Community-based Enterprise and Poverty Reduction..

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Community-based Enterprise and Poverty Reduction: Evidence from Rural Northern Thailand Nuttamon Teerakul and Renato Andrin Villano

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Hosted by: Community-based Enterprise and Poverty Reduction: Evidence from Rural Northern Thailand Nuttamon Teerakul and Renato Andrin Villano

Community-based Enterprise and Poverty Reduction: Evidence from Rural Northern Thailand :

Community-based Enterprise and Poverty Reduction: Evidence from Rural Northern Thailand Nuttamon Teerakul and Renato Andrin Villano The 1 st International Conference on Poverty and Sustainable Development (ICPSD) Colombo, Sri Lanka 17-18 June 2014

Outline of Presentation:

3 Outline of Presentation Background to CBEs in Thailand Research rationale and research questions Research methodologies Study area and survey design Empirical results Implications and conclusions

PowerPoint Presentation:

4 CBEs in Thailand ‘Community-based enterprise: CBE’ is owned and operated by a group of people -particularly women in a community; income-earning from both agric &non-agric activities. 70,304 CBEs in Thailand, 30% in the North Food processing & handicraft products 42% of total CBEs products in Thailand Mainly participated by women

Research rationale:

5 Research rationale Economic crisis:- poverty incidence increased to 21% in 2000. Poverty alleviation policies (since 2001): one of these policies is One Tambon One Product (OTOP) project . Source: NESDB (2008) OTOP (2001)

Research rationale (Cont.):

6 Research rationale (Cont.) Promoting CBEs is seen as a significant tool for rural development. Thailand has already reached the MDG 1 which questions whether CBEs have played a causal or coincidental role in this? Source: NESDB (2008)

Research Questions:

7 Research Questions What is the actual impact on household poverty status from being involved in CBEs? Are there specific benefits for women from being involved in CBEs?

Research methodologies:

Research methodologies Principal Component Analysis (PCA) - To formulate poverty index Propensity Score Matching (PSM) – To assess the impact of being involved in CBE on household poverty status 8

PowerPoint Presentation:

PCA is one tool aimed at enhancing understanding about key factors related to poverty in each particular geographical area. PCA method is used to formulate a poverty index based on the weighted indicators for measuring poverty status of the households in rural northern Thailand. 9 Method of Poverty Index Formulation

Multidimensional poverty conceptual framework:

Multidimensional poverty conceptual framework 10 IX. Household assets Multidimensional poverty measurement Social deprivation Material deprivation VIII. Household product value II. Vulnerability III. Women’s empowerment VII. Household income VI. Household consumption expenditure I. Social participation IV. Happiness (Subjective well-being) V. Access to basic needs

Method of Poverty Impact Assessment for CBEs:

Method of Poverty Impact Assessment for CBEs This study used a quasi-experimental design with cross-sectional data to compare between the control group and treatment group by using after-participation data. 11

Three Cases of Analyses:

Three Cases of Analyses 1 st case: the impact of being a CBE member Control group: non-members Treatment group: CBE members 2 nd case: the impact of being a CBE committee member Control group: CBE normal members Treatment group: CBE committee members 3 rd case: the impact of being a CBE active normal member Control group: CBE inactive normal members Treatment group: CBE active normal members 12

PSM Method Application:

PSM Method Application Three steps of PSM method: 1 st step : Identify the covariates 2 nd step : - Estimation of the CBE membership equation. - Estimation of propensity scores 3 rd step : - Matching treatment group and control group Impact estimation The average effect of treatment on the treated (ATT) is calculated. ATT is the mean difference in outcomes across the treatment group and control group 13

Study Area:

Study Area 14 Why are Chiang Mai, Chiang Rai & Lam Phun provinces? No. of poor villages Main source of CBEs Why is the North? Poverty incidence Average income of poor households No. of CBEs CBEs product diversity

Survey Design:

15 Survey Design CBEs: 14 CBEs : criteria: - main activity - business performance Villages: 12 villages : criteria: - Personal income of the villagers - minority group/native Thai Households: 343 hhs. : criteria: - CBE membership status

PowerPoint Presentation:

16 Total samples: 343 samples 139 non-CBE member households 204 CBE member households 66 CBE committee member households 89 CBE active normal member households 49 CBE inactive normal member households Almost all of the respondents are women. (housewives, household heads/ main support household members) Household Samples

PowerPoint Presentation:

17 Profiles of selected households 45% of the households are active CBE members and 41% are non-members. 23% of the households lived below poverty line. (the poverty line of northern Thailand: 1,326 baht/person/month (1.36 USD/person/day) The proportion of income from the CBEs is small relative to total household income. Agriculture is the main source of household income. 57% of household heads finished elementary school. 75% of hill-tribe household heads have no formal education. Minority hill-tribes had poorer literacy rates, poorer access to sanitation and health services, and lower household income compared to native households.

PowerPoint Presentation:

18 Empirical Results

Poverty Index in Linear Combination of the Standardised Indicators:

19 Poverty Index in Linear Combination of the Standardised Indicators The poverty index is given by: PC1 = .080 × Literacy of 15 to 60 year-old household members - .060 × Outdoor toilet + .053 × flush toilet .061 × Using bamboo/plywood/Tong Tung leaves as main construction material of exterior walls + .071 × Using tile used for floor as main construction material of floor .059 × Using public wells as main source of using water + .066 × N eat and hygiene dwelling .074 × Using collected firewood as main type of cooking fuel + .064 × Always having enough food + .065 × Doing household’s enterprises (excluded handicraft and food processing) to earn a living + .060 × Woman participation in making decision on major issues of family finance + .062 × Satisfaction with size of household’s agricultural land + .103 × Total household ceremonial expenses + .118 × Total household non-food expenses + .089 × Average household saving per month + .109 × Total household income + .096 × Value of household non-agriculture products (excluded handicraft and food processing products) + .088 × Ownership of fridge + .099 × Ownership of gas stove + .079 × Ownership of car + .095 × Ownership of washing machine + .115 × Per capita monthly consumption expense

Distribution of household poverty index:

20 Distribution of household poverty index

PowerPoint Presentation:

Note: 1/ lowest-ranked group (worse off group): the households with scores less than -.35 2/ middle-ranked group: the households with scores between -.35 and .33 3/ higher-ranked group (better off group): the households with scores above .33. 21 Distribution of poverty groups: comparison among types of household

Key outcomes :

Key outcomes 22 Almost half of active normal member households are in the worse-off group, while roughly three-fifths of inactive normal member households are in the better-off group. the proportion of the poorest group in the active normal member households is highest compared to other types of CBE membership. Therefore, the active normal member should be considered as the priority target group of the CBEs for poverty alleviation.

Key outcomes 1st Case: Impact of being CBE member on household poverty:

Key outcomes 1 st Case: Impact of being CBE member on household poverty 23 Being a CBE member : Does not statistically affect household poverty status (poverty index) Have no statistically difference in total income compared to non-member Stronger positive impact on income from CBE (mean difference is at 10,720 baht/year) Have more chance of control over household assets (livestock) but lower chance of control household business

PowerPoint Presentation:

24 Being committee member : Does not statistically affect household poverty status (poverty index) Have no statistically difference in total income compared to normal member Higher positive impact on income from CBE (mean difference is at 18,183 baht/year) Have more chance of decision making in major financial issues Key outcomes 2 nd Case: Impact of being committee member on household poverty

Key outcomes: 3rd Case: Impact of being active normal member on household poverty:

Key outcomes: 3 rd Case: Impact of being active normal member on household poverty 25 Being active normal member : Does not statistically affect household poverty status (poverty index) Have no statistically difference in total income compared to inactive normal member Higher positive impact on income from CBE (mean difference is at 8,203 baht/year)

Implications and conclusions:

Implications and conclusions 26 CBEs should give more consideration on providing and distributing implicit benefits, such as social participation, gender empowerment, reduced vulnerability and increased wellbeing to members. CBEs should encourage members to participate more in CBE activities and increase recognition of the implicit benefits they provide. CBEs should recognise the implicit benefits of participation in the CBEs and the contribution of CBEs to the community.

PowerPoint Presentation:

27 27 Thank You

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