Phasina Tangchuang, 2002
While there is a large consensus that knowledge is becoming an increasingly important stimulant of economic growth during this globalization era (Tangchuang, 2001: 5; cited in Thomas and others, 2000: 205), because all sectors have become knowledge-intensive with international standard mind set, not just those usually called “high technology” (cited in APEC Economic Committee, 2000: 3). Several observers argue that knowledge-based economy (KBE) is linked to the technological revolution and the internationalization of economic production. In a paradigm shift from traditional practices where physical capital was accumulated in an effort to secure, long-term economic growth and development, industrial companies and even agricultural sectors are now utilizing knowledge and ideas to produce increased competitiveness and overall economic performance. However, there is an argument on the reality of whether or not KBE should be seriously considering in the education reform and of “the new economy” as new engines of economic growth among developing countries where are normally rigidity, poor, inequality, poor quality of education, illiterates, high dropout rates, great public debt (Watanachai, 2002: 2; Svetanant, 2001: 41; BMI, 2002: 10) and infrastructure, computer literacy and information technology (IT) availability are far behind international standard. A study conducted by Tangchuang (1999), as well as, the work of Lopez and others (1998) revealed that there are actually many other evidences asserting relationships with economic growth among developing countries. For one hand, how the national economic policies, such as BOI, international investment, revenue and expenditure are set. Policy on education for its citizens, as well as cultural concerns and political stability are determined. On the other hand, how the employment, wage and the improvement of the quality of the labour force (CELS Database, 2002) are taken into account. Thomas and others (2000: 25) viewed the quantitative and qualitative sides of the growth process in the three key principles: A focus on three sets of assets: physical, human and natural capital; A concern for the distributive aspects across people and overtime; An emphasis on the institutional framework for good governance. As Amartya Sen (cited in Thomas and others, 2000: 1) said that “Economics is not only concerned with generating income, but also making good use of that income to enhance our living and our freedoms”. These overall assertion and issues are addressed and discussed in this paper as a case of Thailand.
In order to make this paper well understanding, the presentation will be included with 3 main parts : 1) Definition of KBE 2) Measuring KBE in Thailand and 3) Conclusion.
Definition of KBE
KBE was defined by APEC Economic Committee (2000:3) as an economy in which the production, distribution, and use of knowledge are the main driver of growth, wealth creation and employment across all industries. This definition has been widely accepted that knowledge, tacit and codified, is needed in making a living especially during this globalization era. Developed economies has been foremost recognized that knowledge is becoming an increasingly important stimulant of economic growth all over the world. APEC Leaders in Kuala Lumpur, thus underscored in 1998 and also Auckland in 1999 that knowledge is a key driver of future economic growth. Thaksin Chinawat, Prime Minister of Thailand, a developing country, also urged the use of knowledge-based in every sector on his speech delivering the “parliament cabinet policy declaration” to be able to survive in global competition. The important features of ideal KBE includes with an openness to trade, new ideas and new enterprises; sound macroeconomic policy; the importance attached to education and lifelong learning; and the enabling role of information and telecommunications infrastructure. It is noted that knowledge required by a knowledge-based society is wider than purely technological knowledge; for example, it includes cultural, social, and managerial knowledge. According to OECD (cited in APEC KBE Symposium, 1999) suggests that among the more advanced economies of the world, economic growth is most sustainable for those which are strong in all of the following four dimensions: 1) Innovation and technological change are pervasive, and are supported by an effective national innovation system (that is, a network of institutions in the public and private sector whose activities and interactions initiate, import, modify, and diffuse new technologies and practices). 2) Human resource development is pervasive: education and training are of a high standard, widespread and continue throughout a person’s working life (and even beyond). 3) An efficient infrastructure operates, particularly in information and communications technology (ICT), which allows citizens and businesses to readily and affordably access pertinent information from around the world, and 4) the business environment (that is, the economic and legal policies of government, and the mix of enterprises operating in the economy) is supportive of enterprise and innovation.
On the contrary, the developing countries where depend mostly on agriculture, fighting with poverty, and facing with political instability seem to be far away from these criteria. Take Thailand as an example.
Measuring KBE in Thailand
Innovation and technological change are pervasive, and are supported by an effective national innovation system (that is, a network of institutions in the public and private sector whose activities and interactions initiate, import, modify, and diffuse new technologies and practices)
In Thailand, there are valuable debating whether or not the GDP growth relating to the increasing of KBE. Since around the last decade (1988-1996), before the financial crisis happened in 1997, the GDP growth was around 10-16 per cent each year (ONEC, 1998: 21), but the knowledge activity were quite low (Tangchuang, 2000: 58, also see Table 1).
Regarding to 1970 and 1996, the revenue ratio generated by the sectors of agriculture, industry and services changed drastically. For example, in 1970 most of the revenue generated was from agriculture (31.54%) and only 24.15% from the industry sectors. But some two decades later the revenue generated from agriculture was only 10.59% but the industry sector made up to 44.83% (see Table 2). Since in 1985-1990, the BOI's policy of welcoming industrial firms that were export-oriented contributed largely to increase from US$178 million to $2.5 billion. Unfortunately, the country invested heavily in physical capital rather than human capital in order to tackle the motivation of the foreign entrepreneurs. The government passed 11 bills which allow foreign entrepreneurs to purchase and own the land, houses, buildings and the such in Thailand up to 100 years or more. Commencing with the 21st century, global service competitiveness has been liberalized. Providing sufficient new knowledge within service industries will serve to further stabilize this sector and make it more competitive in the economy. According to OECD (1996: 12) "Today, knowledge in all its forms plays a crucial role in economic processes. Intangible investment is growing much more rapidly than physical investment. Individuals with more knowledge get better paid jobs, firms with more knowledge are winners on markets and nations endowed with more knowledge are more productive". Regarding to Tangchuang’s study (2000), the groups of housewives who are currently involving in SMEs and micro enterprises insisted that products processed from agriculture and local wisdom haven't been up-graded and transformed into the international marketplace yet. They needed innovation and technology to up-grade their products as well as more knowledge on how to do both national and international marketing, since they could not envision how products produced purely by local wisdom could compete with global economies. But not any organizations would response these needs but providing more loans which make them more in debt. He also found that most of agriculturists, especially in Thailand, do their farms with skill-based rather, as their ancestors had done before, than knowledge-based which makes them in debt regarding to the poor quantity and quality of production. Agriculturists do not have sufficient knowledge to improve the quality of natural fertilizer or natural insecticide, thus they buy all of these things, as advertised and mostly imported from foreign countries, which make the fixed cost in doing farms increase unavoidably. Moreover, the corruption among different levels of administrative personnel make the fertilizer, and insecticide more expensive, but poor quality, as well as, labour cost has been increasing rapidly as well. The phenomenon of demonstration among agriculturists thus can be seen during harvest seasons. The reveal of the World Banks recently indicated that high tech exports accounted for 43% of manufactured exports, but such export growth was not based on indigenous development at all (Economist Intelligence Unit, 1999: 25).
(In the sense of HRD is pervasive: Education and training are of a high standard, widespread and continue throughout a person’s working life (and even beyond)
It is a commonly belief that HRD serves as a key and integral factor that can be utilized to move Thailand forward toward sustained economic and social stability. In conformity to this concept, the National Education Development Plan (NEDP) has been in effect since 1961 but HRD had just been prioritized when the NESDP VIII (1992-1996) stated that basic education should be expanded in order "to raise up quality of life of Thai citizens". By 1994 statistics revealed that 65.4% of the 3-5 year old age group were enrolled in pre-school education, whereas in 1987 only 35.8% were enrolled at this level. In 1987 only 33.0% of the 12-14 year old age group were enrolled in school, whereas in 1994 enrollment for this age group had increased to 65.0% and enrollment for 6-11 year olds at the elementary level had increased to 98.4%. However, statistics from NSO (1999) reveals that only 18.81%, 15.91% and 14.50% of school age students attended in upper secondary, vocational and higher education during the NESDP VII(1992-1996). While 29.95%, 23.04% and 23.38% of school age students were in upper secondary, vocational and higher education during the NESDP VIII (1997-2001). By 1987, East Asian educational systems were demonstrating a secondary enrollment rate that averaged approximately 50% of the total population within that age group. The secondary enrollment in Thailand, thus, fell well below regional comparisons at approximately 28%. The World Bank (1998/99: 44) warned that Thailand's weak educational performance derived from a serious shortage of educated labours and this threatened continued growth. Charaenwongsak (1998) argues that the many of causes of the current economic crises appear to have roots in the Thai culture paradigm.
The number of vocational education students fluctuated during 1987-2000. Students attending at this level chose to major in commerce and industrial technology rather than electricity, electronics, mechanics or agriculture due to great demands within the labour market and the number of seats available within the education sector. Unfortunately students were not being adequately prepared for self-employment due to a curriculum that lacked content and an inexperienced teaching staff. NEC (2002: 190-191) recently revealed that educational achievement in elementary and secondary education levels were disappointed and under-estimated. Regarding to the census of student age of 13-24, 7.1 million or 52 per cent was found out of school, with 74 per cent claiming that lacking of financial support while the other 10 per cent claims that education is no use. Since instructors were unable to introduce invention and furthermore, students lacked enthusiasm and the ability to study by themselves (NEC, 1994: 168-172). Entrepreneurs have also frequently complained that vocational graduates were weak in vocational and foreign language skills; lack a sense of science; fail to protect collective interests; lack creativity and leadership qualities; fail to control their emotions; and not endurance to work (Tangchuang and others, 2002). The evidence of the incompetence was revealed by NEC (1999, 2000: 15) that Thai labour is valued at only $5.45 per hour, whereas labour in the Philippines is valued at $6.26 per hour; $9.71 in Malaysia; $13.18 in Korea and $23.79 in Singapore. Actually, Thailand allocated money on education quite high comparing to some countries, for example in 1997 Thailand allocated educational budget with 4.8 per cent of GNP while Korea, Japan, Singapore and China allocated only 3.7, 3.6, 3.0 and 2.3 per cent of GNP respectively (NEC, 2002: 34). But in its report on World Employment 1998-1999, ILO focused on the effects of education and training in determining the "employability" of the population. It reveals that Thailand lagged behind middle-income Asian countries in public spending on primary, secondary and higher education in the 80s and 90s. Meanwhile it is near the average for tertiary and vocational education. The ILO report demonstrates that Thailand has increased its spending on education and training, but not enough to overcome its relative lack of professionals and technicians. Tangchuang (2000) argued that the poor education was not solely related to the amount of budget allocated, but how to spend the budget efficiently. Current issues on educational budget released in daily news revealed that dishonesty, and corruption, as well as patronage system were major factors of the poor education. School principles spend most of educational budget in improving of his own facilities, buildings and landscaping rather than directing to education improvements. The tangible physical development serves to national level of school improvement criterion.
Thailand is also not directing sufficient energies into research. APEC Economic Committee (2000 : 194) reveals that there are only 103 researchers per million in Thailand. This is in sharp contrast to Canada and Australia that the number of researchers were 2,719 and 3,357 per million respectively. Research budget allocations during the National Research Plan (NRP) of 1990-1997 was only 0.17% of the total GNP (ONRC, 1999). Although this statistic has grown slightly, to 0.2% during the 5th NRP of 1998-2001, but Kewdaeng (1999: 55) warns that the allocation should be somewhere between 0.5 and 0.7% of the total GDP. According to statistics, the number of graduate programs in Thailand is increasing. In 1995, there were 737 Master's programs, and 116 Doctoral programs under the Higher Education Plan VIII (13). The Master's degree and Doctoral degree programs normally require students to submit a thesis or dissertation for graduation. In light of this, it is amazing that so few graduates continue on to make a contribution to society by engaging in research within their chosen sector. This issue should be exposed for the negative impact that it is having on both society and the further of Thailand.
The knowledge and skills of laborers are represent factors that can effectively drive the invention and diffusion of technology. Developed economies, such as the United States, and Japan each have a workforce where over 60 percent are high - skilled laborers. Thailand has a largely low-skilled workforce. Most of Thai's industries consists of assembly plants, thus, a high-skilled labor force is of little use. They welcome a low-skilled workforce because it provides cheap labor. Regarding to Tangchuang (2000) on his investigation to what extend students, industry workers and service personnel have relevant knowledge, skills on KBE. It revealed that they had little knowledge/skills in almost every item. The items concerning technology were rated the lowest. It was somehow indicated that knowledge relating to insurance, services, communication gained from journals, peers, while knowledge on industry, finance, community service and computer literacy gained from education sectors. Knowledge on SME and stock investment were not educated. Among these knowledge and skills, all items were rated interested, while English, computer, communication using were most interesting in learning. In addition, regarding to some questions on how they realize the figure of GDP, and exports, most of them had not known or been interested before. In general, knowledge on stock investment, E-commerce, and SME promotion were perceived little knowledge. Nevertheless, the chances to improve their competencies if needed while the workers has the least opportunity. House wife groups are interested in improving quality of food processing and need more knowledge on marketing knowledge. Vocational and higher education students argued that they should have learned harder, more practices. They condemn non-creative environment both inside and outside the educational institutions.
Most of urban secondary schools, colleges and universities provide Internet facilities for students and staff members. Some universities have taught via cyber-classrooms, teleconferences. Students can access the homepages of their instructors and send their homework via e-mail. Instructors sometimes assign their students the task of designing their own homepage and e-commerce sites. However, Tangchuang (2002) found that entrepreneurs still feel disappointed with some graduates who are unable to use IT and technologies efficiently. Nevertheless, there are significant indicators that Thailand has tried to provide the best education but during the transaction period of being agriculture or industry decrease our dignity. Most of lower primary education schools are extending their education to upper primary education, while a lot of agriculture specialized institutions decided to change themselves to universities which confer various fields. Private technical colleges have up-graded themselves to universities. However, findings revealed that most of skills and knowledge provided in formal education and work places were still limited and insufficient for inventing or using hi-technology. 99.7% of Thai companies are small to medium in scale with less than 200 employees each. They need only low-skill labour, and low pay but hard workers, the illegal immigrants from neighbour countries, thus were welcomed. Of these companies, 44% are small, non-formal and without legal registration. SME and micro enterprises companies which have just been officially supported by Thai government in 2000 employ 60% of the total work force. These are able to produce local products that are not valued in the international markets.
To engineer the optimal vision, Thailand intends to place greater emphasis HRD under the National Economic and Social Development Plan VIII by providing more projects of a tangible nature. Much of the semi-governmental sectors will be moved to privatization. Public education and the service sectors will become more autonomous. Children in higher secondary education, vocational education and college students can have education loans available to them with support from a fund that was authorized by the cabinet ministry on March 26, 1995. Compulsory education extended to grade 9 has been launched in 2002, and students from grades 1 through 12 receive "tuition fee free" education. In the sense of "tuition fee free" education, it doesn’t mean that students pay nothing, but they have to pay other fees, such as books, clothes, extra-curricular activities, computer classes, and others which accumulates to no less than ever before. A lot of projects have been launched to strengthen community participation and to improve the integration of indigenous and scientific knowledge. Local curriculum and computer literacy are among the tangible activities being addressed in every school. This project serves to expand national communication skills, the information super-highway, and learning networks over the next few years. It is anticipated that these projects will help improve KBE of those labour forces, as well as, closing the gap between rich and poor. Regarding to Tangchuang (2000) on his investigation to what extend students, industry workers and service personnel have used their internet and cell phones for. It revealed that they mostly used them for entertainment, playing games, chatting and the like.
An efficient infrastructure operates, particularly in information and communications technology (ICT), which allows citizens and businesses to readily and affordably access pertinent information from around the worldInvestments in the ICT infrastructure during 1995-1997 averaged around 0.17% of the GDP, a rather low statistic compared to that of 1.3% for the Philippines and 1.6% for Malaysia. Even so, the master plan for telecommunications policy proposed to increase that the number of cellular and home phones to 6 million between 1997 to 2006. Unfortunately, the source indicated that the number of children between the ages of 7 and 18 now own cellular phones, or 3% of the population owning phones. (ASIAWEEK, 2000: 12). Panyarachun (cited in Changsorn, 2000: A2) states that Thailand cannot hope to participate in the new economy until it resolves the deep-rooted monopoly in its telecom sectors. He also states that "if we want to jump into the new industries, to be part of the future, one of the first infrastructures we need is telecom services which are fast, up-to date, but cheap as well". While increased ICT investment in Thailand has freely opened the way for competitiveness, the public sector has invested more on up-grades. Home phone availability has been widely extended and quality has improved across the nation. At least one public telephone is now situated in every village (ASIAWEEK, 2000: 60). Internet communication links or websites have been initially proposed to every sub-district or local administrative committee office. To date, the number of internet café and telephone availability are close to other NICs.
Statistics indicate that the GDP grew upwardly at a rate that averaged 10% annually between 1960 and 1980 (Suchiro, 1986: 49). International investments under the BOI were appropriated to regional industries located in the northern and central regions. Thousands of rural area semi-skilled and unskilled laborers migrated in swarms to work in construction companies and service sectors. Lured by a better future, farmers sold their land to help meet the demands of investors. Some move to the cities and others spent their money on luxurious merchandises, including cars, trucks, motorcycles, refrigerators, and TV.
Most of the money allocated for investment was overly extended from banks for profit making activities. Credit was made available to construction companies and even politicians to purchase property that was over-valued. The government also secured a number of international loans to subsidize the development of human capital. The results of such investments made the country flourish and to develop a luxurious infrastructure. The stock index increased in an upward direction to hit 1,000-1,700 volume between the period of 1998 to 1993 (The Manager, 2000:83).
There was tremendous growth in direct foreign investment during 1985-1990. The BOI's policy of welcoming industrial firms that were export-oriented contributed largely to increase from US$178 million to $2.5 billion. The World Banks recently reveals that high tech exports accounted for 43% of manufactured exports, but such export growth was not based on indigenous development at all. Honda, Toshiba, Mitsubishi are all examples of companies using Thai labour for assembly line production. These companies provide a source of employment for low-skilled, low pay workers, but opportunities for highly skilled professions, high pay are scarce within these firms (Economist Intelligence Unit, 1999: 25).
Regarding to BMI risk ratings (Business Monitor International, 2002: 4) revealed that business environment and long-term economy in Thailand are 55.7 and 54.2 while they are 64.1 and 65.2 in South Korea and 62.0 and 61.3 in Malaysia. Statistics by UNFPA (1996: 79, 95, 99) also released un-comparable data on education of these three countries, they were male and female secondary school enrollment and annual labour force (growth rate in %) of 40.0, 38.0 and 1.9 per cent in Thailand, while there were 58.0, 62.0 and 2.7 per cent in Malaysia and 91.0, 90.0 and 2.1 per cent in South Korea. Thailand was not too wide gap on economical and educational status from the other two countries during the last two-three decades. While The World Competitiveness Yearbook (2000) ranked Thailand as the 33rd among Asian countries.
Under the NESDP I-VI (1961-1991), infrastructures and health development were determined to be a priority and greatly emphasized. The first NESDP was financially supported by the World Bank (Suehiro, 1986: 49). Billions of bahts were allocated to improve the quality of life for her citizens. Even so, in 1993, the World Bank concluded that among successful
East Asian economies, Thailand performed lower in human capital creation than other
middle-income economies of the region.
Thailand has its own culture, indigenous wisdom, and some natural things which are different from other countries but to face with the new competitive world Thai driven mechanics: education, industry, business and local sectors must practically go beyond tradition and intensify of collaboration with one another. Deep understanding the thoughts of educators, teachers, as well as labour forces and entrepreneurs should be done and analyzed. Learners at all ages, sexes, careers and places needed to be driven at ease to be more realized the impact of liberalization, internationalization and modernization for better adaptation. Regarding to the national policy on raising the equal education opportunity of Thai citizen during the last decade, it revealed the greatest increasing number of educational institutions and students in every level. Unfortunately the values of gaining more education have been merely for the sake of diplomas but lack of creativity, value-added values, and enthusiasm. Education and enterprise sectors, thus should be seriously redesigned for a new paradigm to serve as a knowledge park of a window for society to the knowledge-based economy. The interactions between education, industry and business sectors should cooperate beyond the basic supply but in terms of training, researching and servicing in a tangible and an intangible form to foster growth of international standard, national dignity, self-reliance, international cooperation and competitiveness.
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