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Transcript
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