Projection of the economic impacts of changes in Thailand's transparency and associated change in co2 emissions

Abstract

Economic growth is driven by the growth of capital in the neoclassical tradition. Likewise, economic growth is compromised by the leakage of potential capital growth. The factors in economic growth are the accumulation of 4 types of capital, comprising physical capital, human capital, natural capital, and social capital. They are complementary. The deficiency of any one can compromise economic growth and erode the supply of other types of capital. The deterioration of the social capital that brings corruption is an underlying factor for the drag on economic growth, loss of social welfare, underdeveloped political practice, and rapid depreciation of natural capital. In contrast, healthy economic growth is achieved by an increase in the supply of social capital, which uses transparency as a representation of social capital, adopting Thailand’s corruption perceptions index (CPI). This study employs the computable general equilibrium (CGE) models in ORANI (Dixon et al., 1982). The 2010 edition of the 180 sectors of Thailand’s input-output table by the Office of National Economic and Social Development Council (NESDC) was used as the CGE model database. The CGE system consists of 135,202 variables and 133,940 equations, which offer 1,262 structural exogenous variables. The growth of the investment ratio is represented by the CPI growth rate that is applied to the CGE system for the projection of economic impacts, structural change, and associated changes in CO2 emissions. Economic impact is measured by the growth of real GDP. Structural change is measured by the output growth of sectors that received high and low benefits, and environmental change is measured by petroleum consumption, efficiency of petroleum usage, and carbon emissions. In this study, the projection has two cases. Case 1 (base case) did not apply the growth of the CPI score that fixed an 8 percent investment rate. Case 2 applied investment ratio growth with the growth of the CPI score to compare two test scenarios. Scenario 1 for case 2 was given an 8 percent investment rate and a 0.94 percent per year investment ratio growth for all sectors. In scenario 2 for case 2, the scenario of the increased transparency in the petroleum sector was given an 8 percent investment rate, a 0.97 percent per year investment ratio growth for the petroleum sector, and a 0.94 percent per year investment ratio growth for the rest of the sectors. The 30-year CGE model projection results demonstrate that transparency affects efficient investment, which leads to a prosperous economy. According to the comparison between Case 1 and 2, the application of the investment ratio growth with the growth of the CPI score produced a real GDP growth index that exceeded the base case from 239 to 308. This real GDP growth index has been apparently different over 20 years. The higher CPI score leads to expanding the investment due to rich social capital or transparency and trust. This trust creates investment to replace the depreciation of capital and new investment of capital stock by investment ratio growth. In addition, in scenario 2 for case 2, the Integrity Pact, a tool for increasing the CPI score, results that changes in the petroleum sector, such as increased capital, a decline in the price of petroleum, and it has positively affected the real GDP growth index. In the 30-year prediction, a strong effect was found in the transport and petroleum sectors. In terms of the resulting consequences, policymakers should have a policy not only to audit and monitor the government’s administration for increased transparency and trust, but also the energy and environment conservation policies to support economic growth.