The punch line on economic growth is better productivity through enhanced techno
The punch line on economic growth is better productivity through enhanced technology. In Thailand I believe there have been several vast productivity improvements since 1997.
As first published for members on January 17 '03.
The punch line on economic growth, "its better technology, stupid."
"Fast economic growth went with fast poverty reduction and overall economic contraction went with increased poverty". By William Easterly in "The Elusive Quest for Growth". Published by the MIT press in 2002. Indeed, economic growth more then anything else helps developing countries to decrease poverty levels.
Global economist have for decades already wrongly so argued that "financing the savings gap" in a developing country will increase economic growth. It was the bad luck of poor countries that the first generation of the development experts was influenced by two simultaneous historical events: the Great Depression and the industrialization of the Soviet Union through forced savings and investment. Today we know that supporting the financing gap is not the "holly grail’so proclaimed for years.
"Western donors should fill the financing gap with foreign aid, which will make the economy grow". This was the motto for half a century and it proved to be wrong. If you are not convinced, just read the second chapter of "The Elusive Quest for Growth". "We IFI economists used the financing gap approach even when it clearly wasn't working." "The Elusive Quest for Growth".
Yet, International Financial Institutions (IFI) to this day still use this false doctrine to decide, when making aid and investment growth projections.
Positive technology changes and thereby real productivity contributions more then anything else is what gives strong economic growth in the future. Technology change keeps making a given amount of labor go further. In Thailand I believe there have been several vast productivity improvements since 1997 and this along with the multiplier effect (review in my last article) bodes well for solid real growth here for this and next year.
Mostly productivity improvements -not just private investment, is what brings above average future economic growth. Below I state some major productivity improvements in Thailand, which I think the more guarded economic views around year 2003 are not considering.
Consider some major productivity improvement in Thailand over the past 5 years: ATM Machines. Just about everybody uses them here. They save us all time which is duplicated in employee time savings by the Bank.
Mobile Telephones: Ideally suited for the culture and massively used everywhere. But less abused then in the past as the learning curve has let more Thai people view them as time savers not wasters.
Shopping Centers like Lotus, Carefour and Big C: Experience shows in developed countries that more efficient shopping increases productivity in the economy. I think this is especially so in Thailand. People spend less time running around getting the stuff. While I know there are social negative side benefits, these new massive stores are a great national productivity enhancer.
The Bangkok Sky Train, the efficient national transportation system, like Airline operations and national Trucking, Bus and Van services. I take the Sky Train whenever I can while in Bangkok. I notice at least twice as many people on it, then when it first started some 3 years ago. The Thai Airports in general are above regional standard . Making travel in and out more appealing then some other regional Airports and I have yet to have any problem with Taxi drivers. Bangkok traffic time is reading time for many and so not wasted. Security seems tight but is not a major productivity dragger as now in the West.
Computer and IT. While its positive contribution has been well noted in developed countries, it is not to be discounted as insignificant here. Business, Education, Travel & Tourism, Government, here are all big users. They are coming off a low base and so made tremendous relative improvements, over the past few years especially. The most common Thai/Foreigner can now have a professional web page running in Bangkok for less then 500 hundred Baht a month -and with a top quality mobile phone in the pocket for less then 10-15% of what it cost in 1997.
Paul A. Renaud.
