Socio-economic Analysis of the Songkhla Economy

Abstract

The study site — Songkhla province is playing a vital role for economic and social development in the Southern Thailand being an international marketing hub for natural rubber and other agricultural products. In this context, this academic work provides analytical essays focusing on poverty and income inequality; tourism business; natural rubber production and marketing, and glimpse of Songkhla’s economy.

Both primary and secondary data were explored and analyzed by adopting descriptive statistics, poverty and income inequality indices, One-Way ANOVA, Engel coefficient and econometric models such as GARCH, GARCH-GJR and EGARCH and Social Accounting Matrix framework.

The average household income is significantly different in accordance with spatial location in Songkhla. Incidence of poverty is very low along the Asian highway and its network with head count ratio of 1.17 percent. Income inequality in the sample survey data is 36.4 percent while inequality ratio is considerably higher in urban area (44%).

The number of tourist arrivals is not only the key determinant for a successful tourism business, but it is also the key source of anxiety for private sector entrepreneurs and government policy-makers. Noticeably, almost 80% of daily international arrivals by land transport in Songkhla were from Malaysia. Empirically, we found that the short run risk is persistent with negative asymmetric behavior in daily international arrivals.

The rubber industry contributed Thai Bhat 487.2 billion to the national economy in 2013 with 18.4 % of average annual growth in between 2002 and 2013. It is believed that rubber industry has always been susceptible to the price volatility of rubber latex, which destabilizes the benefits of rubber production to the local economy, particularly to small-holder producers. Empirically, we found that price volatility is strongly persistent on the Hat Yai market, and the estimated results are statistically valid.

The per capita monthly income for the urban poor is considerably low as compared to rural and semi-urban poor. Hence, urban poor are more vulnerable. We found that urban wealthy spent less proportion on food consumption as compared to both semi-urban and rural wealthy households and the Engel coefficient is significantly low in high income households than low income households.

In the Songkhla’s economy, service sector contributed highest share (32.17%) to the total value added followed by factor returns (almost 25%) and agriculture (nearly 24%). Within the agriculture sector, rubber plantation (13%) and fisheries (7%) are the promising sectors. The skilled based services and hotel and tourism, and information technology services sector are also potential sector for Songkhla’s economy.