Modern Economy, 2012, 3, 487-497
http://dx.doi.org/10.4236/me.2012.35064 Published Online September 2012 (http://www.SciRP.org/journal/me)
Governance and Poverty Reduction in Thailand
Pornpen Vora-Sittha
Graduate School of Development Economics, National Institute of Development Administration,
Bangkok, Thailand
Received May 9, 2012; revised June 8, 2012; accepted June 16, 2012
ABSTRACT
The objective of this study is to find out how Thailand achieves her economic growth along with poverty reduction
without good governance practice. The relationships among economic growth, poverty indicators and governance indi-
cators are computed by using Pearson’s correlation. The computed results show that the poverty reduction in Thailand
is achieved through populist policies which are exercised with low quality of governance, not through growth. It sup-
ports general belief that the “pro-poor growth” policy alone without good governance performance is insufficient for
enhancing poverty reduction equally. A strategy for reducing poverty and income inequality for Thailand is not to en-
hance economic growth but to promote major improvements in governance especially in variable that reflect the per-
ception in three governance composite indicators namely Voice and Accountability, Political Stability and Absence of
Violence, and Rule of Law.
Keywords: Governance; Growth; Poverty; In come Inequality; Governance and Poverty Reduction; Thailand
1. Introduction
In Neoclassical theory, faster economic growth is asso-
ciated with faster poverty reduction if the benefits from
growth are also distributed to the poor. The general known
facts in several countries, however, do not support such
linkage. This generates a debate on the issue of the actual
contribution of economic growth to poverty reduction
efforts to be effective. Good governance has been intro-
duced in this scene as a necessary condition for poverty
reduction attempts to be exercised in such a way that
benefits from growth will also fairly distributed to the
poor. If the government power is abused, or is exercised
in weak or improper w ays, the poor are those most likely
to suffer. Moreover, poor governance also generates and
reinforces poverty, and makes poverty reduction efforts
ineffective [1].
Over the past decade since 1998 to date, countries in
all regions have shown substantial i mprovements in gov-
ernance. Thailand is one among them and started having
her public reform in governance since 1999. However, it
is found that the quality of governance; the economic
growth and the poverty reduction for Thailand do not
coincide with the theory. The normative measures in the
quality of governance for Thailand have declined since
2001, whereas the country experienced her rapid econo-
mic growth and decline in poverty incidence. How Tha-
iland achieves her economic growth along with poverty
reduction without good governance practice is a research
question of this study.
The objective of this study is to assess relationship
among the governance indicators, the economic growth
and the poverty indicators which include income ine-
quality in Thailand. The results are expected to support
general belief that either growth or “pro-poor growth”
policy alone is insufficient for enhancing poverty reduc-
tion equally. Good governance in exercising administra-
tive power is a crucial factor not only in eradicatin g pov-
erty but also reinforcing the process of being more equi-
table in income distribution.
The paper proceed s as fo llows. Section 2 provid es sc ope,
methodology and analytical framework for this study.
Section 3 is an overview of Thailand’s economic and
political situation and a review of governance develop-
ment in Thailand as a background for discussion of the
relationship between good governance and poverty re-
duction. Section 4 presents results of the study and the
last section is conclusion and policy implications.
2. Scope, Methodology and Analytical
Framework
2.1. Scope and Methodology
The relationship between the poverty and the governance
indicators is computed by means of Pearson’s correlation.
For the poverty measurement, even though there are
various indicators that show the incidence of income
poverty, two poverty indicators during 1996-2009 name l y,
C
opyright © 2012 SciRes. ME

P. VORA-SITTHA
488
poverty level (proportion of population below the pov-
erty line (expenditure-based)1 and Gini inequality index2
are selected as indication for the poverty incidence in this
study. In this stud y, the GDP per capita growth is used to
represent growth rates for the Thai economy3.
Period under studied is in between 1996-2009. The
1996-1999 stands for the period before public reform in
governance and the years after 2000 are in the period
after the reform.
The Worldwide Governance Indicators (WGI) of World
Bank during the period of 1996 to 2009 is used in this
paper as the measures of the governance quality. The
indicators include six composite indicators: Voice and
Accountability, Political Stability and Violence, Govern-
ment Effectiveness, Rule of Law, Regulatory Quality,
and Control of Corruption. The point estimate of scores
indicating perception on the governance quality are mea s-
ured in units ranging from about –2.5 to 2.5, with higher
values corresponding to better governance outcomes. For
the overall picture of governance quality for a country,
scores summation of the six composite indicators in the
corresponding period is used to represent the aggregate
WGI.
2.2. Defining Governance for This Study
In 1993, the World Bank defined governance as the
method through which power is exercised in the man-
agement of a country’s political, economic and social
resources for development. The use of the terms govern-
ance has been popular in both of their quest and usage in
the nineteenth and twentieth century, as it helps enlarge
and better illustrate what government should be focusing
on. In development literature, the terms “good govern-
ance” is addressed as a crucial link in the road to devel-
opment and poverty reduction; meanwhile, bad govern-
ance is being increasingly regarded as one of the root
causes of all poverty within our societies [2].
In response to the growing demand on measures of the
quality of gov ernan ce, a numb er of aggregate governance
indicators have been produced; such as the World Bank
in 1992, UNDP in 1997 and Daniel Kaufmann et al. in
1999, etc. Data used to quantify governance normally
come from expert assessments, polls of experts, and sur-
veys of government officials, bu sinesses and households.
However, the surveys and polls from various sources do
not share a common methodology, definition of terms, a
set of questions or measurement scale of responses. This
study will use the Worldwide Governance Indicators
(WGI) which proposed by the World Bank as the indica-
tors in measuring good governance, since it is one of the
most reliable indicators to date.
The WGI rank countries on six composite indicators of
“good governance”, covered behavior of three parties in
the society: public sector, private sector and civil society.
The three of them are supposed to cooperate in managing
socio-economic resources for national development. The
indicators include three areas of traditions and institu-
tions by which authority in a country is exercised: 1) the
process by which governments are selected, monitored
and replaced; 2) the capacity of the government to effect-
tively formulate and implement sound policies; and 3)
the respect of citizens and the state for the institutions
that govern economic and social interactions among them.
Two measures of governance are constructed to quantify
perception in each of these three areas, resu lting in a total
of six composite indicators of governance as follow [3].
1) The process by which governments are selected,
monitored, and replaced:
Voice and Accountability (VA)—capturing perceptions
of the extent to which a country’s citizens are able to
participate in selecting their government, as well as free-
dom of expression, freedom of association, and a free
media.
Political Stability and Absence of Violence/Terrorism
(PV)—capturing perceptions of the likelihood that the
government will be destabilized or overthrown by un-
constitutional or violent means, including politically-
motivated violence and terrorism.
2) The capacity of the government to effectively for-
mulate and implement sound policies:
Government Effectiv eness (GE)—capturing perceptions
of the quality of public services, the quality of the civil
service and the degree of its independence from political
pressures, the quality of policy formulation and imple-
mentation, and the credibility of the government’s com-
mitment to such policies.
Regulatory Qu ality (RQ)—capturing perceptions of the
ability of the government to formulate and implement
sound policies and regulations that permit and promote
private sector development.
3Other poverty measures: per capita GDP, poverty gap ratio, share o
f
p
oorest quintile in individual household expenditure, and proportion
b
elow food poverty line; are not used to analyze the linkage between
the indicators of governance and poverty, because the Pearson’s
correlation coefficients as shown in Appendix 1 indicates that they are
highly correlated with one another. Similarly, this study, the GDP per
capita growth is used to represent growth rates for the Thai economy,
since the GDP growth at constant 1988 price and the GDP per capita
growth are also highly correlated with Pearson’s coefficient of 0.989
(Appendix 1).
1Data that represent the proportion of population below the poverty line
is an estimate of the percentage of the population falling below the
p
overty line. The data are officially developed by the NationalEco no mi c
and Social Development Board (NESDB) of Thailand, and is now used
as the standard poverty line in most poverty analyses in the country.
2Gini-coefficient of inequality is the most commonly used inmeasuring
inequality of income. The coefficient varies between 0, which reflects
complete equality and 1, which indicates complete inequality (one
p
erson has all the income or consumption, all othe rs have none).

P. VORA-SITTHA 489
3) The respect of citizens and the state for the institu-
tions that govern economic and social interactions a mo n g
them:
Rule of Law (RL)—capturing perceptions of the extent
to which agents have confidence in and abid e by the ru les
of society, and in particular the quality of contract en-
forcement, property rights, the police, and the courts, as
well as the likelihood of crime and violence.
Control of Corruption (CC)—capturing perceptions of
the extent to which public power is exercised for private
gain, including bo th petty and grand forms of corru ption,
as well as “capture” of the state by elites and private in-
terests.
2.3. Analytical Framework
The relationships among growth, poverty, income ine-
quality, and governance are shown in Figure 1. Several
economists believe that the type of growth that has a
beneficial effect on both pover ty reduction and improved
in income distribution is “pro-poor” growth. It is postu-
lated in th is study that the “pro-poor growth” po licy al on e
is insufficient for enhancing poverty reduction equally.
Good governance is essential for pro-poor growth policy
to be effective and to reinforce the process of income
distribution.
3. Country Background
Most prominent agencies in the international develop-
ment community now acknowledge that poverty reduc-
tion is as much a political as an economic issue. There-
fore, this part will provide an overview of Thailand’s
economic and political situations and a review of gov-
ernance development in Thailand as a background for
discussion of the relationship between good governance
and poverty reduction.
3.1. Economic Background
Thailand is currently an emerging economy in Southeast
Asia and is considered as a newly industrialized country.
The country is classified as the second largest economy
in Southeast Asia after Indonesia. In addition , Thailand is
ranked midway in terms of wealth spread in the region,
since it is the fourth richest nation, based on GDP per
capita, after Singapore, Brunei and Malaysia. In 2011,
the World Bank has upgr aded Thailand’s income catego-
rization from a lower-middle income to an upper-middle
income economy with the Gross National Income (GNI)
per capita at US $4.210 comparing to the upper-middle-
income economies which have average incomes of US
$3.976 to US $12.275.
In the last several decades that ended in 1996, Thai-
land had been one of the great development success co un-
tries, with sustained strong growth at an average rate of
growth pro-poor
policy poverty
reduction
uncertain
uncertain
uncertain
income
equity
good
governance
uncertain
uncertain result ----certain result possible result
Figure 1. The relationship among growth, poverty, income
inequality, and governance.
8% - 9% per year and with an impressive poverty reduc-
tion. Physical capital such as equipment and factories,
both domestic and foreign, was the main contributor to
this high growth rate. In no year from 1958 to 1996 did
Thailand experience a year of negative growth of real
output per head. Following the financial crisis that hit
Thailand in 199 7, howev er, Thailan d’s g rowth rate fell to
–10.5 percent in 1998, the lowest it had been since before
the 1996. Even thoug h the crisis of 1997-1998 wiped of f
some gains that had been achieved in previous decades,
the level of real GDP per person in 1998 was still seven
times of its level in 1951.
About the poverty incidence, before the Asian fin ancia l
crisis, Thailand has made an enormous progress in re-
ducing the inciden ce of poverty with pov erty level falling
from 33 percent in 1990 to 14.75 percent in 1996. The
economic crisis has changed the situation, pushing one
million people into poverty. As is pointed out by Medhi
Krongkaew, et al. [4] that it is the poor who suffered
more than the others—during the boom period, the poor,
especially those in the agricultural sector did not benefit
as much as the rich, whereas during the crisis, the poor
were among the worst hit millions lost their jobs.
After the crisis in 1997, Thailand’s economic policies,
as proposed in the National Economic and Development
Plan, have focused more on improving rural standards of
living and reducing rural poverty than trying to expand
the economy in urban areas. The government’s efforts
does yield improvements in the reduction of poverty on
the average as shown by GDP per capita growth, but the
proportions of the poor who benefit from growth have
been declining from 14.93 percent in 2002 to 8.10 in
2009 (Table 1).
Most economists attribute the continual and rapid de-
creases in poverty incidence to macroeconomic perform-
ance, and the government’s sel ecti ve pol i cie s adopted after
the crisis. However, the performance cannot be claimed
as national success since Gini coefficient, an index which

P. VORA-SITTHA
490
measures the income inequality is rather stable and is
declining slowly during the period of stud y from 42.90 in
1996 to 40.00 in 2009 (Table 1).
3.2. Political Background
The politics of Thailand are conducted within the frame-
work of a constitutional monarchy after the “democratic
revolution” in 1932, whereby the Prim Minister is the
head of government and the King is the head of state.
The judiciary is independent of the executive and the
legislative branches. To date Thailand has had seventeen
charters and constitutions, reflecting a high degree of
political instability.
From 1932, bureaucrats, generals, and businessmen
have run most of the political parties. No “grassroots”
party has ever led the country. Money seems to be the
major factor of gaining power in the country. Political
power means control over the national resource. The B la ck
May which uprising in 1992 lead to reform and promu-
lgate the 1997 constitution which aimed to create checks
and balance of powers between strengthened government,
separately elected senators and anti-corruption institutes.
Administrative courts, Constitutional Courts and election-
control committee were established to strengthen the checks
and balance of politics. Disappointment in the 1997
constitution leads to the 2007 constitution, following
Thaksin’s ouster. The new constitution was particularly
designed to be tighter in its control of corruptions and
conflicts of interests while reducing the authority of the
government but is still unsatisfied to date.
Political conflict arises in Thailand when Thaksin Shi-
nawatra, the Prime Minister of Thailand in 2001, started
implementing a range of populist economic policies and
cracking down on groups critical of his government, in-
cluding several media outlets and organizations that are
part of Thailand’s vibrant civil society. A battle in form
of a conflict which leads to political turmoil broke out
between the populists and conservatives since 2008. Co up s
happened from time to time, reflecting a high degree of
political instability. A current temporary political stability
happens in Thailand when successful coups, military
regimes have abrogated existing constitutions and prom-
ulgated interim charters. Negotiation among politicians,
men of influence and generals has become the prime
factor for restoration of temporary political stability [5].
3.3. How Is the Governance Matter for
Thailand?
After enjoying the world’s highest average growth rate of
12.4 percent annually from 1985 to 1996, Thailand had
faced the economic and the financial crisis in 1997-1998.
Debate over the causes of the crisis was, in part, focused
Table 1. GDP growth, poverty measures and Gini coeffi-
cient for Thailand.
Year Poverty
Level*
Per
Capita GDP
(baht)**
GDP Per
Capita
Growth (%)**
GDP
Growth
(%)**
Gini
Coefficient
199614.75 51,920 4.84 5.8 42.9
199817.46 44,929 –11.39 –10.5 41.5
200020.98 48,339 4.03 4.8 42.8
200214.93 51,042 4.35 5.3 42
200411.16 57,154 5.44 6.3 42.5
20069.55 61,862 4.38 5.1 42.4
20088.95 65,603 1.78 2.5 40.5
20098.1 65,237 –0.56 –2.3 40
Source: the National and Economic Development Board (NESDB), Thai-
land; *Represents the proportion of population below the poverty line (ex-
penditure- based) (%), **The GDP is at Constant 1988 Price.
on the critical weaknesses of the nations’ economic gov-
ernance. It is widely believed that the rapidly changing
environment and the globalization trends had resulted in
the unbalanced and non-sustainable development of some
developing countries. But there are only some countries
in Asia like Thailand, South Korea, Indonesia, etc. which
encountered with severe structural damage, while some
countries as Australia, for example, proved to be more
resilient and adaptable than others to the Asian Crisis.
The Asian Development Bank reported in 1999 that the
crisis in Southeast Asian countries, including South Ko-
rea, was caused by a failure in implementing corporate
governance and the good exercise of power in govern-
ance had been introduced to explain the above phenome-
non [6].
For Thailand, it is apparent that prior to the crisis, in-
appropriate state management was incurred in different
parts of Thai society. The Thai society has confronted a
crisis of declining ethical and moral values and greater
cultural diversity in society. It is documented in the 9th
National Economic and Social Development Plan which
relate to governance quality before the crisis that—Budget
spending in a number of government departments was
wasteful, and investment in large development projects
was no transparent. The bureaucratic system was not co n-
sistent with the economic and social changes, particularly
in terms of its obsolete and inflexible regulations, which
led to greater use of discretionary judgment by officials.
Government officials were not held accountable, while
the state enterprise’ operations were neither efficient nor
transparent, thereby intensifying corruption, a chronic ail-
ment in Thai society. The private sector ran its business
imprudently, for example, extending loans to highrisk
projects and improper pro fit taking, resulting in a decline
in the local business sector and the whole economy [7].

P. VORA-SITTHA 491
3.4. Failure in Strengthening Governance
through Constitutional Reform
It is widely believed that constitutional reform can be a
vital tool to promote the good governance4. It has become
a popular method for countries to account for the past
institutional failures, to reconstruct the political structures
after authoritarian rule, and to ensure better governance
for the futu re. In th e last d ecade alon e, Dress el [8] ind ic a t es
that roughly 70 emerging democracies have completely
rewritten or substantially altered their constitutions and
Thailand is one of them. He refers to Thailand’s 1997
constitutional reform as a particularly interesting case
study in trying to address the governance deficiencies
through the in stitutional means while employing a highly
innovative process for drafting itself. The new constitu-
tion contains several unique features of governance wh ich
apart from the predecessors, including: 1) strengthening
the rule of law and human rights; 2) enhancing account-
ability mechanisms and enforcing much stronger con-
flict of interest standards; 3) improving transparency,
participation and decentralization; and 4) changing the
electoral and legislative processes.
With the assistance of The World Bank, the Thai Gov-
ernment started her public sector reform in governance
since 1999 after the 1997 new constitution. Efforts to
function governance had been undertaken extensively,
though in a limited way. To demonstrate Thailand’s anxi-
ousness in her reform, Damrong Thandee [9] summa-
rized the process by which the government reform gov-
ernance that—the office of the Public Sector Develop-
ment Commission was established on October 3, 2003.
Six days later the Royal Degree was officially declared
on criteria and procedures for good governance in order
to further the country’s intention to reshape Thailand
through the bureaucratic reform and development. Mean-
while, the National Corp orate Governance Committee w a s
set up to draw out policies, measures and schemes to up-
grade the level of corporate governance in business. The
academia, the mass media and the high-ranking officials
joined hands to echo the principles of good governance
by informing as well as by educating the citizens about
the issue. They accordingly outlined the major principles
of the rule of law, the morality, the accountability, the
participation, the responsibility, and the cost-effectiven-
ess in the public sector.
Half a decade later, some were skeptical on the out-
come of the constitutional reform. Several studies that
relate the impact of governance on public administration
to economic development are not satisfied with the re-
sults after reform. It is reported in the Thailand’s 9th and
10th National Economic and Social Development Plan
(2002-2011) [10] that the past developments have not
been able to move the national administration system
towards a real good governance system. It provides changes
in forms but it could not be driven to implement exten-
sively. The government administratio n still lacks of good
governance because it remains centralized. Although over-
all administration system and mechanism allow people to
participate, it is not enough and not beneficial for creat-
ing efficiency, effectiveness and justice in order to be
ready for changes. The system denies opportunities for
popular participation in decision-making. Moreover, the
judicial and legal systems have not adjusted in step with
change and are unable to provide justice for all parties.
Mechanisms for monitoring the use of state power remain
inefficient. The checks-and-balances of private-sector still
have a limited role, and lack of ability to build a collec-
tive network that could monitor effectively. Though tran-
sparency in government administration shows a tendency
to improve, and the rating by Transparency International
rose to 3.8 out of 10 in 2005, however, it drops to 3.4 in
2009. The deep-seated patronage system remains an ob-
stacle to the spread of good governance in Thailand.
Coupled with a lack of quality and public consciousness,
it results in an in ability to separate individual b enefit f ro m
public benefit, leading to more complex problems of in-
justice and corrupt practice.
Another study by Surin Maisrikrod [11] who assesses
the relationship among political-administrative account-
ability, civil society and a new form of governance in
Thailand, points out that the new system of governance
in Thailand is not being achieved as envisaged by the
1997 constitution, because the pro-market forces and
businessmen-politicians are more dominant, resulting in
the erosion of accountability and transparency, causing a
development of “corporatized governance” instead of p ar-
ticipatory governance.
Upon investigating the scores of WGI for Thailand
during the perio d of 1996-2009, The ind icators show that
after the new constitution came into force in 1997, the
aggregate score of governance shows an improvement in
the year of 1999 and 2000, where the score increased
from 1.662 in 1 997 to 1.802 in 2000 . A continual d ecline
in governance quality was noticed from the estimated
scores in the year after 2000 (Table 2). Of the six com-
posite indicators, only two of them: “Regulato ry Quality”
and “Government Effectiveness” remain their positive sig n
over the period of study. The declining in most of the
governance scores overtime after the year of 2000 refl ects
the failure of new institutions and of other provisions
which targeted at good governance through constitution.
The constitutional reform, however, do not totally fail.
At least in the study of Pasuk Phongpaichit [12] (2001)
on the bureaucratic and political corruption, she agrees
that the new constitution contains many innovations which
aim to make it costlier and riskier for the politicians and
4Constitutional reform is the process of reconstructing the constitution
and the laws that govern through public consultation and negotiation.

P. VORA-SITTHA
492
Table 2. The scores of governance indicators.
VA PV GE RQ RL CC Aggregate Scores
1996 0.292 0.133 0.432 0.455 0.626 –0.276 1.662
1997 0.344 0.305 0.26 0.308 0.566 –0.122 1.661
1998 0.397 0.477 0.088 0.162 0.506 0.031 1.660
1999 0.454 0.454 0.079 0.31 0.511 –0.077 1.731
2000 0.51 0.431 0.071 0.459 0.516 –0.184 1.802
2001 0.425 0.463 0.145 0.321 0.411 –0.239 1.526
2002 0.339 0.495 0.219 0.183 0.307 –0.293 1.251
2003 0.258 –0.367 0.346 0.282 0.106 –0.177 0.448
2004 0.125 –0.367 0.287 0.282 0.072 –0.171 0.227
2005 0.031 –0.544 0.454 0.458 0.142 –0.009 0.531
2006 –0.551 –0.922 0.356 0.287 0.038 –0.21 –1.002
2007 –0.612 –0.996 0.349 0.164 –0.019 –0.288 –1.402
2008 –0.513 –1.092 0.188 0.286 –0.065 –0.386 –1.583
2009 –0.403 –1.105 0.152 0.367 –0.134 –0.232 –1.355
the bureaucrats to abuse their position for personal gain.
But the impact on the quality of governance is still mini-
mal because law enforcement remains weak and civil
society is not active in their participatory roles, which
slow down the reform process. She believed that partici-
pation of the people is critical to the success of efforts to
put in place the new independent institutions to ensure
the human rights, the community rig hts, and the rights of
citizens to investigate the behavior of the politicians and
the bureaucrats.
Similarly, Domrong Thandee [13] admits that the out-
come has turned out in mixed results. On the one hand,
several public organizations and personnel were awarded
for their outstanding achievement in the field of per-
formance and philanthropy in several occasions. On the
other hand, corruption and nepotism still prevailed, the
Transparency International places Thailand at 84th in
corruption perceptions index in 2009. That is to say that
Thailand slips back from 11th place to 14th in the Asia-
Pacific index and from 63rd to 84th in the overall 180-
nation world index.
4. Results of the Study
Results of the study are divided into 3 parts. The first part
is an analysis of the relationship among the six govern-
ance composite indicators for Thailand. The second part
presents correlation between growth and poverty indica-
tors. In the third part, the linkage between governance
indictors and poverty indicators will be explored and
analyzed.
4.1. Correlation among Governance Composite
Indicators for Thailand
Of the six governance composite indicators for Thailand,
correlation coefficients show that there are three dimen-
Table 3. Pearson correlation coefficients of the six World
Governance Indicators (WGI).
VA PV GE RQ RL CC
VA 1
PV 0.941*** 1
GE –0.341–0.4211
RQ 0.1990.026*0.188 1
RL 0.840*** 0.909*** –0.258 0.214 1
CC 0.459*0.378–0.101 0.075 0.3741
***represents the 0.01 level of significant (2- tailed), **—the 0.05 level, and
*—the 0.10 level.
sions that have high positiv e correlation with coefficients
value between 0.8 and 0.9. Indicators that represent these
three dimensions are Voice and Accountability, Political
Stability and Absence of Violence, and Rule of Law
(Table 3).
High correlation among the three dimensions of gov-
ernance indicator lies on the facts that they are correlated
and reinforcing each other in Thailand. That is—when
overall administration system and mechanism do not
fully allow opportunities for popular participation in de-
cision-making, the judicial and legal systems do not have
enough adjusted in step with change and are unable to
provide justice for all parties, and the weak results in th e se
two governance indicators lead to political instability
afterward.
It is evident that the scores which measure perception
on the three governance indicators have been declining
after one year of the Thai Rak Thai Party’s won election
in the 2001 (Table 2). Maisrikrod [14] points out that
Thai people are disappointed in the new constitution of
1997 which aimed to establish a stronger participatory
democracy and hence strong accountability and trans-
parency in government, but the charter seems to have

P. VORA-SITTHA 493
failed to produce the desired outcome because capitalists
and corporate elites have captured the electoral process
which is the means by which state power is achieved. In
addition, it is also apparent that the government also put
pressure on Constitutional Court which rules out Thai
people’s reliability on judicial and legal systems. Since
2003, there appears a declining in scores of “Political
Stability and Absence of Violence” indicator, which reflects
the increasing likelihood that the government will be
destabilized or overthrown by unconstitutional or violent
means, including politically-motivated violence and ter-
rorism. The weak political stability during 2003-2004 is
due to the belief that the Thai Rak Thai Party with its
electoral dominance ignore claims from civil society that
the government is undermining accountability and trans-
parency, and in fact condoning actions that go against the
principles of goo d governance.
The perception score on po litical stability howev er has
been even worsening when Bangkok has been rocked by
political turmoil since 2005, and particularly since a mili-
tary coup deposed popularly-elected Prime Minister Tha k -
sin Shinawatra in September 2006. An interim military
government struggled to rule until it staged elections in
December 2007. Although the Thai Rak Thai Party’s
successor won the most seats, two successive prime min-
isters were forced to resign because of controversial rul-
ings by Thailand’s high court. Both decisions raised
concerns that Thailand’s judicial system was being used
for political purposes. Even though lawmakers realigned
into a new ruling coalition and Abhisit Vejjajiva of the
Democrat Party assumed the premier post, protesters
have continued to disrupt the country since then [15].
4.2. Is Growth Essential to Reduce Poverty in
Thailand?
Several countries, particularly in Asia, have seen soaring
economic growth as well as poverty reduction over the
last decade. But when it comes to income inequality im-
provement, they have made more limited progress. A
study of Eastwood, et al. [16], using data during the mid
1980s and the late 1990s demonstrates that the relation-
ship between gr owth and pover ty re duction v aries among
countries. Some countries whose per-capita growth rates
are similar like Ghana and Brazil; the poor fared better in
Ghana where incomes of the poor grow by 1.6 percent
per year, higher than in Brazil which grew by only 0.6
percent per year.
For Thailand, throughout the period of study, Thailand
has achieved both high rates of economic growth and a
rapid decline in the incidence of poverty. But th e growth
does not benefit all equally since Gini coefficients re-
main quite stable (Table 1). By using Pearson’s correla-
tion during the period of 1996-2009, it is shown in Table
4 that there are no correlations among the economic
growths, the income inequality and the poverty level. The
results are consistent with the study of Krongkaew, et al.
[17] who study the linkages among the incidence of pov-
erty, the economic growth and the employment by means
of multiple regression. The study shows that GDP growth
rate is not statistically significant in reducing poverty as
measured by headcount ratios. The result suggests that
the poverty reduction and a slightly improvement in in-
come distribution of Thailand might not due to the eco-
nomic growth but is affected through governance mal-
practice.
Table 4. Pearson correlation coefficients between growth and poverty.
GDP growth at
1988 price GDP per capita growth (%) Per capita GDP (baht)
Proportion
below the
poverty line
Poverty gap
ratio
Share of poorest
quintile in individual
household expenditure
Proportion
below food
poverty line
Gini
coefficient
GDP growth at 1988
price 1
GDP per capita
growth (%) 0.989*** 1
Per capita GDP (baht) 0.989*** 0.333 1
Proportion below th e
poverty line –0.159 –0.232 –0.948*** 1
Poverty gap ratio –0.295 –0.304 –0.929*** 0.998*** 1
Share of poorest
quintile in individual
household expenditure –0.509 –0.503 0.179 –0.172 –0.214 1
Proportion below food
poverty line –0.373 –0.377 –0.779*** 0.904*** 0.922*** –0.099 1
Gini coefficient 0.471 0.379 –0.618** 0.597** 0.54 –0.865*** 0.424 1
Note: ***represents the 0.01 level of significant (2-tailed), **—the 0.05 level, and *—the 0.10 level.

P. VORA-SITTHA
494
In addition, there are also other studies on poverty and
economic growth such as Kakwani [18] and Francois
Bourguignon [19] who agree that economic growth alone
is insufficient for enhancing poverty reduction equally.
They believe that the type of growth that has a beneficial
effect on both poverty reduction and improved income
distribution is “pro-poor” growth, which is often defined
as the growth which improves the income position of the
poor relatively more than that of the non- poor.
To measure a beneficial effect of which the growth has
on both poverty reduction and income distribution, Nana k
Kakwani, et al. [20], for example, proposed a new indi-
cator “the pro-poor growth index”. In their study for three
countries, namely, Lao PDR, Thailand and Korea; the
result for Thailand indicates that growth has not been
strictly pro-poor, although it has yielded considerable
poverty reduction in some period. A more detailed study
in this context is by Krongkaew, et al. [21] who elaborate
further that economic growth in Thailand reduced the
poverty faster than it would have been only in some cer-
tain periods like 1992-1994, 1994-1996, and 2000-2002.
The result explains why the growth, th e proportion of the
poor below the poverty line, and the Gini coefficient do
not statistically significant correlated.
Nanak Kakwani, et al. [22] urge that the relation among
growth, inequality and poverty is complex and interde-
pendent one. For a poverty reduction policy to be effect-
tive, it is necessary to include an agenda that addresses
both distributional concerns and poverty reduction, for
they could lead to the enhancement of both economic
growth and equity. It is suggested by Blaxall [23] that
mere policy agend a per se may not be enough for poverty
reduction efforts to be effective. The power to exercise
such policy in a proper way is an essential component of
any strategy for reducing poverty. Without good gov-
ernance practice, power to be exercised through a coun-
try’s economic, social, and political institu tions would be
abused, or exercised in weak or improper ways, those
with least power—the poor—would be those most likely
to suffer. Weak governance compromises the delivery of
services and benefits to those who need them most; the
influence of powerful interest groups biases policies,
programs and spending away from the poor; and lack of
property rights, police protection and legal services dis-
advantages the poor and inhibits them from securing
their homes and other assets and operating businesses.
Thus poor governance generates and reinforces poverty
and also subverts efforts to reduce it. Strengthening gov-
ernance is an essential precondition to improving the
lives of the poor.
This paper intend to support the line of thought that
the improvement in poverty incidence and a persistence
of high level in income inequality in Thailand do not
originates from the lack of resources but from the failures
of governance practice.
4.3. Governance and Poverty Reduction Linkage
There is lots of evidence from countries around the world
supporting that good governance reduces poverty, and
that bad governance leads to poverty. In economic theory,
there are at least three ways of connecting the govern-
ance and the poverty reduction: 1) economic growth; 2)
effectiveness of aid; and 3) human developmen t (Martin,
2004). It is generally believed that the economic growth
is one of the crucial factors for poverty red uction , and th e
quality of governance correlate to and the economic per-
formance in terms of growth has proliferated, because the
good governance spurs the economic growth that would
consequently reduces the poverty. A study of Kaufmann
et al. [24] for example found that per capita incomes and
the quality of governance are strongly positively corre-
lated across countries.
It is advocated in this study that the good governance
would spurs economic growth and would consequently
reduce poverty on ly when th e type of growth is pro- poor.
The good governance is essential for pro-poor growth
policy to be effective. If the administrative power in ex-
ercising policy is in line with good governance, institu-
tions would function transparently and would be account-
able and accessible to the public, poor people would have
access to basic services, they would have opportunities to
pursue their livelihoods. Sumarto [25] elaborates further
that without good governance, availability of the scarce
resources are generally not put to their best use in com-
bating poverty and would hinder economic growth that
could help pul l the po or out of poverty.
Good governance in public spending, for example, can
help reduce poverty implicitly, by improving services
and reducing waste, but public spending may not be ex-
plicitly oriented to the poor. To increase its pro-poor im-
pact, it may help to concentrate public spending in areas
that are relatively more important to the poor, such as
preventive health care services or primary education or
rural roads, water supply and sanitation. Governments can
also use transfer programs that identify the poor based on
their income or household characteristics and attempt to
channel income or in-kind payments to them.
It is mentioned earlier that the correlation between the
economic growth and the poverty indicators are not sta-
tistically significant because the type of growth in Thai-
land has not been strictly pro-poor. In this part, th e Pear-
son Correlation Coefficients in Table 5 show that pov-
erty level and the Gini coefficient are highly correlated to
the aggregate score of World Governance Indicator (WGI ) .
The positive correlation between the poverty level and
the WGI score indicates that the poor becomes poorer

P. VORA-SITTHA 495
when the quality of governance is low in Thailand of
which the data of aggregate WGI score are continually
decline since 2001.
In addition, it is also found that the per capita GDP at
constant 1988 price shows high negative correlation to
the governance indicator. The result suggests that bad
governance in Thailand does not only adversely affect
income of the poor, but also the average income of all
sectors. The result conforms to the general view that poor
governance tend to reinforce poverty in the society.
The positive correlation between the Gini inequality
index and the aggregate WGI indicator, on the other hand,
implies a better income distribution in light of declining
governance quality. This reflects the facts that perception
on governance quality in general is negative when Thai
government has been utilized p opulist policies by spend-
ing a large amount of money in the budget to help the
poor since 2000.
Among the six composite indicators, there are only
three of them: Voice and Accountability, Political Stabil-
ity and Absence of Violence, and Rule of Law that are
Table 5. Pearson correlation between the aggregate score of
WGI, growth and poverty indicators.
Proportion
below the
poverty li ne
Per capita
GDP (baht)
Per capita
GDP
growth (%)
GDP
growth at
1988 price
Gini
coefficient WGI
Proportion
below the
poverty li ne 1
Per capita
GDP (baht) –0.948** 1
Per capita
GDP growt h
(%) –0.232 0.333 1
GDP growt h
at 1988 price –0.159 0.248 0.989** 1
Gini
coefficient 0.597* –0.618* 0.379 0.471 1
WGI 0.909** –0.955** –0.201 –0.12 0.697** 1
***represents the 0.01 level of significant (2-tailed), **—the 0.05 level, and
*—the 0.10 level.
Table 6. Pearson correlation coefficients between composite
governance indicators, growth and poverty indicators.
WGI
indicators Poverty level Per capita GDP (baht) Gini coefficient Per capita GDP growth (%)
VA 0.896*** –0.932*** 0.628** –0.159
PV 0.937*** –0.971*** 0.605** –0.256
GE –0.562** 0.434 0.191 0.479*
RQ 0.146 –0.013 0.316 0.324
RL 0.889*** –0.911*** 0.644** –0.275
CC 0.366 –0.494* 0.342 –0.476*
***represents the 0.01 level of significant (2-tailed), **—the 0.05 level, and
*—the 0.10 level.
highly correlated to one another (Table 3). This study
will focus on the relationship among these three compos-
ite indicators, the poverty level and the income inequ ality.
It is found that the three dimensions show high correla-
tion coefficients of 0.8 - 0.9 to the poverty indicators
(proportion of population below the poverty line, and the
Gini coefficient), but the linkage between growth and
poverty indicators are not statistically significant. The re-
sults confirm that economic growth is not the main factor
in eradicating poverty in Thailand as normally cited; in-
stead, it is the quality of governance that affects poverty
reduction. The positive correlation between each of the
three governance dimensions and poverty indicators re-
veals the facts that eradication of poverty in Thailand is
success through political chan nel not by economic means.
The Thai government during the period of study spent
money to buy votes both directly and indirectly. Disap-
pointment in populist policies and conflicts among laws,
directives, rules and regulations lead to political stability
afterward.
The only indicator that reflects positive perception of
the quality of public services and the civil service, etc.,
and shows moderately importance in reducing the num-
ber of the poor in line with the accepted principle is G ov-
ernment Effectiveness. In this dimension, even though the
WGI score has been declining since 2006, it still reflects
the positive perception of the quality of public services
and the civil service, etc. Table 5 shows that it is the
only dimension that indicates moderately importance in
reducing the number of the poor in line with the accepted
principle.
The Regulatory Quality indicator displays positive
perception of the ability of the government to formulate
and to implement sound policies and regulations that
permit and promote private sector development over the
studied period. This owes to the facts that Thailand has
achieved some of the most significant growth in the pri-
vate s ector which participa tes in in frastructure, which le a ds
to the moderate growth in GDP, but its correlation with
poverty indicators is not statistically sig nificant.
Control of Corruption remains the only indicator that
Thai people have negative perception of the extent to
which public po wer is exercised throughout th e period of
study (Table 2), indicating that even though the overall
performance of the government sector has improved, but
the capacity for addressing corruption is still weak. Ta-
ble 6 shows that the lack of good governance in this di-
mension does have negative impact on the per capita
GDP at constant price as well as the GDP per capital
growth. But it does not have any correlation to any pov-
erty indicators. This implies that corruption incidence in
Thailand affect the income of Thai people equally not
only the poor.
Unfortunately, nu mber of 14 o bservations in this study

P. VORA-SITTHA
496
is not sufficient to conduct causality test to detect the
cause and effect of relationship am ong the t hree indicators.
5. Conclusions and Policy Implications
Throughout the period of study, Thailand had achieved
both high rates of economic growth and a rapid decline
in the poverty level, but the overall income disparity as
measured by Gini coefficient remains quite stable. Re-
sults of this study show that the poverty reduction in
Thailand is achieved through populist policies which are
exercised with low quality of governance, not through
growth. It supports general belief that the “pro-poor
growth” policy alone without good governance perform-
ance is insufficient for enhancing poverty reduction equally.
Results of this study tend to support general belief th at
the “pro-poor growth” policy alone is insufficient for
enhancing poverty reduction equally. It is advocated in
this study that the good governance is essential for
pro-poor growth policy to be effective and to reinforce
the process of being more equitable in income distribution.
For Thailand to sustain its growth and to avoid the
persistence of high income inequality, the country needs
to reform at least three dimensions of governance quality,
namely Voice and Accountability, Political Stability and
Absence of Violence, and Rule of Law. Politicians s hou ld
stop throwing money around in the name of poverty re-
duction program in order to garner votes. Empowering
the poor by allowing them to participate in formal politi-
cal and administrative processes as generally belief may
not be sufficient to guarantee legitimate transfer of power
to the poor. For a developing country like Thailand, the
emphasis on empowering the poor first with better edu-
cation and training to increase their productivity and
hence income is more vital. With regard to the mainte-
nance of public order, the laws should be enforced on a
fair and non-discriminatory basis that can let them be fre e
from politician intervention. Political stability would fol-
low if the perception on the two aspects; Voice and Ac-
countability and Rule of Law are acceptable by the Thai.
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