“The keyword for Thailand’s economic development is industrial policy that has to be persistent and continuous,” Veerayooth Kanchoochat, assistant professor of political economics at the National Graduate Institute for Policy Studies in Tokyo, said yesterday at a seminar held by the economics faculty of Thammasat University.
“There has to be a continuous revolution |in the country’s production structure with |collective capabilities in order for there to |be an economic expansion,” he added, citing the studies of Ha-Joon Chang, reader in |the political economy of development, |faculty of economics at the University of Cambridge.
Veerayooth said increased government efficiency to provide direction for the economy, policy that clearly targets which industry will be developed during a set time frame, a macroeconomic bottom line that favours growth over inflation and exchange-rate controls, and promotion of education that supports the country’s industrial and economic policies were all prerequisites for economic expansion that could move away from the middle-income trap, as seen in Japan and South Korea.
“Thailand’s industrial policy only preserves some industries such as petrochemicals and automobiles and it is not continuous or persistent, while our main macroeconomic target is to maintain inflation that differs from East Asian countries that concentrate on growth,” he said.
“There should be a clear target of which industry will be promoted for the next 10 years and then [we should] stick with it until it is developed before changing plans and moving to develop other industries as well,” he said.
Veerayooth said Thailand should learn from East Asian countries that have macroeconomic and monetary policies on such aspects as inflation and exchange rates, along with customs and tax regulations, that are supportive of the economic expansion as a whole.
“The education system should be promoted to match the country’s industrial policy and economic strategy. If [for example] the country wishes to develop its chemical industry fully, then education policy should match this intention by promoting and creating personnel that are educated in chemical studies,” he said.
“The country can also promote foreign investment to encourage the transfer of knowledge to develop the targeted industry further.”
Veerayooth warned, however, that such a transition would take time to become effective. Many countries including Japan, South Korea and the United States have gone through the same transition and it took |them a decade or more for their efforts to bear fruit.
Enhancing people’s awareness of how the economy works is also crucial, since it would encourage discussion on the economy that could lead to inclusive development in the future, he concluded.