The Role of Border Trade on Income Distribution and Poverty in Chiang Rai Province

Abstract

This research has three objectives. First, it examines the incidences of income distribution and poverty in Chiang Rai province. Second, it investigates an influence of Chiang Rai’s border trade to income disparity and poverty. Third, it reviews a role of government sector on correcting the income inequality and poverty. The research methodologies uses for analyzing poverty are the FGT index and the Logistic model. Whereas, the Generalized Entropy index and the regression-based inequality decomposition and used for analyzing income distribution. The results found that the most of households involved in border trade lived in border area. They have average income higher than households not involved in border trade by 4 times. Moreover, border trade is a factor contributing to overall income inequality about 5.59 percent followed by education level and proportion of worker in household respectively. According to poverty analysis, poverty proportion in border area is more than non-border area. The households involved in border trade have less possibility to be a poor about 8.34 percent. However, the relationship between living in border area and poverty had not found. The results from in depth interview from government officials indicated that policies relating to resolve income inequality and poverty come from the central government which concentrated on a job promotion by general training for increasing household income. There are a small number of agencies to give directly training on border trade. These findings lead to policy implication that the government should implement pro-poor policies by improving an opportunity of the poor to access high quality education and training relating to border trade. Because they would help to distribute gains from border trade more equally and reduce poverty situation simultaneously.