The economics and politics of rice export taxation in Thailand: A historical simulation analysis, 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.