Thailand or India

The world of today is changing at an unprecedented pace, and that pace of change is only going to accelerate. The good news is that the change is mostly in the positive direction along multiple dimensions such as material welfare, civic services, infrastructure, security, and so on. The negative aspect of the change is that inequality is increasing. That is to be expected. 

I don’t decry the increasing inequality as long as the economically backward are also advancing at an increasing pace.  Inequality is a feature, not a bug. That is, I don’t particularly care if the rich are getting richer so long as the poor are also getting rich. That has been the trend forever in most parts of the world and there’s no reason to expect that it will not continue into the future.

Let me make the case a bit more concrete by considering the case for India and the US. Compared to 50 years ago, both the US and India are much better off today. But the gap between the two has decreased significantly and evidently. Though the US was — and is — much richer than India, India has seen relatively more progress. Faster economic growth is not that hard when an economy is not at the leading edge of development.

Moving to India from the US in the past would have meant a general lowering of the standard of living but not so much now for those who are well-heeled. You can get pretty much everything in the major metros in India that you get in the US, although at a higher price. 

Part of this change is because the world is getting more homogenized; the McDonaldization of the world, so to speak. The quaint regional differences are being lost. But let’s not forget that this is accompanied by an increase in choices that did not exist before. For example, you have access to all sorts of cuisines in pretty much all major cities of the world. Rich and even middle class people across the world can afford to travel on vacation.

My grandparents and parents barely traveled within India, never mind ever traveling abroad. Though they were middle-class by the standards of the day, they were too poor to afford that luxury. But all my siblings and their children consider it totally unremarkable to go on domestic and foreign vacations. 

The world is getting better every day in every way materially. 

This bit was motivated by a question I was asked yesterday. In about 20 years, which of the two countries — Thailand or India — would be a better place to live in? Thailand is a richer country than India today. The average Thai has a better standard of living than the average Indian. But will the gap narrow or will it widen in 20 years?

My answer is that it would not matter. India’s GDP per capita (nominal, not PPP) was $2,700 compared to Thailand’s $7,400. Those are 2024 figures. India, aside from having a lower GDP per capita, has a higher tax rate on consumption: 18% GST compared to 7% VAT. That means India is more costly for goods and services. Therefore money will go further in Thailand compared to India.

But even if relocation were costless, not too many Indians would choose to move to Thailand. The place one chooses to live in depends only partially on macroeconomic variables but to a large degree on one’s social connections.

Gazing into my crystal ball, I see that the gap between Thailand and India will narrow. In 2045, India’s GDP per capita will be $9,200 (in 2026 dollars) and Thailand’s $12,200. (Assumption: The economies will grow at the current rate of growth. India at an average 6.5% per annum and Thailand 2.5% per annum.) So my guess is that in about 20 years, the macroeconomic conditions in both places would be roughly comparable. 

Though averages conceal a lot of details, they have their utility. They show us the big picture which must be considered. But the particulars matter too. And those particulars will only be known 20 years hence. Therefore my answer is to keep both options open and cross that bridge when you come to it.

BTW, I’m going to be in Thailand for a week starting 24th Feb. If you have suggestions on what to do in Bangkok or Pattaya, please leave a comment or email me. Thanks.

Author: Atanu Dey

Economist. View all posts by Atanu Dey