Sufficiency Economy Matrices: Multi-Period Optimization for Local Development Planners

Abstract

Unprecedented resource, economic, and social constraints now require social and economic_x000D_ planners to view 5-year plans as a problem of constrained optimization. Analyses of social_x000D_ accounting matrices have typically been limited to multiplier analyses, which proceed by trial_x000D_ and error and largely ignore such constraints. Lagrangians expressly take constraints into_x000D_ account, but become impracticable as the number of production, sales, consumption,_x000D_ investment, government, and trading activities multiplies; resource and ethical constraints_x000D_ increase; and decision makers become increasingly leery of downside risk. MOTAD_x000D_ programming models are an effective way to analyze complex decisions of this type, but they_x000D_ have not been applied to social accounting matrices in the past, nor have they included such_x000D_ ethical principles as those contained in Thailand’s Sufficiency Economy philosophy. This_x000D_ research applies constrained optimization, risk programming, and the sufficiency economy_x000D_ philosophy to a case study of a sub-district in Northern Thailand. A seven-step process takes_x000D_ local decision-makers and planners from their current sub-optimal, unprotected situation to an_x000D_ optimal, “immunized” 5-year plan. Shadow price analyses, sufficiency economy indicators_x000D_ and parametric programming are also integrated into the 7-step procedure.