose politicians
were deft at capturing funds from the national budget (Warr, 2003; Hyun, 2009;
TDRI, 2015).

2 The UN and the World Bank prefer the Gini Index of household expenditure which is usually
lower than that based on income. The Thai literature has tended to concentrate on the income
index which include the excess of income over expenditure, that is, saving, which contributes
to inequality of wealth.

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