اقتصاد و سیاست از مالیات صادرات برنج در تایلند: یک تجزیه و تحلیل شبیه سازی تاریخی،1950-1985

Based on simulation analysis using the partial equilibrium trade model, this study tries to identify the factors underlying changes in rice export taxation in Thailand in 1950–1985. It was found that the Thai government over-taxed rice exports during the low-income stage and gradually reduced it to a more optimum level corresponding to increases in per-capita income, but more recently moved to under-taxation in terms of social welfare maximization for the nation. The results are consistent with the hypothesis that the process of export tax reductions reflects the shifts in the political equilibrium from the point of favoring urban interests at the expense of farmers to that of favoring farmers more. In this process, the economic welfare of the nation as a whole does not appear to have entered into politicians’ calculations as a significant factor in their policy decisions.

Most food-exporting countries tax their exports heavily in the early development stage and reduce taxation later as they advance into higher development stages. This study aims to identify the factors underlying this evolution of trade policies by using the partial equilibrium model simulating the efficiency and distributional effects of taxation on staple food exports. Thailand has been chosen as a relevant example for this purpose because the country has been among the largest rice exporters in the world, and the Thai government used to impose a heavy tax on rice exports in its early development stage and later reduced it as this country achieved successful industrialization. The strong empirical regularity observable worldwide is that, while trade and taxation policies in developing countries tend to be distorted in the direction of exploiting (or taxing) agricultural producers, these policies in developed countries are designed to protect (or subsidize) them (Anderson & Hayami, 1986; Krueger, Schiff, & Valdes, 1992; Sadoulet & de Janvry, 1995; Schultz, 1978; Timmer, 2002). Particularly, agricultural exporting-developing countries often tax their exports by a variety of devices such as export taxes, export quotas, overvalued exchange rates, and forced procurement at lower prices by the government's parastatal. The stated objectives of these government interventions have been to correct market failure such as imperfect information, to extract surplus from agriculture which is the major sector in low-income economies, to provide food security to the poor, and to raise government revenue for national development purposes. In terms of political-economy realities, such policy choices have been the rational responses to an array of political lobbying pressures from vested interest groups including urban consumers, industrialists, and labor unions even if they might reduce the net social welfare of the nation in terms of standard economics. Having chosen Thailand as an example, the study attempts to measure the efficiency and the welfare distributional effects of the rice export taxation on different interest groups in Thailand for the 1950–1985 period, and to shed light on factors underlying the process of Thai rice pricing policy formulation. Traditionally, the rice industry played a critically important role in the Thai economy by providing the main staple food, employing a large portion of the labor force, and contributing to government revenue and foreign exchange earnings. For the past three decades, however, the rice sector's share in the Thai economy has rapidly declined corresponding to the dramatic progress in industrialization as a part of the East Asian Miracle (World Bank, 1993). Correspondingly, a major shift in policy has progressed from taxing to subsidizing rice farmers. Most past studies on the effects of the rice export taxation in Thailand (e.g. Siamwalla & Setboonsarng, 1989; Usher, 1978; Wong, 1978) have either failed to make a comprehensive calculation of its welfare distributional effects or simply calculated them for one time point. By applying the welfare economic analysis of the partial equilibrium framework combined with the political-economy approach to the data over the period from 1950 to 1985, this study attempts to provide a historical perspective on the effects of policy changes as well as factors underlying these changes. The whole period is sub-divided into the high taxation period (1950–1970) and the transitional period (1971–1985) from the high taxation to the non-taxation period classified according to the nominal rate of protection on rice. Moreover, political-economy inferences for the period after 1985 will also be made. Knowledge of the distributional effects of the export taxation on different groups’ welfare is essential for understanding the various stakeholders’ pressures on the government policy formulation process, and, hence, is an indispensable input to politicians in their attempts to alter incentive constraints through institutional reforms. The long-term simulation analysis spanning over different development stages will enable us to identify the dynamic effects of structural and institutional changes on the bargaining power of opposing interest groups in the Thai rice policy formulation process, rendering useful lessons for other staple food-exporting developing countries. The analysis will also enable us to infer how dominant the political lobbying for group interests would be relative to considerations of the social welfare maximization for the nation in politicians’ decisions. The remaining sections of this paper are organized as follows. In Section 2, a brief review of the rice economy and policies in Thailand is conducted to provide insights into the historical paths of rice policies. Section 3 develops a model for measuring the welfare effects of the rice export taxation. Explanations on the data sources used and the parameters employed in the simulation analyses are provided in Sections 4 and 5, respectively. The results of the historical simulation under both the large and small country assumptions are presented in Section 6. Finally, Section 7 summarizes the main findings and discusses their implications.

In this paper, partial equilibrium welfare economic analysis combined with political-economy approach is applied to evaluate the 1950–1985 rice export taxation policies in Thailand. Simulations were conducted for the period 1950–1970 characterized by high taxation and the period 1971–1985 characterized by a transition from the high taxation to the zero taxation era. The results of the simulation analysis are consistent with the hypothesis that historically observed policies were the results of interactions between rational political leaders trying to maximize the probability of their staying in power and various interest groups seeking profits to their group. In this process, economic efficiency measurable by net social welfare to the nation does not appear to have entered the politicians’ calculation as a major factor. The results reveal that in the low-income stage, the Thai government taxed the rice sector much higher than optimum, but reduced the tax gradually to optimum during the course of development. More recently, however, the taxation rate has been reduced to less than optimum. Our findings suggest that, during the early stage of development when the Schultzian food problem was dominant, the Thai government redistributed substantial income from rice farmers to urban consumers, industrialists, exporters, and the government agencies in collusion since the political benefit of doing so to politicians was much greater than the political cost of taxing farmers. Urban consumers were geographically concentrated and more easily organized themselves for political lobbying than rice farmers who were dispersed over wide remote areas. Moreover, autocratic leaders of the military junta before the early 1970s would have found little need for major electoral support from rural areas. On the other hand, in the early development stage, the rice sector was dominant in the national economy, from which rice export taxation enabled the government to extract large revenue at a relatively low administrative cost. Therefore, rice export taxation should have been politically efficient for Thai political leaders, though economically inefficient. The results also reveal that in the more advanced stage of development, as a result of successful industrialization, rural-urban income disparity widened while the food problem lost its ground gradually. This structural change established the conditions to strengthen the farmers’ political power in demanding for export tax reductions while it reduced the opposition from the coalition of urban consumers, industrialists, rice exporters and government agencies. These conditions were also reinforced by the change in political institution from bureaucratic-centered to interest-group politics. This tax reduction, however, did not affect the quota rent to rice trading elites in collusion with Commerce Ministry's officials, implying their decreasing resistance to tax reduction. The tax reduction occurring in the 1970s to the early 1980s was associated with efficiency improvements from the over-taxation to the optimum taxation in terms of the social welfare criteria to the nation. However, as the political equilibrium moved toward favoring farmers more after the mid-1980s, the export taxation was further reduced to zero. This recent move should have been politically rational in terms of politicians’ private welfare maximization, though not economically rational in terms of social economic welfare maximization. As for policy implications for food exporting-developing countries, the results show that, provided that the government has the capacity to use the tax revenue efficiently for national development purposes, there is a good possibility for large food-exporters to promote economic development by taxing their exports at a relatively high rate during their low-income stage when the tax base outside agriculture is weak, because the loss in social economic welfare due to the taxation is small relative to the tax revenue generated during the low-income stage, as illustrated by our simulation for the case of Thailand. However, once this system is instituted, it is susceptible to manipulations by the rent-seeking activities of vested interest groups, resulting in the imposition and maintenance of taxation at a much higher rate than the social optimum and for a longer period than necessary, resulting in a major loss in social economic efficiency as well as undue sacrifice of farmers. This problem may be aggravated by the government's lack of capacity to utilize the tax revenue efficiently for the development of the national economy including the rural sector. Greater caution must be paid to the use of export taxation in small food exporting-developing countries because the taxation is sure to cause major losses in both efficiency and equity. How efficiently did the Thai government use the rice export tax revenue in the past? Were the gains from national economic growth due to the use of the tax revenue larger or smaller than static efficiency losses due to market distortions by export taxation in the case of Thailand? This question cannot be answered by our partial equilibrium analysis. It requires a more comprehensive general equilibrium analysis, which is beyond the scope of this study. The possibility, however, may exist for food exporting-developing countries to use a part of the revenue from food export taxation for financing investments in programs to increase agricultural productivity, such as agricultural research, irrigation infrastructure and fertilizer subsidy, with the result of not only increasing social economic welfare for the nation as a whole but also improving inter-sectoral equity. How large this possibility would be and how such agricultural development policies may be best combined with food export taxation shall be among the important policy research agenda in the future.