To see the sun rise, look east; to see it set, look west – Anonymous
How fitting this quote is for today’s economic woes. The West and Europe are struggling to gain a firm grip post the global meltdown while some emerging markets were so well poised in their simplistic economic structure that we can draw lessons today. Let’s turn the page to Thailand.
Think ancient customs and culture, situated in the heart of Asia, where tradition meets cutting edge technology and development. Bangkok, a place where monks robbed in saffron smarting the latest mobile devices and almost completely juxtaposed with the west.
The fresh aromas of Thai cuisine hangs in the air and cannot be escaped, a part of Thailand that cannot be forgotten or unappreciated. So much so, that the production and consumption of food is sacred in Thailand. Blessed with some of the most fertile soil in the world and weather conditions to match, Thailand can be regard as the “Kitchen of the World”.
Juxtaposed with ancient and cultural architecture and blended with modern signposts of development, Thailand as recognised by the World Bank is one of the developing world success stories worth telling. More crucially, it is a winning case study for Africa to glean from.
In 2010 exports accounted for almost 70 percent of GDP, pushed by service and industrial sectors. As the second largest economy in South East Asia, it is the leading manufacturer and exporter of automobiles and associated downstream parts. Thailand is the major connector for semi-conductor, computer and electronic industries and also the leading supplier of chemicals, plastics, resins, rubber and metal to its own and surrounding countries’ industries. Of the highest order and quality, the country is rich in precious gem stones and a leading market for jewellery.
Here is the amazing part and lessons for Africa – 40 percent of the labour market are employed in the agricultural sector. Thailand at the moment boasts an unemployment rate of just 1 percent, one of the lowest in the world. Only 4 percent of their GDP is allocated to education. This for a country densely populated of 67 million and a per capita of $8,700 per annum. Economic growth has lifted Thailand’s living standards with one of the lowest poverty rates in Asia.
The key to Thailand’s growth? Nothing short of modernisation and their goal to join the ranks of the ‘Asian Tigers’ which are South Korea, Singapore, Taiwan and Hong Kong give credence to the manufacturing prowess of these countries.
Not without severe challenges, Thailand has overcome the economic challenges from the Tsunami, the currency crisis and recent floods. Thailand, has buoyancy in its location as part of the South East Asia supply chain, a highly motivated workforce and a solid foundation in the food industry.
This is not bad for a country that has the longest reigning monarchy in the world – 68 years. Globally Thailand is the sixth largest food producer and the sixth biggest exporter. Fundamental to the structure of Thailand’s food industry, exports are pushed by only 3 percent of the country’s 8 500 food manufacturers. The rest is for domestic consumption, ensuring that staple cost-affordability of staple foods are available for the 99 percent employed workforce.
Delving into the food market in Thailand, most of the raw materials for their food is sourced from within Thailand. Compounding this relevance is that the food industry is highly competitive, lowering the cost of food on the domestic front.
Forty years ago, the government of Thailand, food producers and research institutions in the food industry set out to develop systems and processes that will lead to a superior quality of food. This led to the modernization of technology to enhance the production of food, maintaining employment.
Interestingly, canned tuna and rice are the leading exports from Thailand to Africa. Yet Africa has sufficient Tuna in their own waters. In Thailand, the appetite for highly skilled labour for the food industry is bred in the more than sixty universities offering studies in food sciences.
For example, Thailand and Vietnam have developed and 900km corridor to facilitate the inter transfer of tradable goods that will keep prices down while making markets accessible.
In many ways Africa needs to take a feather from the economic prowess of Thailand. Along with their Asian counter parts, Thailand is completely a market driven system. Africa at the moment is a greed and corruption driven system with markets subdued by politicians.
Africa has 60 percent of the world’s arable land, the highest HIV/AIDS rates in the world and the highest level of starvation unsupported by adequate education across the continent. For a large part Africa has no focus.
In particular, South Africa does not have a focus. South Africa is ranked 3 for attracting global investment of at least $10 billion for renewable energy, yet unemployment rests between 25 – 35 percent depending on the definition you use. South Africa’s population is 16 million less than Thailand and by far has more critical resources in fisheries, agriculture, infrastructure, commodities such as gold, diamonds, platinum, coal and iron ore.
At one stage South Africa had one of the best clothing and textile industries in the world where most of such workforce is now unemployed and the industry has collapsed. Downstream industries in the agriculture and commodities sectors are either limited or non-existing to be of competitive in nature, raising domestic prices.
As recent as yesterday, Anglo American CEO announced that the company will be cutting as many as 60,000 jobs and included in this, 40 percent of the head office staff in Johannesburg will be retrenched.
Where South Africa has also failed is attracting investment in the clothing and textile industry to raise competitiveness and exports for this sector that already has a highly skilled workforce. A further typical blunder is that South Africa imports so many shoes from China of sub-standard to what the manufacturing market previously produced and exported.
It should be easy to identify the problems in Africa and where they can look to Thailand as an ideal model of emerging market development case study.