A creative economy for Thailand: a dream or reality?
In economic development, there are three stages of growths: resource-driven growth, efficiency-driven growth and innovation-driven growth. Most people would agree that Thailand moved out of resource-driven growth a long while ago, given the depletion of our natural resources. Most economists would say that Thailand is now at the second stage of development, under efficiency-driven growth. However, with the Thai government's January 22 announcement of a "Country Development Strategy" in promoting growth and competitiveness, the stated goal for Thailand is to "move up the value chain".Ultimately, the aim is to get Thailand out of the so-called "middle income trap". The World Bank defines middle-income countries as those with GDP per capita between US$1,000 to $12,000 per year. Thailand is now at about $5,300, and there is still a long way to go as far as statistics are concerned.
The only way we can move Thailand toward a high-income economy is to realise the third stage of development - innovation-led growth. In the future, the Thai economy must grow through "ideas" rather than an "I can do" mentality. We can look at the most concrete examples now. The most value-added (or profit) is now with the companies that generate "ideas", while companies that "do" the actual work (i.e. assembly) get a miniscule profit share. Take Apple products, for example. Apple in 2012 recorded revenue of over $156 billion, with net profit over $41.7 billion (a wide 26-per cent profit margin), while Foxconn, the company that manufactures Apple products showed revenue of $131 billion, with net profit of $2.7 billion (a slim 2-per cent profit margin). So we can see that value creation benefits mostly those with ideas and innovation - the hallmark of a creative economy.
The first definition of a "creative economy" was developed by British writer John Howkins in 2001. According to Howkins' definition, the various activities that comprise a creative economy have one thing in common: they are the result of individuals using their imagination and exploring (or protecting themselves from others doing so) related economic value. We should recognise that a creative economy is more than just Internet and information technology companies - its coverage is wide-ranging, including, among other things, the cultural sector, tourism, arts and media - basically anything that you can apply your ideas to to add value in the production and distribution processes.
In achieving a creative economy for Thailand, we need the right mix of public policies and strategic choices, in order to harness our economic potential for creativity. The starting point is to enhance creative capacities and to identify creative sectors in Thailand. Government policies should aim towards building the creative entrepreneurial capacities of Thai people, offer modern and affordable access to modern technologies, and promote the trade potential of creative products in both the domestic and international markets. The one-tambon-one-product (OTOP) policy is a right step towards promoting high quality, locally made goods in wider marketplaces.
If the government can successfully promote a creative economy, there will be positive spillover effects, higher levels of income and employment generation in Thailand. One major challenge for shaping creative economy policies for Thailand is related to intellectual property rights: how to measure the value of intellectual property, how to redistribute profits and how to regulate these activities. The evolution of multimedia created an open market for the distribution and sharing of digitised creative content. Now, the debate about the protection or sharing of intellectual property rights became highly complex, involving governments, artists, creators and business people. How should we strike a balance between letting creative people benefit from their own work, giving incentives to them to make further inventions, while allowing society at large to benefit from their inventions and promoting healthy market competition?
Furthermore, we have to recognise that a creative economy should have a social dimension. It functions through interconnected networks of production, marketing and distribution, spanning the entire value chain. Today it is strongly influenced by the growing role of Internet connectivity and social networks. These new tools, such as blogs and forums, facilitate connectivity and collaboration among creative people, products and places.
Pragmatic policy-making requires a better understanding of who the stakeholders are in the creative economy, how they relate to one another and how the creative sector relates to other sectors of the economy. Thailand will need to bridge its own "digital divide" - only 25 per cent of the Thai population has access to the Internet - and enable people across society and the professions to communicate and share ideas.
Last, policies for a creative economy have to respond not only to economic needs but also to special demands from local communities with regard to education, cultural identity, social inequalities and environmental concerns. Major urban centres in Thailand like Bangkok, Chiang Mai and Phuket should foster the concept of "creative cities", to formulate urban development strategies for reinvigorating growth with a focus on culture and creative activities.
Looking ahead, I applaud the government in its efforts and goals to move Thailand out of the middle-income trap, as announced recently by the prime minister. Thais in different parts of the country should work together in formulating a feasible strategy to foster our creative economy, based on our own strengths, weaknesses and realities. We need to draw upon our strengths in food production and medical tourism, for example, and find ways to add value to our products and services. The time for action is now; the world and its creative economy will certainly not wait for us.
Dr Chodechai Suwanaporn is executive vice president, economics and energy policy, PTT Public Company Limited. Chodechai.email@example.com.