"Vent-For- Surplus" as a Source of Agricultural Growth in Northeast Thailand, 1950-1986

This paper reviews the "vent-for-surplus" model of agricultural development, in which access to foreign markets allows "surplus productive capacity" to be exploited. The "indirect effects" of trade contribute to long-term economic growth even after the direct gains from trade are realized. How the new income streams are distributed amongst the population may also carry implications for long-term growth prospects. The model is used to explain the rapid expansion in export crop production that has taken place in the Northeast Region of Thailand over the past twenty-five years. It is shown that the growth in export production was achieved at very little expense to the subsistence sector by employing previously underutilized land and labor resources. Growth indices are constructed to quantify the contribution of "vent-for-surplus" to the growth in agricultural product. Institutional factors play a major role in realizing growth potential. The major demand-side impetus for Thai cassava production came from agricultural policy adjustments in the European Economic Community. Thai policies on trade and foreign investment encouraged foreign and domestic entrepreneurs to invest in marketing and processing improvements. The private sector also played a leading role in extending production technology to the farm level. The public sector played a substantial role in improving transportation services. Future growth will probably require a larger role for the public sector, particularly in agricultural research and human capital development.