Suvit Maesincee

1
R D and The Nations Competitiveness
http//www.nrct.net/symposium/media2.php?typewma
id3
Suvit Maesincee July 21, 2003
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Our Opportunity
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Thailand Is Over-Reliant on Resource-Based And
Labor-intensive Industries
Export Composition of Six Asian Economies
Thailand
Indonesia
China
Resource- Based/ Labor Intensive Economies
Singapore
South Korea
Malaysia
Resource Based
Labor Intensive
Science- Based/ Differentiated/ Scale Intensive
Economies
Scale Based
Differentiated
Science Based
Source
Conference on Thailands Dynamic Economic
Recovery and Competitiveness, 1998
4
Relationship Between Natural Resource Exports and
Wealth

• US

• Germany

• Japan

• Canada

• Sweden

• Singapore

PPP per capital

• Korea

• Malaysia

• Thailand

• Russia

• Costa Rica

• Brazil

• Argentina

• Bolivia

• India

Percentage of exports in natural resources
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The Silent War and Paradigm Lost
Tragedy of the Common
Over Investment
Mass Market Competitive Paradigm
Scale Driven Economy
Hyper Competition
Over Capacity
Shortage of Demand
Industry Rationalization
Mass Customization Competitive Paradigm
Creativity Driven Economy
New Competitive Playing Field
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Industries and Businesses Are Buzzing With Changes
Knowledge Based Economy
Industry Based Economy
Make and Sell Sense and Respond Goods
for Elites Goods for Everyone Mass Market
Markets of One Owning Assets
Gaining Access Corporate Governance
Market Governance Just in Time
Real Time Local Economy Global
Economy Asymmetry of Information
Democratization of Information Economics of
Diminishing Returns Economics of Increasing
Returns
Source Marketing Moves
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The Emergence of Creative Economy
RD
High Tech
Software
Fashion
Design
Toys and Games
Architecture
Video Games
Advertising
Level of Sophistication
TV and Radio
Publishing
Performing Arts
Film
Art
Music
Craft
Low Tech
Low Touch
High Touch
Level of Customization
8
The Most Important Intellectual Property in the
Creative Economy is the Stuff Inside Peoples Head
Value
High
High
Low
Low
Concept
Technology
Source Cagan and Vogel
9
More for Less
Example Software Industry Value Created
Less for More
More for More
Conceptualization
Requirement Analysis
Thai
High-Level Design
Low-Level Design
Coding
Israel
Testing and Support
Ireland
India
Source Software Park
10
Example Israels Agricultural Industry
1948-1970 Self Sufficient
Agricultural Output
Local Consumption
000 ton
1967
1982
Growth
1970-1980 Export Agricultural Products Productivit
y Improvement
Vegetable
70
165
6
Citrus fruits
98
160
3
Other fruits
30
80
7
Export
Field crops
30
60
5
1980 up Export Know-How and Technologies
Beef
10
40
10
Value added
Source Israel Ministry of Agriculture and Rural
Development
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Can Thailand Compete in the New Competitive
Landscape?
12
Our Capability
13
Our Budgeting Constraint
Government Expenditure 1997-2001
Mil Bht
700,000
600,000
500,000
Fixed Expense
400,000
Public Investment
300,000
200,000
100,000
Fiscal Year
0
1997
1998
1999
2000
2001
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• Our Investment for the Future Are Significantly
  Low

International Comparison of RD Investment
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
USA
Japan
Korea
Malaysia
Taiwan
Singapore
Thailand
Source Thailand Economic Monitor, June 2000
15

• We Still Deal With a Wide Manpower Gap in Science
  and Technology

Gaps in Science and Technology (At Current Level
of Demand)
10,963
1996
7,015
2001
5,874
4,520
541
180
(113)
(352)
M.Eng /D. Eng
B. Engineering
B. Science
MS/DS
Source Lall (1999), Raising Competitiveness in
Thai Economy, Country Employment Policy Review,
ILO.
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...So We Cast Doubt on Our Ability to Compete
Software Industry
High

• HR Capabilities
• Number
• Wages
• Skills

USA
India
UK
Germany
China
France
Indonesia
Thailand
Ireland
Philippines
Singapore
Low
High
Low

• Entrepreneurial Capabilities
• Number
• Quality

Source Nasscom 1999
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The Catalysts for Future Growth Such As Venture
Capital Have Lagged Behind Its Competitors
Venture Capital Assets Under Management ( of GDP)
Singapore
Singapore
9.17
3.16
HK/China
Hong Kong
Taiwan
USA
USA
South Korea
South Korea
Australia
Vietnam
1999
1994
PR China
Australia
Malaysia
Malaysia
Japan
Taiwan
India
Indonesia
Philippines
Philippines
Indonesia
Thailand
Thailand
0.10
0.21
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The Same Is Also True for the Incubator Businesses
Incubator Growth
Incubator by Region/Country
4,000
1,000
1980
1985
1990
2000
1995
2005
US
E. Europe
France
Australia
Israel
Japan
Africa
Germany
UK
India
Canada
Scan- dinavia
Thailand
Source Incubators
19
(No Transcript)
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Thailands Current Technology Position
Technology Achievement Index
Dynamic Adopter
Potential Leader
Leader
Maginalized
Uruguay South Africa Thailand Panama Brazil Philip
pines Bolivia China Columbia Peru Jamaica Iran Ind
onesia India Sri Lanka Algeria Egypt
Finland US Sweden Japan Korea Netherlands UK Canad
a Australia Singapore Germany Norway Ireland Belgi
um New Zealand Austria France Israel
Spain Italy Czech Hungary Slovenia HK Slovakia Gre
ece Bulgaria Poland Malaysia Croatia Mexico Cyprus
Argentina Romania Costa Rica Chile
Pakistan Senegal Nicaragua Ghana Kenya Sudan Tanza
nia
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Our Strategy (Structural)
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Nations Building Strategy
The New Competitive Paradigm
Economic
The New Competitive Landscape
Nations Competitive Position
Social
The Strategic Thrusts
Geo-Politic
The New Social Contract
Environmental
Driving National Agenda
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New Competitive Paradigm
Local Links Global Reaches
Regional
Neighborhood
Local
Global
International Competitiveness
Social Cohesion

• Efficiency
• Cost effective
• Productivity
• Innovation

• Sufficiency
• Community Building
• Cultural Identity
• Family Value

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New Competitive Landscape
Potential Global Niches

• Software

• Auto industry

• Fashion

• Foods

• Tourism

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Strategic Thrust
Value added Potentials
Focus of Thai Producers
Production
Marketing
RD
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The New Social Contract
New Direction of Investment in Human and Social
Capital
Capital
The Old Direction
A New Direction
Job- Wealth Cycle
Wealth
Investment

• Labors and managers are fungible
• Viewed as input costs
• General education

• Source of competitive advantage
• Source of increasing return on inv.
• Education as specialized, focused

Human Capital

• Paternalistic
• Hierarchical organizations
• Individual oriented

• Trust oriented
• Interdependent
• Meritocratic
• Team oriented

Job
Human Relations

• System thinking, results form
• mental models
• Integrative, interdisciplinary
• approaches
• Team oriented

• Linear learning, results form strategy
• choices and organizational design
• (single loop learning)
• Reductionist strategies
• Technical and compartmentalized

Social Capital
Learning
Conducive Environment

• Create wealth through innovation
• and distribute to most productive
• people
• Law and regulatory framework as
• enabling investment in innovation
• Informal producers increasingly
• integrated

• Redistribute finite wealth
• Law and regulatory framework as constraints
• Informal producers are marginalized

Justice and Social Equity
Knowledge Wealth Cycle
Talent
Wealth
Value Created
Source Modified from Plowing the Sea
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Our Strategy (Behavioral)
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Nature of Entrepreneurs
Early Adopter
Early Majority
Late Adopter
Innovator
Laggards
Profile
Enthusiastics
Visionaries
Skeptics
Pragmatics
Conservatives
Nature
Propensity to Innovate
Propensity to Imitate
Risk Preference
Risk Neutral
Risk Averse
Pace
Revolutionary
Evolutionary
Pattern
Discontinuity
Continuity
Focus
Creative Destruction
Productivity Improvement
Early Market
Mainstream Market
Type of Market
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Different Stages of Innovation Development
Early Adopter
Early Majority
Late Adopter
Laggards
Innovator
Architecture and Capability Innovation
Platform Innovation
Product Innovation
Process Innovation
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Different Types of Business Support
Innovator
Return
Early Adopter
IRR Line
Business Angel
Introduction
Early Majority
Venture Capital
Growth
Late Adopter
Fixed Debt
Mature
Laggards
Risk
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Psychological Issues

• Delay Gain

• Delay Loss

Loss
Gain

• Unbundle gains
• Bundle losses
• Bundle smaller losses with larger gains
• Unbundle smaller gains from larger losses

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Creating a New Competitive Platform
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Strategic TransformationClustering Development...
A Cluster Provides a Conducive Platform for the
Creation, Diffusion, Adoption and Interaction of
Innovation
Knowledge Driven Platform
Innovation Cycle
Creation
Clustering Development
Lift-off
Diffusion
Interaction
Extending
Adoption
Emerging
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Strategic TransformationClustering Development...
Most of Thai Industry Clusters Are Still in the
Emerging Stage
Rural Enterprises
Local
Family Enterprises
Traditional Subcontractors
Process Related
National
International
International
Local
National
Market Related
Source Bianchi and Tommaso
35
Strategic TransformationClustering Development...
Nature of Cluster Linkages in the Emerging Stage
is Uneven and Unpredictable
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Strategic TransformationClustering Development...
Some Industries (e.g., Autos), However, Shift
their Clusters from the Emerging Phase to the
Extending Phase
Enterprises in the Cluster Increasingly Diverse
and Sophisticated Multiple Coopetitive
Relationships Emerging
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Strategic TransformationClustering Development...
SME Networks Are Loosely-linked Groups of Small
Firms with Some Specific Purposes
Rural Enterprises
E.g., improving technological efficiency and
pooling resources for export promotion, thereby
accessing international markets
Local
Family Enterprises
Traditional Subcontractors
Process Related
National
SME Networks
International
Peoples Republic of China SMEs
International
Local
National
Market Related
Source Bianchi and Tommaso
38
Strategic TransformationClustering Development...
Opportunity for Our Cultural Industry Cluster
Development
Fashions
Magazine/Book Publishing
Radio/TV Production
Web Design
Creative Industries
Tourism
Music Video
Advertising
Product/ Packaging Design
Foods
Graphic
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Strategic TransformationClustering Development...
Medium Sized Niche Enterprises Exists in Certain
Fashion, Luxury Items of Handicraft Production
and High Tech Products
Rural Enterprises
Local
Family Enterprises
Traditional Subcontractors
Singapore SMEs --Making sound cards used in
multimedia computing --In the mid 1990s, together
accounted for three-quarters of the world market
Medium Sized Niche Enterprises
Process Related
National
SME Networks
International
International
Local
National
Market Related
Source Bianchi and Tommaso
40
Strategic TransformationClustering Development...
The Ultimate Goal Is to Develop Lift-off
Industry Clusters
There are extensive and multiple synergies within
cluster major linkages develop with other
regional clusters and/or outside agglomerations
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Strategic TransformationClustering Development...
From Traditional to Global Subcontractors
Rural Enterprises
Local
Family Enterprises
Traditional Subcontractors
Japanese SMEs --Moving from their
pre-existing domestic subcontractors to
global subcontractors
Medium Sized Niche Enterprises
Process Related
National
SME Networks
International
Global Subcontractors
International
Local
National
Market Related
Source Bianchi and Tommaso
42
Strategic TransformationClustering Development...
Industry Districts Comprise Geographical and
Sectoral Concentration of SMEs...
Rural Enterprises
Industrial Districts
Local
Family Enterprises
Traditional Subcontractors
Medium Sized Niche Enterprises
Process Related
National
SME Networks
International
Global Subcontractors
Source Bianchi and Tommaso
International
Local
National
Market Related
...Undertaking of Joint Action Aimed at Raising
Collective Innovation and Efficiency
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Strategic TransformationClustering Development...
Emilia-Romagna In the Nortern Italy Is a Good
Example
Key Features

• Population 4 millions
• 90,000 SMEs covering 40
• of employment
• Stand alone and subcontractors
• SMEs
• Supporting infrastructure
• transports, research center,
• financial institutes, university,
• laboratories
• Gain advantages of economies of
• specialization
• Export-oriented and has capacity
• to respond to market changes
• and compete globally

Emilia-Romagna
Source Marketing of the Nations
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Strategic TransformationClustering Development...
Key Success Factors For Clustering Formation
Connectivity
Interactivity
Creativity
Liquidity
45
Dynamics of Industry Clustering
Strategic TransformationClustering Development...
46
The New RD
Governing
National Agenda
Directing
Managing
Organizational Agenda
Personal Agenda
Executing