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SUFFICIENCY ECONOMYSUFFICIENCY ECONOMY
““Income Generation and Poverty Reduction for Development” Income Generation and Poverty Reduction for Development” CourseCourse
Mekong InstituteMekong Institute
1 April 2009 1 April 2009
Montree BoonpanitMontree BoonpanitDirector Director
Northeastern Economic Northeastern Economic and Social Development Officeand Social Development Office
Contents to be discussedContents to be discussed
1.1. What is “Sufficiency Economy”What is “Sufficiency Economy”
2.2. How is S.E. importance?How is S.E. importance?
3.3. To what extent S.E. can alleviate To what extent S.E. can alleviate
poverty?poverty?
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Sufficiency Economy Sufficiency Economy in the views of most Thaisin the views of most Thais
It is applicable It is applicable for agriculture onlyfor agriculture only
It is a It is a subsistence economysubsistence economy
or economy for the or economy for the poorpoor
Consumption andConsumption andeconomic will decline economic will decline
Country developmentCountry development will lag far behindwill lag far behind
Can not use luxury goods Can not use luxury goods or modern technology, or modern technology, applies only primitiveapplies only primitive instruments or things.instruments or things.
One has to be enoughOne has to be enough
or satisfy what one hasor satisfy what one has
No need to work hard No need to work hard
to get more products to get more products
or to earn higher income.or to earn higher income.
Contradict to Contradict to capitalism economycapitalism economy
Sufficiency
Economy
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What is “Sufficiency What is “Sufficiency Economy”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 as well as the level of nation in development and administration so as 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 needed 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 based 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,
environmental, and cultural changes in the world. 1Notice 1 Unofficial translation of the Thai working definition approved by His Majesty and sent by His Majesty’s Principle Secretary to the NESDB on November 29’1999
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SufficiencyEconomy
Appropriate conduct by the populace at all level
Moral honesty, integrity, patience,
perseverance, diligence, wisdom
Protection from internal and external shock
Moderation, reasonableness, self-immunity
is a philosophy
Stresses
Sufficiency
Middle path
Modernize in line with globalization
meansApplicable of knowledge
with due consideration and prudence
Great care utilization of theories, methodologies with great care
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Moderation: - How many is considered moderation?
- Can we consume luxury goods? (depend on each individual’s capability
so long as it harmless one-self & others or not make trouble to anyone)
Knowledge condition: - Concerning living and livelihood; theories, methodology, technologies, changing of environment, globalization, local wisdom, socio-geology etc.
- Right and accuracy.
Moral condition: - Lead to responsibility; one-self, family, community, social and national
(Know, prudence, great care,due consideration)
(honesty, integrity, sincere, diligence, perseverance,
Sharing)
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Summary of the Philosophy of Summary of the Philosophy of Sufficiency EconomySufficiency Economy
The Middle Path
Reasonableness Self-immunity
Moderation
balance / stability / sustainability
life / economy / social
Lead to
Moral Condition (honest, sincere, diligence,
perseverance, sharing)
Knowledge Condition(Know, prudence, great care)
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How is S.E. importance?How is S.E. importance? 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.
S.E. is the foundation of
life and stability of nation
Aim to
BalanceStability
Lead to
Cope with changes:Internal and external
Economic: Economic groupings & changes in global financial markets ; (inter-country 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.
Sustainable
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World EconomyWorld Economy World economy now is in the stage of recession, while World economy now is in the stage of recession, while
last year it grew 2.5 last year it grew 2.5 %%., resulting in unemployment of ., resulting in unemployment of
200 million person worldwide. 200 million person worldwide. European economy in 2008 was a lion share of world European economy in 2008 was a lion share of world
economy account for economy account for 242. % 242. %.. U.S.A. Economy was the second of U.S.A. Economy was the second of 1 8 .3 %1 8 .3 % , its GDP was , its GDP was
about us$ about us$ 1430 1430 billion.billion. Thai economy depends 70 Thai economy depends 70 % % on exporton export
Asian Asian 214. % 214. % of Thai exportof Thai export EUEU 128. % 128. % of Thai exportof Thai export U.S.AU.S.A 126. % 126. % of Thai exportof Thai export JapanJapan 118. % 118. % of Thai exportof Thai export ChinaChina 9.7% 9.7% of Thai exportof Thai export
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Climate Change; Climate Change; global warmingglobal warming
Intergovernmental Panel on Intergovernmental Panel on climate change (climate change (IPCC) reported to IPCC) reported to UN.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 280 ppm.
200 years after the industry revolution, Co2 in the
atmosphere has increased 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 this problem.
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What we are facing in the What we are facing in the complex modern world or complex modern world or
globalizationglobalization Food insecurityFood insecurity
Massive environmental destructionMassive environmental destruction
Growing inequalities in distribution of Growing inequalities in distribution of
incomeincome
Crippling financial crisisCrippling financial crisis
Market failureMarket failure
Poor people increasePoor people increase
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Present & Future
Economic Development
- Food shortages- Energy shortages - Lack of resources- etc
- income disparity- migration- terrorism- communicable deceases
- climate change - deforest, flood - ozone layer destruction- acid rain- decease from pollution
1. Economic Development without
CSR
2. shortage of natural resources
3. Environmental degradation
Three Major Problems Threatening World Survival and Limit to Growth
- water pollution- soil degradation- air pollution - over garbage - slums etc
worldpast
Amount of Resources Food andEnergy
Environmental Quality Environmental
Quality
Economic Development
adhere to capitalist without sufficiency
Quantity of Resources Food andEnergy
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(Sufficiency economy)(Sufficiency economy)
Extreme and Middle Path of Economic Extreme and Middle Path of Economic SystemSystem
MainstreamMainstream AlternativeAlternative stream stream
Capitalism economyCapitalism economy Socialism economySocialism economy
Self-sufficiency Self-sufficiency economyeconomy
Trade economyTrade economy(Greed (Greed economy)economy) - Self-reliance 100%
- Close the country- Borderless even in the space -Looking to occupy other planets
GlobaliGlobalizationzation
Understood human nature Accept limitation
Indicate weaknessesAware of danger
InefficiencyLack of goodsUnwillingness sharing
Slow progressLag far behindCan’t catch up with new knowledge
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C.E. VS S.E.Capitalist EconomyCapitalist Economy Sufficiency EconomySufficiency Economy
Maximize profitMaximize productionMaximize consumption
Abstemious use of resources
RiskRisk Self-immunitySelf-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 Smith’s work “The wealth of Nation”
(free market, greed, the role of self-interest)
Adam Smith’s work“The Theory of Moral
Sentiments” (conscience will lead us to do what is
right)
Greed Moderation
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33 Stages of SufficiencyStages of Sufficiency
1.
2.
3.
Sufficiency at family or farm level“Stage of self-reliance”
Sufficiency at community or organization level“Stage of cooperation among people/famers”
“cooperative, community enterprise”
Sufficiency at the national level“Stage of cooperation among cooperative”
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3 steps for country 3 steps for country developmentdevelopment
1.1.
2.2.
* Building a good basis or infrastructure for enabling people to have enough to live on or enough to eat.
* People join hands in various activities (in the form of group or enterprise)
* Participate in decision making process* Develop mutual learning processes* Appropriately apply the uncomplicated technology in development
Individual orfamily level
(self-reliance)
Communitylevel
(cooperative)
National level
(cooperation among cooperative)
3.3.
* Serve domestic demand first* Enhance cooperative networking * Promote holistic development processes to create balance* Take into account country’s capital; social, economic, resources
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Application of S.E.Application of S.E. Cost reduction in stead of targeted Cost reduction in stead of targeted
earning.earning. Increasing income together with Increasing income together with
reducing expensesreducing expenses Reduce risk :Reduce risk :
Sources of income earning have to diversifySources of income earning have to diversify Cope with the changing world through the process of Cope with the changing world through the process of
learning together & working togetherlearning together & working together
Expanding opportunity together with Expanding opportunity together with preparing the people with appropriate preparing the people with appropriate knowledge & know-howknowledge & know-how
(for instance village fund)(for instance village fund)
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Factors give rise to poverty
Poverty
Over expenses
Low income
Lack of opportunities
Behavior in spendingHigh cost of livingHigh dependency ratioPhysical or health problem
Low endowment; asset, capability etc. Low educationLow quality & less products to saleBehavior; not persevere, lazy
Capital High income job Public services
Education Health services
to access, to acquire
Soft loan Land
Non pro-poor policies
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S.E. & poverty alleviation
Reduce Expenses
Increase Income
Generate Opportunities
Change behavior
Change behavior
New TheoryAgriculture
Government Intervention
Provide soft loan(village fund)
Tuition-free Education
Treatment-freefor hospital visit
S.E
OTOP community enterprise
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New Theory Agriculture: New Theory Agriculture: NTANTA
Main purpose is to make farmers more self-reliant Main purpose is to make farmers more self-reliant through an integrated management of their land, living through an integrated management of their land, living harmoniously with nature.harmoniously with nature.
NTANTA has 3 stageshas 3 stages1.1. Create selfCreate self--reliance at the household level; in term of reliance at the household level; in term of
food, healthy and income from extra crops.food, healthy and income from extra crops.Do mixed farming by dividing land into 4 parts with Do mixed farming by dividing land into 4 parts with proportion of 30/30/30/10 for rice cultivation, garden proportion of 30/30/30/10 for rice cultivation, garden crop, a pond and housing respectively.crop, a pond and housing respectively.
2.2. Create selfCreate self--reliance at the community level; reliance at the community level; Based on cooperative activities among members within Based on cooperative activities among members within community based on a concept of sharing excess community based on a concept of sharing excess resource of each household. It can be community resource of each household. It can be community enterprise.enterprise.
3.3. Advance stage; Advance stage; The community expands their activities through reaching The community expands their activities through reaching out to other communities, cooperatives as business out to other communities, cooperatives as business partnerships.partnerships.
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What is What is Community Community
PlanPlan A plan that is formulated A plan that is formulated
for the development of for the development of
community by community community by community
and for the community and for the community
itselfitself
A participant from A participant from
members of the members of the
community in the process community in the process
of formulationof formulation
Self-relianceSelf-reliance
Local resource and Local resource and
wisdomwisdom
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Principles of Community Principles of Community PlanPlan
““explode from withinexplode from within " " / “knowing oneself”/ “knowing oneself”
Area-based/Community based development: for by and Area-based/Community based development: for by and
of the community: not for the government or NGO of the community: not for the government or NGO
agenciesagencies
Participation from all sectorsParticipation from all sectors
Other levels or agencies support but not guide/controlOther levels or agencies support but not guide/control
Community Information “know oneself”: reduces Community Information “know oneself”: reduces
expenses, increases income and generates expenses, increases income and generates
opportunitiesopportunities
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Community Development Plan Community Development Plan Formulation ProcessesFormulation Processes
1.1. Meeting to share the understanding.Meeting to share the understanding.• PurposePurpose• BenefitsBenefits• ApplicationApplication
2.2. Explore the information by community member.Explore the information by community member.• IncomeIncome• ExpenditureExpenditure• Natural resourcesNatural resources• Public utilitiesPublic utilities• Etc.Etc.
3.3. Meeting for presenting & discussing.Meeting for presenting & discussing.• Know one selfKnow one self• Form a share visionForm a share vision• Form development planForm development plan
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S.E. business practiceS.E. business practice Appropriate use of technology:Appropriate use of technology: use of inexpensive use of inexpensive
butbut technicallytechnically
sound technologysound technology Appropriate manufacturing capacity: Appropriate manufacturing capacity: consistence with consistence with
businessbusiness ability to manageability to manage Focus on long term profit:Focus on long term profit: moderate profitmoderate profit Emphasis on honesty:Emphasis on honesty: fair to consumers, fair to consumers,
customers, customers, workers, suppliersworkers, suppliers Risk management:Risk management: diversification, variousdiversification, various
products, ability to adjustproducts, ability to adjust Don’t create unmanageable debtsDon’t create unmanageable debts RespondRespond respectivelyrespectively to local, regional, domestic to local, regional, domestic
and and international market.international market.