Disequalizing Equalization Grant: An Assessment of the Relationship Between Equalization Grant and Local Fiscal Capacity in Northeast Thailand

Abstract

: This paper examines the extent to which Thailand's current general or equalization grant program has helped reduce local fiscal disparity. Theoretically, the general grant transfers ought to be inversely related to local revenue-generating capacity. However, based on the 2010–2012 local government financial data from Khon Kaen province, this paper finds that local jurisdictions with high fiscal capacity and income per capita tend to receive more equalization grant per capita than the fiscally and economically disadvantaged localities. Descriptive statistics, the Gini coefficients, and fixed-effects econometric model are used to examine the relationship between general grant transfers and local fiscal capacity.