Provincial Budgetary Allocation and Inequality in Human Development

Abstract

Promoting equity and justice is one of the national strategies set out by the government to reduce inequality in the country. However, the way the central government allocates the budgets to the provinces may make it difficult for the government to reach the goals of equity. Inequality of opportunity is a serious social issue existing everywhere in Thailand, even though it may seem to get better slowly. Over the years, we still see spatial inequality of access to high-quality public goods and services. This research aims to analyze the relationship between provincial budgetary allocation and inequality in human development and proposes guidelines for using fiscal policy to promote equality among provinces in Thailand. Using provinces as the unit of analysis, this quantitative research is divided into two parts. First, the researchers utilize several datasets from the Budget Bureau, the National Statistical Office and the Office of the National Economic and Social Development Council to examine the structures and trends of provincial budgetary allocation during the years 2558 to 2562. The results depict that the provincial budget has become more dispersed than it was before, but it is still heavily centralized. Second, employing multiple regression analysis, the researchers find a positive relationship between provincial budgetary and inequality in overall human development (including education and income development). This research provides three main policy recommendations. First, the government should adopt equity-based budgeting. That is, provinces with greater inequality should be given a larger provincial budget to reach the same level of development as others. Second, both local government units and central offices at the sub-national level should develop a budget strategy management framework that will bring all priorities together in one cohesive format that yields much more impactful results. Finally, the provincial budget model should be redesigned to use the Human Achievement Index (HAI) as one of the criteria for the annual budget allocation.