Thailand and Its Knowledge Economy

Arkhom Termpittayapaisith Deputy Secretary-General, Office of the

National Economic and Social Development Board, Thailand.

Development Paradigm

Old Paradigm

New Paradigm

Low Labor CostAbundant Natural Resources

Knowledge + Labor + NR

Unsustainable

Dev.

Sustainable

Dev.

Knowledge Economy: Where Does Thailand Stand?

1.Economic competitiveness: technological and scientific capabilities

- WEF Ranking

- IMD Ranking

2. Knowledge economy: Knowledge Assessment Methodology (KAM)

World Economic Forum (WEF)

Technology and Innovation Indicators

Innovation Index

Technology Readiness

index

Technology Transfer

Japan 5 2 -

Korea 8 16 -Singapore 13 7 -

Malaysia 40 15 1

Thailand 43 39 5

China 75 68 43

Source :WEF 2005 and 2006

IMD Science and Technology Assessment

Infrastructure

Technological Infrastructure

Scientific Infrastructure

Numbers of Countries Assessed

Source: IMD, various years.

’06

48

53

61

’04

45

55

60

’03

20

26

30

’02

43

46

49

’01

48

49

49

’00

47

47

47

’99

47

48

47

’98

43

43

47

’97

32

32

47

’05

45

56

60

Knowledge Assessment Methodology (KAM)

KAM is based on the four of pillars of KE developed by the World Bank Institute (WBI) that are

(1) economic and institutional regime, (2) educated and skilled population, (3) national innovation system, and (4) dynamic information infrastructure.

KAM is designed to help countries assessing their strengths and weaknesses in making transition to knowledge economy.

Thailand’s KEI increasing from 4.26in 1995 to 4.78 in 2002

0 1 2 3 4 5 6 7 8

Singapore

Korea

Thailand

Malaysia

China

Econ. Incentive Regime Innovation Education Information Infrastructure

Source: Dahlman (2003)

Selected 14 Variables from KAM(Detailed Analysis)

Overall Performance of the Economy

GDP Growth Poverty Index

Economic

Incentive &

Institutional

Regime

Soundness of Banks Intensity of Local Competition Government Effectiveness

Innovation System Researchers in R&D Per Million Population Total Expenditure for R&D as % of GDP Research Collaboration (UILs)

Education &Human Resources:

Average Years of Schooling Professional &Technical Workers (% of Labor Force) Quality of Science & Math Education

ICT

Internet Users Per 10,000 People E-Govt services ICT Expenditure as % of GDP

KAM Spidergram for Thailand, Japan, Korea and China

KAM of Thailand, Japan, Korea, and China

0

5

10GDP Growth(%)

Poverty Index

Soundness of Banks

Local Competition

Government Effectiveness

Researchers in R&D / million

Total Expenditure for R&D as % of GDP

University-Company Research Collaboration

Average Years of Schooling

Prof. and Tech. Workers as % of the Labor Force

Quality of Science and Math Education

Internet users per 10,000 people

E-Government Services

ICT Expenditure as % of GDP

Thailand Japan Korea ChinaSource: The World Bank Institute (2006)

Thailand, KAM Spidergram for Selected Variables of Innovation Pillar

THAILAND - INNOVATION PILLAR

0

5

10

Gross Foreign Direct Investment as % ofGDP

Researchers in R&D / million

Total Expenditure for R&D as % of GDP

Manuf. Trade as % of GDP

University-Company ResearchCollaboration

Scientific and technical journal articles /mil. pop.

Availability of Venture Capital

Patent applications granted by theUSPTO / mil. pop.

High-Tech Exports as % of Manuf.Exports

Private Sector Spending on R&D

Firm-level Technology Absorption

Value Chain Presence

Source: The World Bank Institute (2006)

Selected Indicators: Measures of Innovation

Educational Attainment of Thai Population and Workforce

Quality of the Educational Outputs R&D Expenditure and Patents

Educational Attainment

Taiwan 876 10

Thailand 6.5 12.6

Korea 10.84 6.5

Malaysia 6.8 16.2

Singapore 7.05 16.4

Country Mean Years of School

No Schooling( % of pop. aged over

15)

Source: Barro and Lee (2000) and http://www.ksg.harvard.edu/CID

Educational Attainment of Population: Thailand and Malaysia

Source: Dahlman (2003).

Primary Complete

16%

Primary Incomplete

24%Secondary Complete

16%

Secondary Incomplete

13%

Tertiary Complete

21%

No schooling7%

Tertiary Incomplete

3%

Malaysia 2000

Primary Complete

27%

No schooling13%Secondary

Incomplete11%

Primary Incomplete

34%

Secondary Complete

4%

Tertiary Complete

7%

Tertiary Incomplete

4%

Thailand 2000

Thai labor force is not well educated

Educational Attainment of Employed Persons Aged Over 15

Less than Primary35.5%

Primary22.5%

Low er Secondary14.1%

Upper Secondary11.3%

Higher Level 12.6%

Others0.1% None

3.5%

Unknow n0.4%

Source: National Statistical Office (2005), Report of the Labor Force Survey.

Workforce Employed in Thai Business Enterprises is mostly Non S&T Classification.

Percentage of S&T and Non S&T Workforce Classified by Industry

0%

20%

40%

60%

80%

100%1

. F

oo

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nd

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Ga

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3.

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ea

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4.

Wo

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Fu

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ure

5.

Pe

tro

ch

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ica

l

6.

Mo

ld &

Die

7.

Ru

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an

d R

ub

be

r P

rod

uc

ts

8.

Ce

ram

ics

an

d G

las

se

s

9.

Iro

n a

nd

Ste

el

10

. E

lec

tric

al

an

d E

lec

tro

nic

Su

pp

lie

nc

es

11

. A

uto

mo

bil

e a

nd

Pa

rts

12

. G

em

s a

nd

Je

we

lrie

s

NonS&T/2003

S&T/2003

Source: Thailand Research and Development Institute (2004).

Quality of the Educational Outputs

Thai secondary education students performed below average and poorly as compared with students in other East Asian countries.

Source: Trend in Mathematic and Science Study (TIMSS), as cited in the World Bank (2005).

Math

604.4

587.2

585.1

582.1

578.6

519.3

467.4

403.1

344.9

Science

567.9

548.6

569.1

529.6

549.7

492.4

482.3

435.5

345.2

Science

580.4

545. 8

509.7

554.5

510.1

Math

608.6

580.7

568.9

581.1

516.2

Country

Singapore

South Korea

Taiwan

Hong Kong

Japan

Malaysia

Thailand

Indonesia

Philippines

1995 1999

Thai students under the supervision of IPST were reported their great performance in Olympiad programme

Source: Program for International Student Assessment (PISA), (OECD) as cited in the World Bank (2005).

2003

Japan

Korea

Hong Kong

Indonesia

Macao-China

Thailand

OECD Average

Math

553

552

558

361

528

424

496

Science

548

538

539

395

525

429

500

Reading

598

534

510

382

498

420

494

Program for International Student Assessment (PISA) Score

R&D Expenditure

Thailand requires more national R&D spending

R&D spending, a more focus on research/knowledge commercialization through increased patenting and a more entrepreneurial dimension has to be in place

Source: R&D Survey, NSO.

R&D exp.

R&D exp. per capita (bath)

R&D exp. as % of GDP

Govt. budget outlays for R&D

1996

5,528.1

92.0

0.1

3,395.2

1999

5,021.7

81.3

0.12

2,182.7

(Million Bath)2003

15,499.2

242.2

0.3

7,36460

R&D Expenditure classified by Field of Research and Sector of Performance

Business enterprises and higher education are key players in research and development

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000

Government

HigherEd. (pub.)

Higher Ed. (priv.)

P ublic Enterprise

P rivate Enterprise

P rivate non-profit

Natural Sciences Engineering Technologies

Medical Sciences Agricultural Sciences

Social Sciences Humanities

Source: R&D Survey, NSO.

Patents per 100,000 Populations

Source: US Patent and Trademark Office as cited in the World Bank (2006), East Asia Update.

East Asia & PacificTaiwan, ChinaSingaporeHong KongKoreaMalaysiaThailandChinaPhilippinesIndonesia

OECDUnited StatesJapanAustralia

0.041.810.311.670.200.020.000.000.010.009.83

18.4712.622.80

0.209.241.863.652.590.080.020.000.010.00

12.8324.5018.752.99

0.6630.179.879.328.670.280.070.030.020.01

19.0033.5628.545.26

225.6226.6431.7154.9235.4238.6276.0636.0377.2132.448.1

37.052.276.3

% Change 1993-96-2001-

04 2001-04 1993-96 1985-88

Government Policy in Enhancing Knowledge Economy

Development goals for S&T development in the 9th National Economic and Social Development Plan

qualitative goals • Enhancing capability in technological innovation; Setting up mechanisms and institutions for knowledge diffusion and knowledge transfer• Focusing on quality improvement for teaching in all S&T educational levels.

quantitative goals• Increasing R&D expenditure to be not less than 0.4 % of GDP • Increasing numbers of researchers to 3.5 persons per 10,000 populations.

Policy Implementations

The National Science and Technology Development Agency (NSTDA)

Office of Knowledge Management and Development (OKMD) administers 7 offices :1.Thailand Design Center, TDC;2.Thailand Center of Excellence for Life Science;3. National Center for the Gifted and Talented;4. Thai Knowledge Park;5. National Discovery Museum Institute;6. Center for the Promotion of National Strength on Moral Ethics and Values; 7. National Institute for Brain-based Learning

National Innovation Agency

Science Park

Software Park

Software Industry Promotion Agency (SIPA).

Role: stimulating technology development and providing incentive structure for a society of knowledge and innovativeness of the country.

Institutional arrangements in Thailand in relation to innovativeness and knowledge

University and Industry Linkages (UILs)in Thailand

Prominent role of the university is put onto

educating people while other roles are still at

minimum.

Firms have generally not exhibited strong

interest in UILs

Effective UILs are heavily tied with large firms

such as large garment exporters, Seagate in

hard disk drives, and the CP group in shrimps

Thai firms and their major partners

0

10

20

30

40

50

60

70

80

90

Gov

ernm

ent o

rpr

ivat

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n-pr

ofit

rese

arch

inst

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s

Uni

vers

ities

orot

her

high

ered

ucat

ion

inst

itute

s

Com

petit

ors

For

eign

-ow

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supp

liers

Loca

lly-o

wne

dsu

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rs

Par

ent/A

ssoc

iate

com

pani

es Clie

nts

Percent of Firms Identifying their External Information Sources%

Clients, parent/associate companies, local and foreign suppliers are major partners of Thai firm

R&D institutes and universities including government have played a minor role in building technology/innovation capabilities of firms.

Source: Based on Thailand National Science & Technology Development Agency R&D/Innovation Survey 2002, cited in Intarakumnerd (2005).

Brief review of UILs in Thailand

Mitr Phol sugarcane research center has linkages with public technology institutions like National Science and Technology Development Agency, and MTEC more than those with university.

Toyota Technical Center—Asia Pacific (TTCAP) has had significant linkages and collaboration extending beyond the national boundary where the center is located. However, TTCAP is reported to have a simple network to recruit employees with Thai universities.

Seagate: Qualified engineers are produced in collaboration with Thai universities and the first joint Seagate/AIT academic course has been offered in the Master's program since 1999.

Sources: Brimble (2006), Asian Institute of Technology(2006).

NSTDA : Major actor in national innovation system The National Center for Genetic Engineering and Biotechnology

(BIOTEC) has led the research in modern biotechnology that helped prevent disastrous losses in shrimp production,

The Cassava and Starch Technology Unit induces research and development for improvement in Thai cassava and starch, e.g. industrial application of cassava and starch in both food and non-food industries—process for the production of ethanol and renewable fuel (BIOTEC, 2006). ,

Set up the Software Park Thailand (SPT) one successful example that received strong support from well-known transnational corporations (such as IBM, HP, SUN, and ORACLE) and established collaboration with Canegie-Mellon university for offering training and certification on the Capability Maturity Model to raise the standard of software production of STP’s tenant companies (Virasa, 2005, p. 104)

National Competitiveness Committee (NCC)

NESDB under NCC has set up action plans for human resource development in major industries

Petrochemical-industry group under the Thai Industry Federation, Petroleum Institute of Thailand, the Office of

Vocational Education Commission and the NESDB have signed MOU for implementation of a pilot project on human resource

development in petrochemical industry

The Constructionism-Chemical Engineering Practice School (C-

ChEPS) was designed for improving skills of workers in

petrochemical industry. Training programmes under C-ChEPS was initiated in 2000 by a

private corporation, the Siam Cement Group under a collaboration with the King Mongkut’s University of Technology

Thonburi.

Some Policy Recommendations:Given the framework of knowledge economy, Thailand’s innovation and education systems have confirmed the weakest arena among others.

Strengthening education system (i.e. education reform) and outputs to increase qualified workforce particularly in S&T skills, including putting in place incentives for firms in the-job training system;

Building new knowledge through basic research, R&D spending, technology transfer including developing strong linkages in universities, research institutes and firms (i.e. university-industry linkages) as foundation for knowledge generation and technology catching-up;

Ensuring sufficient incentives for firms to innovate in new products and processes for industry and services sectors, given new trend in technology and market demand;

Establishing S&T infrastructure (e.g. science parks, research funding, IT infrastructure etc.) and increasing private involvement in developing the knowledge economy.