area-based innovation strategies and middle income · pdf filesolutions and position/guide ......

STIPI

Area-based Innovation

Strategies

and Middle Income Trap (MIT)

of Thailand Jeong Hyop LEE, Ph.D.

Senior Advisor

Science, Technology and Innovation Policy Institute (STIPI)

King Mongkut’s University of Technology Thonburi (KMUTT), Thailand

ASIALICS

Oct 3, 2016

Bangkok, Thailand

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STIPI

• Perspectives of Innovation Systems are good at describing successes in the past and other countries/areas

• Consequent benchmark-based policy recommendations not guaranteeing effective problem solving policy interventions

• Still relevant are entrepreneurship (Schumpeter), learning and role of government for catching-up industrialization (Amsden) and others.

• Applying those buzzwords into the system analysis being prone to blame each other and make relevant stakeholders cynical and desperate

Buzzwords and MIT

2 JHLee, Science, Technology and Innovation Policy Institute (STIPI), KMUTT

STIPI

Thailand:

• Plenty resources & reasonable population size

• Inducing a few global companies of Japan and others; automotive and electronics industries

• Leading the ASEAN region with benevolent and generous people to willingly share their fortune with neighboring countries

Natural Endowments and Leadership


STIPI The “Middle Income Trap” Locked-in middle income trap

• Stagnant growth and non-resilience to frequent economic and natural crisis

• Loosing leadership in the region

Annual GDP growth, 1961-2011

(OECD Reviews of Innovation Policy

Innovation in Southeast Asia, 2013)

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STIPI STI and Area-based Strategies Innovation strategies

• 300 % tax deduction

• Talent mobility

• R&D in ten strategic areas

• Procurement and PPP as new policy delivery mechanisms

The Startup Thailand, launched last April 2016

• Promoting entrepreneurship, reaching out to Chiang Mai, Khon Kaen

and Phuket.

• Three startup streets in Bangkok; Innovation district near the

Knowledge Exchange Center with KMUTT, Siam square with

Chulalongkorn and the Food Innopolis with Thamassat U, AIT and

Thailand Science Park.

• Electric vehicle industry promotion with utilizing existing automotive

and electronics industrial capabilities

• Phuket

Eastern Seaboard


STIPI Conceptual Framework

• Alternative way to diagnose the systemic structural bottlenecks of Thailand, articulate relevant solutions and position/guide (existing and future) innovation programs for betterment?

System Diagnosis

Solutions

Innovation

Programs


STIPI Framework Principles

For more information you can refer to “STI Strategies and Action Planning in ASEAN” by Jeong Hyop Lee ets (2015)

- Followings are considered to go beyond benchmark which only provides irrelevant and decontextualized recommendations

- Holistic approach to overview system weakness and bottlenecks, to provide contextual understanding of them and to identify the leverage points to start the system transformation process with limited resources and expertise

- Future design approach to set future-oriented goals and find pathways of necessary steps in back-cascading way to minimize uncertainties and complexities

- Intuitive approach to articulate story telling type strategies with limited information and hence increase the consensus among stakeholders for better implementation

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STIPI Tentative Descriptive Holistic Diagnosis

o Systemic absence of engineering and management capacities is a critical cause of the poor performance and affected by the long tradition of mercantilism.

o This institutional backwardness became bottlenecks of industrialization, informatization and knowledge-intensive startup promotion.

o It is because of the core capacity absence that the benevolent supports for neighboring countries cannot be culminated in the sustainable business development mechanism and mutually benefitted regional partnership.

• Low value added export products

• Domestic market oriented by local large companies

• Degradation of 1st tier suppliers to 2nd /3rd tier ones • High aesthetic sense of Thai not fully utilized

Phenomena

Poor economic

performance in Thailand

Short-term profit investments

such as condo development

Talents are not cultivated for

industrialization

Technological developments

are not favored by private

sectors.

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JHLee, Science, Technology and Innovation Policy Institute (STIPI), KMUTT

STIPI Tentative Futuristic Solutions

Engineering and management capacity by which institutional transformation of the whole system can be triggered.

In partnership with foreign stakeholders, there should be on-the-job capacity development process

To bring in the foreign talents, the enlarged ASEAN regional market is a necessary condition. Sufficient conditions will be prepared as Thai STI stakeholders engage in real problem solving innovations in partnership with neighboring countries. This will also provide a strong rationale for their commitment for the capacity building.

Thailand may pursue a regional hub with business development mechanism and help neighboring countries while Thai benefitted with the enlarged market.


STIPI

Position and Requirements of Area-based Innovation Strategies

• A platform to experiment and implement system transformation process in strategic partnership with foreign STI stakeholders in Thailand.

• The foreign partnership are required for capacity development, regional problem solving and business development.

• Domestic absorptive and dynamic core capacity development process needs be carefully designed especially considering the low market affordability and poorly cultivated product/service development capacities.


STIPI Case Studies

Bangkok Startup Streets: Innovation districts, Siam square and Food Innopolis

Local Innovation (startup) ecosystems: Chiang Mai, Khon Kaen and Phuket

Electric vehicle and new ICT innovation

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• Phuket

Eastern Seaboard


STIPI Case 1: Three BKK Startup Districts

A few cloning success startup

models of e-book, e-payment and

others in a naturally protected

market with cultural and linguistic

barriers and modest market size

Laws/regulations (IP belongs to government if

developed with grants),

government policies (Hard startup business environment, HR not

qualified for right question articulation),

institutions and investment practices (no high risk/return), which are not favorable for

startups

• University Initiatives:

KMUTT (Top-down),

Chulalongkorn (Bottom-up)

• Government Initiative:

Food Innopolis

Scale-up?

Successful

implementation of

startup districts?

Institutionalization

of startup

businesses?

Traditional mercantile institutions?

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STIPI


STIPI Food Innopolis • Promoting new technology-based food and agro businesses with

anchor facilities.

• Needs be positioned as a system integrator for global market in the existing agro and food system which is dominated by a few large domestic companies in the oligopolistic market.

• Focused on product development and may develop a global business platform with agencies which are commissioned for domestic and international market development (such as National Food Institute) .

• With this platform, strategic partnership with global e-commerce market places such as Alibaba (China), Coupang (Korea) needs be initiated and potential local and international producers are to be cultivated to provide the identified global market demands.

• The innovation ladder strategies need be prepared to develop more value-added and sophisticated food products in partnership with local universities and research institutes.

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STIPI


STIPI Case 2: Local (Startup) Innovation Ecosystem

Strong regional

identity and

competitive local

universities

Lack of local

quality jobs and

brain drain

Bottom-up initiatives

Chiang Mai University

Café de Innova (Startup

Incubator)

Khon Kaen Smart City

initiative by private sector

Double bottlenecks of general MIT

conditions and lock of local

autonomy

Partial policy engagement

through talent mobility, integrated

work and Science & Technology

Park programs

Limited outcomes with

activity and output

based performance


STIPI Chiang Mai

• ICT-based strategic industry promotion: tourism, agriculture, creative and handicraft industry

• With quite good local s/w engineers, a few animation studios and international contracts were successfully accomplished.

• Not comprehensively addressed for other strategic industries

• High caliber engineers from local universities and research institutes are not fully geared to contribute even though implementation of talent mobility programs and others.

• Regional master plan should be developed as an overarching guideline for collective process of capacity development.

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STIPI


STIPI Phuket (and Southern Region) #1

• Strong in hospitality industry (tourism and service) and forestry,

agriculture, mining and seafood are also major local industries.

FDI were incentivized to utilize cheap labors and natural resources

by BOI from 1980s until late 1990s. After that, SMEs were

promoted. And then tourism followed.

• Local food-processing industries in the south were closed down or

loosing competitiveness because labor costs increased and natural

resources depleted. Palm oil and rubber plantation and their

downstream SMEs remained. Tourism is threatened by the natural

disasters. Marine industry was alternatively pursued with the canal

plan, which was suspended because of political reasons and the

deep sea port issues on both side of the canal.

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STIPI

• Medical tourism and health industry with medical equipment are

positively considered in line with current tourism of geographical

uniqueness.

• Existing industrial upgrading needs be carefully managed. Western

part of the region may be specialized in service while eastern part

can build up innovation capabilities with local universities of

especially three large population provinces.

• Medical, agriculture and embedded researches which are relatively

strong can be geared to promote local industrial upgrading and

diversification.

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Phuket (and Southern Region) #2


STIPI

Case 3: Electric Vehicle and New ICT Innovation Strategies #1

• Thai has successfully managed to induce foreign direct investments to build automotive and electronics industries.

Thailand Board of Investment (2015)

Thailand Moving Ahead with Cluster

Development

Cluster for activities using advance

technology and future industry e.g.

Automotive and Parts Cluster (7 Provinces)

Electrical Appliances, Electronics &

Telecommunication Equipment Cluster (7

Provinces)

Eco-friendly Petrochemicals and Chemicals

(2 Provinces)

Digital-based Cluster (2 Provinces)

Food Innopolis

Medical Hub

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STIPI

• EV innovation strategies are necessary since technological

upgrading of local automotive suppliers does not guarantee EV industrialization in Thailand.

• EV service ecosystem which has natural market barriers and core

technology capacity development on EV charge system in the tropical climate may potential leverage to start EV innovation.

• Various ICT service opportunities such as IoT, Big Data and Cloud

Computing are explored through smart cities and others while the emerging Industry 4.0 is threatening the labor-intensive industry of Thailand.

• To boost ICT innovation requires a double edged sword to create and expand market and to build core supply capacity in Thai.

Case 3: Electric Vehicle and New ICT Innovation Strategies #2


STIPI Policy Recommendations

• Appropriate strategies

• Driving mechanism

• Relevant indicators for monitoring and feedback

• Thai specific philosophy for resource and expertise mobilization


STIPI

Thank you for your attention!

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STIPI

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