Climbing up the competitiveness ladder

Business News - Friday December 14, 2007

ECO Cafe'

Climbing up the competitiveness ladder

TIENTIP SUBHANIJ

Wouldn't it be nice to wake up in a green, pollution-free and happy little town? The state of citizens' welfare sometimes cannot be measured solely in terms of personal income. The quality of life also includes many other factors. These are, for example, life stability, employment opportunities, and self-discovery.

We may now be stressed about how uncertain our lives are going to be with the current political instability, unclear economic policies and the unstoppable forces of globalisation. Compared to many other places, however, Thailand is still very peaceful and full of potential. Where else in the world can you find that your own housemaids have 30 rai of fertile land to go back to, whenever they want to?

In the previous column, I mentioned the group of countries known collectively as the BRIC (Brazil, Russia, India and China). Today I would like to focus specifically on Brazil for two reasons. First is to highlight that the current state of Thailand's economy and politics is not that bad.

Second is to point out that, given so many obstacles in the past, Brazil has been able to survive today's economic and social complexity to become a rising star in Latin America.

Since the end of its "economic miracle" years in the 1960s and 1970s, Brazil has lagged behind many countries. A few years ago, however, Goldman Sachs thankfully selected Brazil, along with Russia, India and China, as one of the four "BRICs" - the developing countries that would dominate the world economy by 2050.

Despite outside enthusiasm for the country, many Brazilians wonder whether the "B" should be removed from BRIC. In the last few years, whereas developing countries as a whole have grown by more than 7% on average, Brazil's growth has been closer to a modest 4%.

By reputation, Brazil is also one of the most crime-ridden places on earth. Street crime is so severe that some tourists think it might be safer to live in the jungle than to walk on the streets of Rio de Janeiro.

The problem of crime is deeply rooted in the social system. Brazil is a country with extreme inequality, with a fraction of elite controlling most of the nation's wealth and power while so many powerless under-class people live at subsistence level. By law, Brazil is a democracy but the justice system is ineffective. And until recently, many people seriously thought that Brazil was "falling into pieces".

Against this background, after President Luiz Ina'cio Lula da Silva won re-election last year, the situation seemed to be getting better. Poor people's living standards have been improving, thanks partly to the social policies of reforming democratic governments.Income inequality, from which Brazil suffers most, has at last begun to ease. Brazil's democracy and an open-market economics concept are finally bearing fruit.

Brazil now claims itself to be an alternative-energy superpower. The Brazilian government has undertaken an ambitious programme to reduce dependence on imported oil. The Brazilian ethanol programme provides about a million jobs and cuts a lot of oil imports. Blessed with its natural resources, Brazil has enormous energy potential.

Today, Brazil gets a large proportion of its automobile fuels from sugarcane-based ethanol.

Last month, Brazil's state-controlled oil company also announced that the country had discovered more oil than previously thought, estimated to be between five billion and eight billion barrels. More discoveries are likely to be made in the future.

Already competitive in the alternative-energy sector, Brazil is now likely to become a global leader.

Crippled by economic and social problems for so long, Brazil has finally found its true competitive advantage. Like Brazil, Thailand's soil is very fertile. And even better, we have less crime, less social inequality and a more well-founded educational system.

There are many sectors that Thailand is good at. For example, with a large supply of skilled labour, Thai-manufactured vehicles and parts have gained acceptance around the world, and Thai-produced parts can be found in many high-end European vehicles, as well as various types of Japanese and American vehicles. In terms of tourism, we have 76 provinces, each with its own uniqueness.

There is no arguing that Thailand is blessed with beautiful nature, rich culture and many attractions, so promoting the tourism industry is something that can be done easily.

Other high-potential sectors include petrochemical products, hospital services, fruits, vegetables and ornamental plants.

We shouldn't be too stressed to learn that we are now lagging behind our neighbours on the competitiveness ladder.

It took Brazil many decades to finally climb up from the bottom of the pile. Here in Thailand we still have time to strengthen our true competitiveness. Although the process has already begun, the important question remains - have we made it the top priority?

Dr Tientip Subhanij holds a PhD in economics from the University of Cambridge, and currently has a career in banking as well as academia. She can be reached at tien201@yahoo.com

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