Urban Bias on Steroids: The Case of Thailand

This is from the Economist:

The National Village Community Fund, which has allocated 500,000 baht each to almost 80,000 villages for rural projects, is now administered by the ministry of interior. The state’s Special Financial Institutions, which provide rural credit, are now regulated by the central bank, having previously been the playthings of provincial politicians. These days, if you wait for money from Bangkok, “you’ll wait forever,” says Mr Suradech.

His complaint is confirmed by a startling calculation. The World Bank reckons that over 70% of Thailand’s public expenditure in 2010 benefited Greater Bangkok, home to 17% of the country’s population. In no other economy with a comparable level of income is government spending as skewed, say the bank’s economists.

Rather than lift the shopping power of the rural masses, the junta has aimed to boost spending by tourists and urbanites. It has cut taxes markedly for the relatively few businesses and people that pay them. It has also succeeded in doubling the number of visitors from China to 10m a year.

Remember the red shirts and yellow shirts and how they managed to cripple Bangkok?

H/T Tyler Cowen.

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