Download 0402 Sufficiency Economy

Sufficiency Economy
15 March 2010
Krailert Taweekul
Faculty of Agriculture, Khon Kaen University
Today presentation
1. What is “Sufficiency Economy”?
2. The importance of Sufficiency Economy
Sufficiency Economy in the views of Thais
Contradict to
capitalism economy
One has to be enough or
satisfy what one has
Can not use luxury goods or
modern technology, applies
only primitive instruments or
things
It is a subsistence economy
or economy for the poor
No need to work hard to get more
products or to earn higher income
Sufficiency
Economy
It is applicable for
agricultural
Consumption and
economic will decline
Contradict to
capitalism economy
Both agricultural and business sectors
can be applied
What is Sufficiency Economy ?
Sufficiency Economy
is a philosophy that
stresses the middle path as an overriding principle
for appropriate conduct by the populace at all
levels. This applies to conduct starting from the
level of the families, communities, the nation in
development and administration to modernize in
line with the forces of globalization.
Sufficiency means :
moderation,
reasonableness,
and the need of self-immunity
mechanism
for
sufficient
protection from impact arising
from internal and external
changes. To achieve this, an
application of knowledge with
due consideration and prudence
is essential. In particular, great
care is needs in the utilization of
theories and methodologies for
planning and implementation in
every step.
At the same time, it is essential to strengthen
the moral fiber of the nation, so that everyone,
particularly public officials, academia,
businessmen at all levels, adhere first and
foremost to the principle of honesty and
integrity.
In addition, a way of life base on patience,
perseverance, diligence, wisdom and
prudence is indispensable to create balance
and be able to cope appropriately with
critical challenges arising from extensive
and rapid socioeconomic, environment, and
cultural changes in the world.
Additionally, a way of life base on patience,
perseverance, diligence, wisdom and
prudence is indispensable to create balance
and be able to cope appropriately with
critical challenges arising from extensive
and rapid socioeconomic, environment, and
cultural changes in the world.
Sufficiency
Economy
Is a
philosophy
stresses
Middle path
Appropriate conduct
By the populace at all level
Modernize
in line with globalization
Moderation, reasonableness, self -immunity
Protection
from internal and external shock
Applicable of knowledge
Sufficiency
means
With due consideration and prudence
Great care utilization
Of theories, methodologies with great care
Moral
Honesty, integrity, patience, perseverance,
diligence, wisdom
-How many is considered moderation?
-Can we consume luxury goods?
(depend on each individual’s capability so
long as it harmless one-self & other or not
make trouble to anyone)
Moderation :
Knowledge condition: -Concerning living and livelihood;
theories, methodology, technologies,
changing of environment, globalization,
local wisdom, socio-geology etc.
Moral condition :
(honesty, integrity, sincere,
diligence, perseverance, sharing)
-Lead to responsibility;
One-self, family, community, social and
national levels
Summary of the Philosophy of Sufficiency Economy
The Middle Path
Moderation
Reasonableness Self-immunity
Knowledge Condition
(Know, prudence,
great care)
Moral Condition
(honest, sincere,
diligence,
perseverance,
sharing)
Lead to
Life / economy/social
Balance / stability / sustainability
2. The importance of Sufficient economy
We are now in the globalization stream.
- changes are rapid and extensive
- Its effects are enormous and severe to the people’s ways of life.
S.E
Lead to
Balance
Stability
Sustainable
Aim to
Cope with changes:
Internal and external
S.E is the
foundation of
life and stability
of nation
Economic: Economic grouping & change in
global financial markets; (intercountry flow of capital, goods and
services)
Technology: Leapfrog advances in technologies;
communication, bio, material,
nanotechnology
Social:
Social changes: ageing society.
Environment: Changes in the environment and
natural resources: climate change,
incident of natural disasters.
World Economy
♦World economy now is in the stage of recession, while last year it grew 2.5 %,
resulting in unemployment of 200 million person worldwide.
♦ European economy in 2008 was a lion share of world economy account for
24.2 %
♦ U.S.A. economy was the second of 18.3%, its GDP was about us$ 143.0
billion.
♦ Thai economy depends 70% on export:
- Asian
21.4 % of Thai export
- EU
12.8 % of Thai export
- U.S.A.
12.6 % of Thai export
- Japan
11.8 % of Thai export
- China
9.7 % of Thai export
Climate change; global warming
♦Intergovernment panel on climate change (IPCC) reported to UN
• This is the first time in 4,500 mil years that the
earth has tremendous changed by human
being.
• Before the industry revolution Co2 was at 208
ppm.
• 200 years after the industry revolution, Co2 in
the atmosphere has increase to be 380 ppm.
• The critical point is at 450 ppm.
• Now we annually generate 2 ppm of Co2 to the
air
• So we have 35 years left to solve to this
problem.
How does SE relate to Development
Economics?
Development of the country must proceed in stages. First of all,
there must be a foundation with the majority of the people having
enough to live on by using methods and equipment which are
economical but technically correct as well. When such a secure
foundation is adequately ready and operational, then it can be
gradually expanded and developed to raise prosperity and the
economic standard to a higher level by stages. … if one focuses
only on rapid economic expansion without making sure that such a
plan is appropriate for our people and the condition of our country,
it will inevitably result in various imbalances and eventually end up
as failure or crisis as found in other countries. (1974)
No need to be a tiger
How Can We Apply Sufficiency Economy?
Sufficiency Economy
1. Daily life
- Moderation
- Reasonableness
- Self-immunity
Think before you buy
Sufficiency Club
2. Economic Development
- Agricultural Sector
- Private Sector
- Government Policy
Problems of Past Economic Development
90,000
GDP/Capita
Poverty rate by
provinces, 2000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
Poverty rate
- Poverty
- Weakness in the grass root
- Other developmental problems
Agricultural Sector
Thai agriculture in the recent past - Monoculture
- Problems from
Monoculture
- Problems from
Supply/Demand
Adjustment
- Weather
- Debt Problem
- Migration and
weakness of the
villages
New Theory for Agriculture
1. First step The aim is to let the farmers be able to support
themselves (self-sufficiency) especially concerning rice. If the main
problem is water then they should dig a pond in their land to make
sure that they have enough water for farming and household usages
which they might need support from the government or private sector
in digging the pond.
2. Second step Farmers should work together and create a
cooperative to reduce the cost of production and for saving purposes
as well as social security and together they will also have more
negotiating power in selling their products to the markets.
3. Third step For developed communities, further expansion of
the production process and commerce such as cooperative stores or
rice milling factories can rely further from the cooperation from
commercial banks or oil companies in improving their livelihood.
Example of New Theory
Example from Kam pla laay - Koan Kean
Diversified
agricultures
and other
benefits
PDA: NGO center, Nakorn ratchasima province
Agricultural Sector
Don Han village: The miracle and sufficient economy village of Khon Kaen
Ban Beung Chim: Phoo Boontem
Ba Kae village,
Two Approaches in Economic
Development
Old Development Paradigm
Development under SE Concept
Private Sector and
NGOs
Examples
• Thinking about others
Saha Farm
• Self immunity
Hana
- Prudence and not too greedy
Pricing moderately
Do not borrow
unnecessarily
• Thinking about staffs
7-11
Empathy to
your staffs
• Cautious expansion
Golden place
Building your
foundation
Back to Sufficiency Economy
Concept
Reasonableness
Thinking about all risk involved
Moderation
within one means and not overextend
Self-Immunity
How to make sure that
private sector is more in
line with sufficiency economy
Greater Prudence
Better risk management
Long term and sustainable
Investment
Government Policy
Implications of SE on Government
Policies
1. Macroeconomic Management
2. Government Policy Design
3. Alternative Development Strategy
Implications of SE on Government Policies
Moderation
1. Macro
Management
Reasonableness
Mega-project, Growth,
Inflation, Budget Deficit
Self- immunity
Adequate Saving
Energy Security
National Risk Manag..
2. Gov. Policy Adjust design of governmental projects to make people to be more sufficient
Design
(Village funds, Debt forgiveness, Educational reform etc.)
3. Alternative
Development
Strategy
Adjust the balance of economic development framework
Rural along side with Industrial development, Strong communities
Quality growth, No need to go fast, Emphasis on public well-being
How about the recent government policies
on
30% reserve requirement and the
amendment
to the Foreign Business Act?
Isolated incident
IV. How Much Success Thailand has thus far
in Applying the SE Concept?
• We are in the experimental mode and in the process of
implementing the SE concept into the economy
•
• Some success in agricultural sector
• Success in getting people to become aware of the concept
but still not the right understanding (from survey)
We also put more emphasis on teaching and instilling the
concept since young age. Same as instilling saving culture.
But it is a difficult fight with consumerism & advertisement
Success in getting discussions going: but a
little bit too much
Some successes in some of the government
policies design but more have to be done
Limited success in business sector
Private Sector
Examples
• Thinking about others
Saha Farm
• Self immunity
Hana
- Prudence and not too greedy
Pricing moderately
Do not borrow
unnecessarily
• Thinking about staffs
7-11
Empathy to
your staffs
• Cautious expansion
Golden place
Building your
foundation
Back to Sufficiency Economy
Concept
Reasonableness
Thinking about all risk involved
Moderation
within one means and not overextend
Self-Immunity
How to make sure that
private sector is more in
line with sufficiency economy
Greater Prudence
Better risk management
Long term and sustainable
Investment
Government Policy
Implications of SE on Government
Policies
1. Macroeconomic Management
2. Government Policy Design
3. Alternative Development Strategy
Implications of SE on Government Policies
Moderation
1. Macro
Management
Reasonableness
Mega-project, Growth,
Inflation, Budget Deficit
Self- immunity
Adequate Saving
Energy Security
National Risk Manag..
2. Gov. Policy Adjust design of governmental projects to make people to be more sufficient
Design
(Village funds, Debt forgiveness, Educational reform etc.)
3. Alternative
Development
Strategy
Adjust the balance of economic development framework
Rural along side with Industrial development, Strong communities
Quality growth, No need to go fast, Emphasis on public well-being
How about the recent government policies on
30% reserve requirement and the amendment
to the Foreign Business Act?
IV. How Much Success Thailand has thus far
in Applying the SE Concept?
•
• Some success in agricultural sector
• Success in getting people to become aware of the concept
but still not the right understanding (from survey)
We also put more emphasis on teaching and instilling the
concept since young age. Same as instilling saving culture.
But it is a difficult fight with consumerism & advertisement
- Success in getting discussions going: but a little
bit too much
- Some successes in some of the government
policies design
but more have to be done
- Limited success in business sector
- We are in the experimental mode and in the
process of implementing the SE concept into the
economy
Sufficiency Economy as a New Approach to
Development
A work in progress – but with great promises
A framework that can work within the market system that
will bring more balance and equitable growth which will
truly increase the well-being of the general public in the
long run
For each individual
A philosophy for people to find the meaning for themselves
“Sufficiency Economy does not have to be complete, just half or
even a quarter will be enough. … Last year, I thought that everyone
understand this. … But recently, in fact last month someone who
should understand this well because he has been working in the filed
of development for sometimes say that sufficiency economy is very
good and we have do it for one quarter of the country. … The meaning
of sufficiency economy and one quarter figure is not one quarter of
(the land area of) Thailand but one quarter of our action.” (1998)
What are we facing in the complex modern
world or globalization ?
♦ Food insecurity
♦ Massive environmental
destruction
♦ Growing inequalities in
distribution of income
♦ Crippling financial crisis
♦ Market failure
♦Poor people increase
Three Major Problems Threatening World Survival and Limit to Growth
- Food shortages
- Energy shortages
- Lack of resources
- etc
Past
world
Present & Future
Economic
Development
adhere to
capitalist
without sufficiency
Economic
Development
Amount of
Resources
Food
and Energy
Environmental
Quality
1. Economic Development without CSR
2. Shortage of natural resources
3. Environment degradation
Quantity of Resources
Food and Energy
- water pollution
- soil degradation
-air pollution
-over garbage
-slums
-etc.
- income disparity
- migration
-Terrorism
-communicable
deceases
Environmental
Quality
- climate change
- deforest, flood
- ozone layer destruction
-acid rain
-decease from pollution
Extreme and Middle Path of Economic System
Mainstream
Capitalism economy
+
Globalization
Alternative stream
Socialism economy
Understood
human nature
Inefficiency Lack of
goods Unwillingness
sharing
Accept
limitation
Sufficiency economy
Aware of
danger
Indicate weaknesses
Slow progress
Lag far behind
Can’t catch up with
new knowledge
Trade economy (Greed economy)
- Borderless even in the space
- Looking to occupy other planets
Self-sufficiency economy
-Self-reliance 100%
C.E.
VS
S.E.
Capitalist Economy (C.E)
Maximize profit
Maximize production
Maximize consumption
Sufficiency Economy (S. E.)
Abstemious use of resources
Greed
Moderation
Risk
Self-immunity
Work for self-interest
- Create the poor
Work for oneself & Others
- Joint activities, Joint consumption
At the expense of others (Less CSR)
Give away part of their wealth
Income concentration
Income distribution
Short-term profit
Long-term profit
Aims at wealth
Aims at happiness
Adam Smiith’s work
“The wealth of Nation”
(free market, greed, the role of selfinterest )
Adam Smiith’s work
“The Theory of Moral Sentiments”
(conscience will lead us to do what is right)
Three Stages of Sufficiency
1.
Sufficiency at family or farm level “Stage of self-reliance”
2.
Sufficiency at community or organization level “Stage of
cooperation among people/farmers” “cooperative,
community enterprise”
3.
Sufficiency at the national level “Stage of cooperation
among cooperative”
Three steps for country development
1.
2.
3.
Individual or
family level
(self-reliance)
• Building a good basis or infrastructure for enabling
people to have enough to live on or enough to live
on or enough to eat.
Community
level
(cooperative)
• People join hands in various activities (in the from
of group or enterprise)
• Participate in decision making process
• Develop mutual learning process
• Appropriately apply the uncomplicated technology
in development
National level
(cooperation
among
cooperative)
• Serve domestic demand first
• Enhance cooperative networking
• Promote holistic development processes to create
balance
•Take into account country’s capital social, economic,
resources
Application of Sufficient Economy
1.
Cost reduction in stead of targeted earning
2.
Increasing income together with reducing expenses
3.
Reduce risk:
- Sources of income earning have to diversify
- Cope with the changing world through the process of learning
together & working together
4.
Expanding opportunity together with preparing the
people with appropriate knowledge & know –how
(for instance village fund)
Factors give rise to poverty
Over expenses
Poverty
Low income
Lack of
opportunities
to access, to acquire
Behavior in spending
High cost of living
High dependency ratio
Physical or health problem
Low endowment; asset, capability etc.
Low education
Low quality & less products to sale
Behavior; not persevere, lazy
Non pro –poor policies
Capital
Soft loan
High income job
Land
Education
Public services
Health services
Sufficient Economy & rural development
Reduce Expenses
Change behavior
New Theory
Agriculture
Increase Income
S.E.
Change behavior
OTOP
Community enterprise
Providing
Opportunities
Government Intervention
Provide soft loan
(village fund)
Free
Education
Free for hospital
treatment
New Theory Agriculture (NTA)
Main purpose is to make farmers more self-reliant
through integrated farming system and living
harmoniously with nature.
NTA has 3 stages
1. Create self-reliance at the household
level; in terms of food, health and
income.
2. Create self-reliance at the community
level; based on cooperative activities
within community based on sharing
excess resources of each household.
It also can be community enterprise.
3. Advance stage; the community expands
their activities through reaching out to
other communities, cooperatives as
business partnerships.
Philosophy and frame of
Sufficient Economy
These can be the guidelines for implementing
the activities for reaching the Sufficient
Economy.
Philosophy
1. Moderation
Philosophy
2. Reasonableness
Frame
Standard/ Basis
Indication
1.1 Back to the
source
Goodness,
moral
-Share
-Not take advantage
-Do not think only
money
-Business ethic
1.2 Back to the
roots
Know own
background,
local wisdom
-Proud of yourself
-Proud of using local
products
- Proud of birth
place and ancestor
-Living with Thai
living life
1.3 Back to the
basic
Easy going life -Keep the middle
style suitable to way to select the
time and place daily consumer
products
-Not depend on
famous brand
Frame
Standard/ Basis
Indication
2.1 Academic
principles
Having
information to
know others and
yourself for the
change
-Adaptation not
adoption
-Know local capacity
-Know local capital
-Find out new
knowledge
-Try to get higher
education
2.2 Good plan
Doing life plan,
community plan
strategic plan
organisation plan
- family’s Accountant
-Investment plan
-Strategic plan base on
data knowledge and
good thinking
2.3 Professional
Quality,
consistency
sustainability
-Activeness
- Know both width and
depth
-Work consistency and
good quality
Philosophy
3. Self-immunity
Frame
Standard/ Basis
Indication
3.1 Good life system
Good
relationship in
family,
strenghtening
Community
-Worm family better
earning more money
- Family plan
-Social security
3.2 Good working
system
Self-reliance on
production,
consumption,
processing and
market, saving
and social
- Doing various
activities to support
economical community
and local needs such as
integrated farm,
community enterprise,
SMEs focusing on
community then
outside.
3.3 Good
governance
Good
relationship
better than
controlling and
disciplinary
- Motivation building
-Genevous
- Account ability,
transparency
- Not only result but
pay attension on
process
How to apply Sufficient
economy for earning
income from agricultural
activities
♠ Thailand is divided into 4 parts
- North
- Northeast
- Central
- South
♠ Population (September 2004)
- 61,172,224 people in whole country
- 20,934,246 people in Northeast
♠ 8.8 million of population are under poverty line
(38.50 US $) / head / month
- Bangkok
1.1
million pop.
- Central
1.03
million pop.
- North
2.28
million pop.
- South
0.81
million pop.
- Northeast
4.58
million pop.
22 % of people living in Northeast
under poverty line
Sources of Incomes in Northeast
• Main crop
: Rice, Sugarcane, Vegetable, Cassava
Fruit tree, Flower and Others
• Region faces many difficulties
♦ Less rainfall
♦ Sandy soil
♦ No facilities for irrigation
90
80
70
60
50
40
30
20
2005
2006
2007
677 mm
916 mm
1045 mm
1- Jul- 08
1- Apr- 08
1- Jan- 08
1- Oct- 07
1- Jul- 07
1- Apr- 07
1- Jan- 07
1- Oct- 06
1- Jul- 06
1- Apr- 06
1- Jan- 06
1- Oct- 05
1- Jul- 05
0
1- Apr- 05
10
1- Jan- 05
Daily rainfall (mm)
Lead to low
yield
Daily rainfall (mm)
90
80
70
60
50
40
30
20
10
0
9- Nov- 06
9- Dec- 06
8- Jan- 07
7- Feb- 07
9- Mar- 07
8- Apr- 07
8- May- 07
7- Jun- 07
7- Jul- 07
6- Aug- 07
5- Sep- 07
5- Oct- 07
4- Nov- 07
4- Dec- 07
3- Jan- 08
2- Feb- 08
3- Mar- 08
2- Apr- 08
2- May- 08
1- Jun- 08
1- Jul- 08
31- Jul- 08
Daily rainfall and water level in a pond
1- Dec
1- Nov
1- Oct
1- Sep
1- Aug
600
1- Jul
1- Jun
1- May
1- Apr
1- Mar
1- Feb
1000
2008
4
3.5
3
2.5
2
1.5
1
0.5
0
◆ Water level (m)
0
1- Jan
Accumulated rainfall (mm)
1200
2007
800
2006
2005
400
200
Role of Agriculture
• Agriculture is the foundation of Thailand’s
national economy
• Country total area is 51.31 mil ha.
• Farm holding area is 21.1 mil ha.
• Country Ag. Products account for 1,000 billion baht
- export
400,000 million baht
- consume
600,000 million baht
For instances
Θ Rice productivity (2001 / 02)
Northeast
306 kgs / rai
Central
513 kgs / rai
Θ Farmers develop production by
expansion of upland area not to
increasing yield / area
Agricultural Area and Farm Size (1998 / 99)
Region
Northeast
North
Central
South
Area / HH
25.7 rai
22.4 rai
31.8 rai
23.5 rai
< 10 rai
10 – 20 rai
20 -30 rai
30 – 40 rai
40 – 50 rai
> 50 rai
20.91 %
31.49 %
20.99 %
10.40 %
6.81 %
9.41 %
34.52 %
26.50 %
14.04 %
9.11 %
5.34 %
10.49 %
27.98 %
21.93 %
17.05 %
11.19 %
7.54 %
15.20 %
31.89 %
29.18 %
17.59 %
9.39 %
5.83 %
8.45 %
Rainfed (%)
83.9 %
74.2 %
66.7 %
91.8 %
Land use (%)
92.3%
120.3 %
118.6 %
103.4 %
Source: OAE (1998/99) cited in Ando (2004)
Note : 1) Rainfed = Rainfed area / Total agricultural land
2) Land use = Planted area / Total agricultural land
Farm Household Incomes (1999 / 2000)
Region
Net farm
income
Non farm
income
Total income
Net farm income
/ Total income
Northeast
North
Central
South
15,864 baht
26,989 baht
50,323 baht
60,604 baht
56,910 baht
45,303 baht
58,275 baht
63,938 baht
72,774 baht
72,292 baht
108,598 baht
124,542 baht
21.8 %
37.3 %
Source : Ando (2004)
46.3 %
48.7 %
Quality of life
Health
Knowledge
Incomes
Management
Participation
Application of SE.
Thank you