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

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