Australia and Thailand provide an insightful comparison of economic systems, as they differ in numerous ways. Both countries have mixed market economies, but Australia is an advanced economy whilst Thailand is a newly industrialised country with a developing economy. Thailand is still in recovery from 2014 when political unrest disrupted the economy and is slowly progressing to a new and improved state while Australia’s last recession was in the early 1900s.
Australia is a Western market economy where there is a high GDP and a low poverty rate. The four main components of this developed country are trade, manufacturing, services and financing. Some common features Australia shares with other advanced countries are:
• High per capita incomes and living standards
• A high level of human development with accessible education, health and social welfare services
• Industrialisation
• A high degree of environmental quality and sustainability
On the other hand, Thailand has impressively moved from a country with low income to an upper-income country with sustained strong growth and a remarkable decrease in poverty. There is private freedom, centralised economic planning and government regulation. Thailand aims to transform into a developed, first world nation that has the ability to sustain long-term quality growth. Some features that Thailand shares with developing countries are:
• Improved per capita incomes and living standards
• Improved quality of human development
• Better levels of saving and investment
• In the process of industrialisation
• More access to education, health and social welfare services
However, Thailand does share some features with Australia. Both countries have a well-developed public health system and some form of widespread government health insurance.
Economic Growth
Economic growth is a country’s ability to increase its production in goods and services, which is compared from one stage in time to another. It is often measured by comparing gross domestic product (GDP) in a year with the previous year and can also be used to compare one country’s economic growth to another, as it includes population differences between countries. Economic growth usually only occurs if there has been an advancement in technology, an increase in capital stock and improvements in the quality of education and life. In 2015, Australia’s GDP was US$1.62 trillion making it the 19th largest economy in the world. The average rate of GDP per capita growth was only 3% as investments fell and net exports did not contribute to this growth. In comparison, Thailand had a GDP of US$1.054 trillion, which made it the 22nd largest economy in the world. It’s average rate of GDP per capita growth was 2.8%, showing how these two economies are growing at similar rates but at different stages in economic life.
Quality of Life
The quality of life refers to the standard of health, happiness and well being that is experienced by individuals or groups. The United Nations Development Programme contains data in the Human Development Index (HDI), which focuses on three main aspects of the quality of life; life expectancy at birth, mean years of schooling and GNI per capita.
Australia’s HDI was 0.935 in 2015, making it the 2nd best country to live in and Thailand’s was definitely lower at 0.726 with a ranking of 93. As shown in the table below, the life expectancy at birth in Thailand is shorter than it is in Australia. The expected years of schooling are also shorter in Thailand than it is in Australia.
The Distribution of Income
Income distribution refers to how a nation distributes its GDP among its population. The distribution of income within a large group of people is often represented by the Lorenz curve. The curve measures the cumulative percentages of total income against the cumulative number of recipients, usually starting with the poorest or lowest group. The Lorenz curve is linked with measures of income inequality such as the Gini coefficient. The smaller the coefficient, the more equal the distribution of income is. A comparison of Australia and Thailand is shown in the table below.
From the table, it is clear that overall income inequality was greater in Thailand with a Gini index of 42.8 compared to a Gini Index of 34.01 in Australia. This shows the extent of how unevenly and disproportionately income was distributed in Thailand in 2000. Since then, this has slightly improved with the Gini Index last being recorded as 39.3 in 2012. The line graphs below display the fluctuations of income distribution in Thailand and Australia throughout the years, showing how inconsistent governments and economies can be.
The distribution of income in Australia is more equal and fair, as it operates through systems of taxation and social welfare payments. The higher a person earns, the more tax they pay because they are moved to higher tax brackets which differentiate them from those who earn less. The majority of money paid is given to the low-income earners through social welfare payments such as pensions, unemployment benefits, etc. and the rest of it goes towards other services such as education, health, defence and general public services. This ensures that no money is lost or is unfairly distributed. The pie chart below shows how the Australian government spends its money. In contrast, the Thai government has boosted its spending on defence and education with little money going towards the other services.
Employment and Unemployment
With a population of 23,860,000 in 2015, Australia had a workforce of approximately 12,500,000 people. The participation rate of the working age population was 64.8%. In comparison, Thailand with a population of 67,900,000 in 2015, had a workforce of 40,000,000 people in 2015, which was about three times larger than Australia’s workforce, and Thailand’s participation rate was also higher at 72%.
In Australia in 2011, 2.5% of the workforce was involved in agriculture, forestry and fishing, 1.8% in mining and 9.0% in manufacturing, whilst in Thailand, over half of the workforce is employed in the service industry. 32% of the workforce was involved in agriculture and 17% in the industrial sector. The industrial sector consists of manufacturing, mining, construction, electricity, water and gas and contributes to about 40% of Thailand’s GDP, reflecting a highly industrialised economy compared to Australia.
Australia had an unemployment rate of about 6% in 2015. It has now fallen to 5.8%, representing the strongest period of job growth in 28 years. In contrast, Thailand’s unemployment rate is below 1%, making it one of the lowest in the world. This is due to ‘informal labour’, a lack of insurance and a low birth rate. Those who can’t find jobs always end up in the informal sector or do something of their own. Foreign workers are not accounted for and currently there is a lack of babies with a fertility rate of 1.4 compared to it being 1.9 in Australia.
Environmental Sustainability
In Thailand, many issues have arisen concerning the environment and its resources. The country is currently faced with problems of air and water pollution, deforestation, declining wildlife, soil erosion, hazardous wastes and water scarcity. As Thailand started to modernize, the forests and trees surrounding the city were all chopped down to ensure space for new high-rise buildings. Bangkok supposedly has less trees and plants than any other city. This has forced the Thai government to review the critical levels of pollution and the diminishing natural resources. However, in Australia, the environment is more appreciated and cared for. Australia believes that the current use of natural resources affects the present and also the future. Greenhouse gas emissions and climate change are feared to only to get worse if they aren’t managed now. Thus, deforestation, agricultural clearing and overgrazing, overfishing, pollution and infrastructure development are major concerns for both Australia and Thailand.
The Role of Government (health care, education and social welfare)
Health Care
In 2009-2010, Australia spent about US$121 billion on health care services, averaging out to be around US$5000 per person. The government provides US$35 billion to public hospitals every year and to private hospitals it is just under $4 billion. Similar to other OECD countries, health expenditure has increased over the past few years at a fast rate. Like Australia, the Thai government also provides money towards health care. The country introduces many health schemes, for example, the Universal Coverage Health Scheme (UCS). Because of this, 99.5% of the country has health protection and healthcare is mostly accessible to everyone.
Education
Almost every year, the Australian government spends approximately $40 billion on schools with an average of just under $11,000 per student. However, research by the Mitchell Institute has proven that the government has not been fair in its spending. Spending on schools and universities has clearly risen over the last decade, but there is now a decline in spending on VET courses. In comparison, Thailand spends about 8% of its GDP on educational institutions.
Social Welfare
In the 2015-16 Australian Budget, the government included $154 billion on welfare services and social security in the financial year. This symbolizes about 35% of total government spending. These payments include social security, compensation and services to groups such as veterans, the elderly, children, families, unemployed people and those with disability. The graph below represents this. However, the Thai government currently spends less than 10% of their GDP on welfare, showing the instability of the economy and its effects on the people.