Beyond the Crisis: A Strategy for Public Disclosure Authorized Renewing Rural Development in Thailand by Public Disclosure Authorized Rural Development and Natural Resource Sector Unit East Asia and Pacific Region The World Bank Public Disclosure Authorized Financial Support by Public Disclosure Authorized Australian Agency for International Development April 2000 Beyond the Crisis: A Strategy for Renewing Rural Development in Thailand By Rural Development and Natural Resource Sector Unit East Asia and Pacific Region The World Bank 1818 H Street, N.W., Washington, D.C. 20433 U.S.A. Tel: (202) 477-1234 Fax: (202) 477-6391 World Bank Office Bangkok Diethelm Towers, 14th Floor Tower A 93/1 Wireless Road, Bangkok 10330 Thailand Tel: (662) 256-7792 Fax: (662) 256-7794-5 Printed in Thailand April 2000 Copyright 2000 Photo credit: Bank for Agriculture and Agricultural Co-operatives (BAAC) ii “This Sukothai is good. In the water there are fish, In the fields there is rice.” King Ramkhamhaeng iii iv TABLE OF CONTENTS Page FOREWORD ix EXECUTIVE SUMMARY xi Chapter 1 : NEW VISION FOR RURAL DEVELOPMENT 1 OVERVIEW OF RURAL SECTOR......................................................................................................................................................1 KEY RURAL CHALLENGES .............................................................................................................................................................3 CRISIS IMPACT..................................................................................................................................................................................4 A RURAL DEVELOPMENT VISION FOR THE 21 ST CENTURY....................................................................................................6 Chapter 2 : STRENGTHENING LOCAL COMMUNITIES 9 CHANGING STRUCTURE OF GOVERNMENT ...............................................................................................................................9 CHANGING ROLE OF COMMUNITIES.........................................................................................................................................10 SPECIAL NEEDS OF POOR COMMUNITIES.................................................................................................................................11 KEY TASKS FOR THE FUTURE ......................................................................................................................................................11 Chapter 3 : FOSTERING RURAL ENTREPRENEURSHIP 15 INDUSTRIAL CONCENTRATION ..................................................................................................................................................15 SME DEVELOPMENT....................................................................................................................................................................16 OFF-FARM EMPLOYMENT AND RURAL LABOR MARKETS...................................................................................................17 CRISIS IMPACT ON OFF-FARM EMPLOYMENT.........................................................................................................................18 KEY ACTIONS FOR THE FUTURE .................................................................................................................................................19 Chapter 4 : STRENGTHENING RURAL FINANCE MARKETS 23 CHANGING STRUCTURE OF RURAL FINANCE.........................................................................................................................23 CRISIS IMPACT................................................................................................................................................................................25 KEY ACTIONS FOR THE FUTURE ................................................................................................................................................26 v Page Chapter 5 : IMPROVING AGRICULTURAL PRODUCTIVITY 29 LONG-TERM CHANGES IN RESOURCE USE ..............................................................................................................................29 CONSTRAINTS TO GROWTH ........................................................................................................................................................30 DECLINING AGRICULTURAL COMPETITIVENESS DURING THE BOOM................................................................................31 AGRICULTURE AFTER THE CRISIS..............................................................................................................................................32 GOVERNMENT STRATEGY............................................................................................................................................................33 KEY ACTIONS FOR THE FUTURE .................................................................................................................................................34 Chapter 6 : IMPROVING NATURAL RESOURCE MANAGEMENT 39 FORESTS AND BIODIVERSITY.......................................................................................................................................................39 WATERSHED MANAGEMENT......................................................................................................................................................40 WATER RESOURCES ......................................................................................................................................................................41 COASTAL RESOURCES...................................................................................................................................................................43 BIBLIOGRAPHY 47 BOXES Box 1.1 Managing the Family Rice Bowl....................................................................................................................................5 Box 2.1 A Unique Tradition of NGO Activity........................................................................................................................10 Box 2.2 Listening to Villagers.......................................................................................................................................................11 Box 3.1 Building Rice Mills…and Communities ...................................................................................................................17 Box 3.2 Losing Village Jobs ...........................................................................................................................................................18 Box 3.3 Forging New Public/Private Partnerships ..............................................................................................................20 Box 4.1 What Makes Micro-Credit Work .................................................................................................................................25 Box 5.1 Losing Comparative Advantage in Rice Production ...........................................................................................34 Box 5.2 New Agriculture Initiatives for the Poor ..................................................................................................................35 Box 6.1 Putting Pressure on Trees…and Government.........................................................................................................40 Box 6.2 Land Use Conflicts in Watersheds..............................................................................................................................41 Figures Figure 3.1 Spatial Distribution of Industry in Thailand ......................................................................................................15 Figure 3.2 Capacity Utilization in Surveyed Industrial Firms ..........................................................................................18 Figure 5.1 Real Exchange Rate and Competitiveness ...........................................................................................................32 Figure 5.2 Change in Rice Prices (percentage change, year-on-year)..............................................................................33 Figure 6.1 Fisheries Sector Production by Sub-Sector ..........................................................................................................44 Figure 6.2 Value of Fisheries Sector Production by Sub-Sector ........................................................................................44 vi Page Tables Table 3.1 Manufacturing Breakdown in Northeast (1995).................................................................................................16 Table 5.1 Agricultural Production Statistics from Southeast Asia.................................................................................29 Table 5.2 Agricultural Labor Statistics from Southeast Asia ............................................................................................30 This report was prepared by Richard Scobey, Louise Scura, William Martin (Bank Staff), Robert Townsend, Peter Warr, Brett Coleman, and Ampai Harakunarak (Consultants), based on field work in Thailand in March and August 1998. The supervising managers were Geoffrey Fox (Manager, Rural Development and Natural Resources Unit, East Asia) and Jayasankar Shivakumar (Director, Thailand Country Management Unit), and the peer reviewers were Nipon Poapongsakorn (Thailand Development Research Institute), Alex