Understanding Sufficiency Economy Concept and Its Applications: a View from Thailand. Kobsak Pootrakool 1 June 2007. Outline. Introduction What is Sufficiency Economy? How Can We Apply Sufficiency Economy? How Much Success Thailand has thus far in Applying the Concept?. I. Introduction.
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1 June 2007
Sufficiency economy is one of the most misunderstood topics, both in Thailand and abroad:
Why is this the case? Why is there so much misunderstanding concerning this concept?
His Majesty has been talking about sufficiency economy since 1974.
It is a concept that come from his extensive experiencesafter visiting one village after another village and see what works and what does not work.
Then in 1997 after the crisis, he began to use the term“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, 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…. At the same time, it is essential to strengthen the moral fibre of the nation, so that everyone, particularly political and public officials, academic, businessmen at all levels, adheres first and foremost to the principle of honesty and integrity.(1999)
Conditions(1) Application of knowledge with due consideration and prudence
(2) Adherence to the principle of honesty and integrity
“Sufficiency is moderation. If one is moderate in one’s desires, one will have less craving. If one has less craving, one will take less advantage of others. If all nations hold this concept … without being extreme or insatiable in one’s desires, the world will be a happier place. Being moderate does not mean to be too strictly frugal; luxuriousitems are permissible, but one should not take advantage of others in the fulfillment of one’s desires. Moderation, in other words, living within one’s means, should dictate all actions. Act in moderation, speak in moderation; that is, be moderate in all activities.”
Subject to Budget Constraints
PersonApplications of Neoclassical Economics
Neoclassical economics tries to understand human choices and explains the observed pattern using the optimizing framework
Lack of Self Discipline
From the view point of neoclassical economics, the behavior of those who adhere to sufficiency economy philosophy will be similar to the behavior of “prudence persons”. So, in a sense SE is normative about people preferences.
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
1. Daily life
2. Economic Development
- Agricultural Sector
- Private Sector
- Government Policy
Think before you buy
Sufficiency Club (ชมรมคนพอเพียง)
Poverty rate by provinces, 2000
- Weakness in the grass root
- Other developmental problems
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.
Ilustrative Example of New Theory desires,
Diversifiedagriculturesand other benefits
Old Development Paradigm
Development under SE Concept
Do not borrow unnecessarily
Empathy to your staffs
Building your foundation
How to make sure that private sector is more in
line with sufficiency economy
ReasonablenessThinking about all risk involved
within one means and not overextend
Better risk management
Long term and sustainable Investment
1. Macroeconomic Management
2. Government Policy Design
3. Alternative Development Strategy
Adequate SavingEnergy Security National Risk Manag..
1. Macro Management
Mega-project, Growth, Inflation, Budget Deficit
Adjust design of governmental projects to make people to be more sufficient (Village funds, Debt forgiveness, Educational reform etc.)
2. Gov. PolicyDesign
Adjust the balance of economic development frameworkRural 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 desires, 30% reserve requirement and the amendment to the Foreign Business Act?
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
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)