Regional industriazation, labor mobility, and poverty changes

Abstract

This research aims to find out the impact of regional industrialization through labor mobility and income changes on poverty changes in two periods; between 1988 and 1996, and between 1996 and 2000. In order to achieve the objectives of the study, the industrialization policy which is comprised of an industrial development policy launched by the National Economic and Social Development Board (NESDB), and the industrial promotion policy under the Board of Investment (BOI) were investigated. The Head-Count Ratio Index is used in this study. It measures the proportion of poor people in total population based on the 1988, 1996, and 2000 Household Socio-economic Survey data (SES) conducted by the National Statistical Office (NSO). Impacts of the regional industrialization policy on the national poverty changes are explained by the decomposition analysis of the national poverty changes. The analysis consists of two effects, productivity effect and resource allocation effect. The productivity effect explains the contribution of income changes to the national poverty changes. The resource allocation effect explains the contribution of the mobility of labor to the national poverty changes. This study demonstrates that the regional industrialization policy would affect the national poverty changes when explained by the contribution of the productivity effect and the resource allocation effect. Finding shows that the contribution of the productivity effect had much more effect on poverty changes than that of the resource allocation effect. A key factor contributing to the national poverty changes between 1988 and 1996, and between 1996 and 2000; was the productivity effect of agricultural labor in the areas outside the Bangkok Metropolitan Region and outside the Eastern Seaboard Region. This could be indirectly induced by the industrialization policies. The results show that an actual decrease in the national poverty incidence by around 17.9 percent of total population between 1988 and 1996, was caused by the productivity effect by 94 percent of the actual decrease. The remaining 6 percent was caused by the resource allocation effect. Between 1996 and 2000, an increase in the national poverty incidence was predominantly caused by the contribution of the productivity effect. However, it was partly offset by the contribution of the resource allocation effect.