Essays on village development in rural Thailand

Abstract

The process of development is accompanied by urbanization through shifting labor from agriculture to the industrial and service sector. Thus, rural villages in developing countries, where most agriculture takes place, are often seen as a place unattractive for work and living. Especially younger people seek employment in the cities where they find better infrastructure and more leisure possibilities. Left behind in the villages are often the elderly and minors. Most of the development investments are made in urban agglomerates while villages are given lower priority. Hence, the role of rural villages is often underrated in developing countries and therefore some villages remain pockets of poverty. Considering the experience of many European countries with well-targeted rural development policies, villages can become modernized and they can become an attractive living place with low prices for land and a better environment than in polluted cities. Hence, there is a need to study the role that rural villages can play in economic development of an emerging market country like Thailand. Therefore, this thesis takes an in-depth look at the mechanism, constraints and opportunities that govern socioeconomic development of rural villages in Thailand. The dissertation contains four essays. Each essay deals with a different aspect of the development of rural villages. The first essay is based on panel data from a single village, and tests, by means of two econometric models, the standard assumption that out-migration is a driver for increase in welfare and reducing poverty in villages. The second paper, using the same village than in the first paper applies a mathematical programming model to investigate the future role of agriculture under two likely external economic scenarios. The third article takes a broader view, by using a sample of 220 villages in Northeast Thailand, and explores the factors that on the one hand, can facilitate transformation from backward to progressive rural villages and that on the other hand, can hinder modernization and development. The fourth essay is focused on villages along the Mekong River in both, Thailand and Laos and presents an account of the impact of the recent Covid-19 pandemic on Mekong villages. The results of the four essays can be summarized as follows. Firstly, against the hypotheses suggested by the theory of migration, migration was not a significant factor driving income growth in the village. In-migration exceeded out-migration and business investment in the village was a major driver of income growth. Secondly, while income growth was well in line with Thailand’s national rate of economic growth, inequality has risen and poverty decline was minimal, much behind the aggregate rate of poverty decline in the country. In addition, household debt on average has more doubled between 2009 and 2018. Thirdly, households who diversified into wage and self-employment experienced better progress in terms of income growth and were less likely to be poor, compared to households whose primary occupation was farming. While all village households are engaged in farming, income from agriculture is not the only source of household income, i.e. majority of households are following a multiple income, part-time farming system. Results of a village-level, positive mathematical programming model showed that even drastic price increases in maize, which is the main agricultural commodity of the village, will not reverse the trend away from agriculture and towards a more diversified livelihood strategy. On the other hand, households are not likely to give up farming altogether in the foreseeable future. Fourthly, using panel data of 220 villages between 2007 and 2017, results of the descriptive and the model analysis demonstrate the importance of infrastructure investment in the development of rural villages in North East Thailand. On average of all the villages, poverty has been halved and household income has doubled. Key infrastructures are good quality roads, significantly related to basically all welfare parameters. Agricultural productivity growth is facilitated by improvements in irrigation infrastructure. A major infrastructure is improvements in telecommunication which is still emerging but was found to be crucial for a modernization of the village economy. However, progress in this area is lagging behind the advances made in urban areas. Finally, the paper describing the implications of the Covid-19 pandemic in villages along the Mekong River in Northeast Thailand and Laos, showed that while the economic impact of Covid-19 in rural villages was minimal, the pandemic has exposed the weakness of rural economies in the Mekong villages under lockdown conditions and due to their past threats from the exploitation of the river as a source of hydropower. This makes it even harder for these villages to cope with other ongoing processes such as climate change and natural resource depletion. In conclusion, the studies of rural villages in Thailand have opened up a new perspective of development for emerging market economies. It also provides an entry point to a policy debate for a new rural development policy. Such policy should recognize the opportunities that exist in rural villages as a means of inclusive economic growth and not, as in the past, just as a source of cheap labor for urban development.