Economy of Isan

The economy of Isan is dominated by agriculture, although output is poor and this sector is decreasing in importance at the expense of trade and the service sector. Most of the population is poor and badly educated. Many labourers have been driven by poverty to seek work in other parts of Thailand or abroad.

Although Isan accounts for around a third of Thailand’s population and a third of its area, it produces only 8.9% of GDP. Its economy grew at 6.2% per annum during the 1990s.

Contents

1 Sectors 1.1 Agriculture 1.2 Other sectors 2 Poverty 3 Workforce 4 Migrant workers 5 External links

Sectors

Agriculture is the biggest sector of the economy. The following table shows the percentage of Gross Regional Product (GRP) by sector in 2000:

Agriculture	21.9
Trade	17.9
Industrial	16
Services	14.8
Public administration and defence	7
Construction	4.1
Other	18.3

Agriculture

Agriculture remains the largest sector of the economy, but its importance is decreasing. Its share of GRP fell from 45% in 1980 to 33.2% in 1990, and to 21.9% in 2000. During the 1990s, the agricultural sector grew at only 3.8% per annum, compared to 9.7% pa for the service sector. Although 76% of the population engages in some form of agriculture, only 46% of the workforce is formally employed in the sector, reflecting the fact that for many it is a part-time occupation.

Of the region's 62,000 square miles, only 35,600 is cultivated, and only 3000 is irrigated [1] (http://www.ide.go.jp/English/Publish/Books/Asedp/pdf/066_cap6.pdf). There are a number of reasons for this. Saline contamination makes a third of the land unfit for cultivation. Although average rainfall is not much less than in other parts of the country, its unpredictability often causes drought or flooding. The latter is worsened by the generally flat terrain of the plateau, while both are exacerbated by the sandy soil, which is poor at retaining water. Deforestation reduced forest cover from 25% in 1975 to 14% in 1995, again inhibiting water retention.

Attempts to improve the agricultural sector through irrigation and diversification have caused unforeseen environmental damage. Increased irrigation has increased the water table in some areas, bringing salt to the surface and contaminating the soil. The same effect has also been observed following forest clearance and the planting of cereal crops, cassava and sugar cane.

Irrigation has also proved somewhat ineffective in increasing agricultural production. Workers commonly work in agriculture during the wet season and turn to non-farm activities during the dry season. Using irrigation to increase dry season production would therefore reduce the labour devoted to these other activities and so reduce the income they provide, rather than simply supplementing it [2] (http://www.nectec.or.th/thai-yunnan/24.html).

The land which is cultivated is relatively unproductive: paddy fields produce only 424 tonnes of rice per square mile, compared to 547 nationally. Many farmers still use water buffalo rather than tractors.

60% of cultivated land is devoted to paddy. The concentration on rice farming has made the farmers vulnerable to fluctuating prices, although this has now been reduced somewhat by increased diversification. Other crops produced include, tobacco, cotton and watermelons.

Other sectors

Other sectors of the economy have been growing more quickly than agriculture, although this growth can be misleading. The number of factories grew from 1908 in 1975 to 44,000 in 1995, but 34,312 of these were rice mills. In 2000, 76% of factories in Isan were breweries or food or tobacco processors.

Poverty

Isan’s economic disadvantages have caused great poverty. In 1995, 28% of the population was classed as below the poverty line, compared to just 7% in Central Thailand. In 2000, per capita income was just 26,317 baht, compared to 208,434 in Bangkok. Even within Isan, there is a rural/urban divide. In 1995, all of Thailand's ten poorest provinces were in Isan, the poorest being Sisaket. However, most wealth and investment is concentrated in the four major cities of Khorat, Ubon, Udon and Khon Kaen. These four provinces account for 40% of the region’s population.

Workforce

A survey in spring 2001 found a total labour force of 10.7 million. Almost 600,000 of those were seasonal labourers between work, and 5.2% were unemployed. The remaining 9. 5 million were employed as follows:

Agriculture	4.4 million
Wholesale/retail trade	1.37 million
Manufacturing	1.2 million
Construction	820,000
Hotel/restaurant	440,000
Other	1.3 million

The population is poorly-educated, with 6.4 million over 15s not having completed primary school. 4 million have a primary education, 2.2 million secondary, and 829,736 have a university level education (all as of 2001). There is little incentive for better education, as most job vacancies require few or no educational qualifications.

Migrant workers

Many Isan people have sought work elsewhere. In the first half of the 1990s, 420,000 workers moved elsewhere in Thailand (60% of them to Bangkok). Many of the taxi drivers, shop and factory workers and construction workers in the capital are from Isan. The economic advantages of migrant labour have come at a social cost: while some workers migrate annually, other families are divided often for many years.

Other workers from Isan move abroad, with 108,000 emigrating in 2002. In that year migrant workers overseas remitted 29.5 million baht.

Rural Isan is a disproportionate supplier of workers to the sex trade: this is partly a legacy of the Vietnam-era US bases, and partly due to the region’s poverty. The Thai government’s National Economic and Social Development Board estimates remittances from Isan women overseas (many of them former prostitutes) to amount to $35m per annum (equivalent to 6% of the region’s economic output) [3] (http://news.bbc.co.uk/2/hi/asia-pacific/3907581.stm). The amount of money earned by active prostitutes from the region is inevitably harder to quantify.

External links

• Books/Asedp/pdf/066_cap6.pdf Toward a Knowledge-Based Economy: Northeastern Thailand (http://www.ide.go.jp/English/Publish/)

• The greening of Isaan, in Thai-Yunnan Project Newsletter No. 24 (http://www.nectec.or.th/thai-yunnan/24.html)