FRIDAY, March 29, 2024
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Why Thailand 4.0 will not join the ranks of South Korea, Taiwan

Why Thailand 4.0 will not join the ranks of South Korea, Taiwan

Everyone repeats the “4.0 economy” mantra as if repetition will mobilise Thailand from middle-income doldrums to developed dynamism. Ministries are conjured, regulations rolled out, policies promulgated, funds found. To what end?

There are two troublesome questions:
• What is a 4.0 economy?
• What is 4.0 in the modern global division of labour?
The answers suggest that Thailand underestimates the challenge it confronts. In fact, the challenge today is whether Thailand can increase its human capital base fast enough to maintain middle-income status. 
What is the discussion of 4.0 about? First and foremost, it is about hardware and building networks to connect the hardware. Second, it is about basic computer literacy. This means training teachers and lecturers to teach students to use computers. In principle, the time will come when Thailand can train 100 per cent of required skilled workers, instead of the current 50 per cent. 
As hardware, networking and computer-competent new hires spread, Thai companies should be able to join the computer age. 
But is this a 4.0 economy understood as “developed”?
No. This is a computer-enabled economy.
Why isn’t this the real thing?
Because it is passive. It is about borrowing and importing someone else’s knowledge work.
Put it this way. If you turn on your computer, open Word, and write an original poem, you have created something. Just knowing how to turn on a computer and open Word, however, does not mean that you possess more than basic computer literacy. It does not mean that you can operate a numerically controlled cutting machine, write code, design new chips or create any other intellectual property.
“So what?” you ask.
Here we arrive at the second question: What is 4.0 in the modern global division of labour?
The “global division of labour” is the relationship among countries in the global economy. Imagine a ladder with a few developed countries perched on the top rung and a larger and larger number of lesser and lesser developed countries scrabbling for each lower rung. At the top is where the knowledge work gets done and new technologies get created. Because these countries innovate the newest, coolest stuff, their products sell for the most and their people get rich. The next rung is for middle-income countries that manufacture high-end commodities for the top dogs. They must be able to use fancy tech to make this stuff, but the manufacturing technology, like the products, comes from above. Workers are skilled but not innovative, and they earn well, but less than those at the top. At the third level are the producers of industrial basics – steel is the usual example. Work is largely routine; workers earn less than their middle-income country counterparts do. At the bottom, savagely contesting the lowest rung of the ladder are the myriad countries with nothing to sell but the poverty of their people, countries that compete to produce the lowest skilled, lowest value products for the lowest prices. 
What does this have to do with 4.0?
Everything.
The global division of labour is not static. It is dynamic and savagely competitive. It is challenging to move up the division of labour, as South Korea and Taiwan did and Thailand presumes to do. It is also challenging just to keep one’s place on the ladder.
Here is where 4.0 matters for Thailand. 4.0 is Thailand’s investment in maintaining its middle-income rank. 
Why?
Because while Thailand needs computers and networks, human capital determines a country’s rank in the global division of labour.
Human capital, however, is Thailand’s greatest weakness. Always a global and regional educational laggard, Thailand fared dangerously badly in a major recent study of Asian digital competence. Compared to 11 of its regional rivals, Thailand ranked 10th behind even Malaysia and Indonesia. 
Reading the report, what stands out? Tenth in computer-savvy human capital.
This is not an “escape the middle-income doldrums” problem. This is a “hang onto the middle-income rung of the ladder” problem. 
What makes investment in IT-capable and IT-inventive human capital so critical to maintaining Thailand’s current, privileged position in the global division of labour?
The multinational corporations located in Thailand know that in the coming decades, they will require an increasingly sophisticated, IT-capable workforce. To date, Thailand has “solved” the problem of its failure to educate a sufficient number of skilled workers by depending on the multinational companies to provide their own “Honda University” and “General Dynamics University” to up-skill what the Thai labour market offers. Today, as other well-placed, politically stable, Asian countries invest in luring new multinationals with their large investments in high-quality human capital, why should such companies continue to welcome the burden of training a workforce that is further and further behind the skill curve?
Multinationals bring products, production technology and global market networks. They look to their hosts to provide what they cannot – transportation, communications, financial and government services and, most important, human capital investments of a size and quality commensurate with their own investment.
Such companies are the foundation of Thailand’s middle-income status. Will today’s tech drive keep them invested for now? We can only hope so. It is clear, however, that this is not the real question. The real challenge is tougher. Will it be possible to overcome the entrenched failure of the educational bureaucracy in time to secure Thailand a solid grip on an upper rung in the global division of labour?

Michael Shafer is director of the Warm Heart Foundation, based in A Phrao, Chiang Mai.

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