Addressing Regional Disparity in Thailand

Opening Remarks by Mathew A. Verghis
Lead Economist for Southeast Asia, the World Bank
At the seminar on
Addressing Regional Disparity:
Thailand Experience and International Lessons 
Bangkok, Sept. 9, 2009

Khun Arkhom Termpittayapaith, Dr. Pornchai Thiraveja, Ladies and Gentlemen,

It is my pleasure to be here with you at the seminar on Addressing Regional Disparity: Thailand Experience and International Lessons. I look forward to the discussion we're going to have today, but would also like to offer some of my own thoughts on this topic.

Regional disparities are a fact of life. In just about every developing country rural and outlying areas of developing countries tend to be poorer, less healthy and less educated then their urban counterparts reflecting limited access to markets and weak public services.

Governments are trying to respond to the challenge posed by these disparities. In the World Bank’s work with our client countries, a review of Country Assistance Strategies found that about 75 percent address geographic disparities as a ‘’strategic pillar’’.

Larger countries such as Brazil and India devote significant investments to ease regional imbalances. A review of the Bank’s work suggests three areas in particular that are in need of change. I cite them here in case they are useful for the deliberations:

• Though a high priority is given to regional disparities, the problems faced and objectives pursued have not been clearly defined. For instance, is the goal to promote convergence of social indicators? Of consumption? Or of economic activity? Ensuring that goals are defined will help focus policies.
• Country wide policies such as the intergovernmental fiscal framework, labor laws, land property rights and trade policies have an impact on regional inequality. These can affect rural urban terms of trade and product and factor movements. The intergovernmental fiscal framework – the rules under which services are delivered at the local whether by entities such as school or hospitals or by local governments – has a significant impact on the delivery of social services.
• The bank has placed too much focus on programs schemes. These have their place, but within a broader strategy.

There is also a need for better coordination and sequencing of instruments, as well as a better policy framework. The WDR 2009 begins to provide such a framework, starting from the insights of the new economic geography which emphasizes the importance of agglomeration – of concentration – as a driver of economic growth. The messages of WDR 2009 differ a bit from conventional wisdom:

• Growth requires economic concentration and so will be unbalanced. Trying to spread out economic production may fight the forces of economic growth.
• Regional disparities in social welfare are neither inevitable nor desirable, and policies should counter such disparities.
• Integration – connecting people and places to facilitate access to opportunities - - is the way to achieve unbalanced growth (economic concentration) and inclusive development.

The Government of Thailand is interested in addressing regional disparities and in our work here we would very much like to develop some of these ideas in case they are helpful. This seminar today helps us to launch this work by given us an opportunity to hear about the Thailand experience from the FPO, the NESDB and Thammasat University. We are also very grateful to the NESDB and the FPO for co-hosting this event with us.

Thank you.