By Atul Bhattarai
On March 9 at the Metropolitan Club in New York City, Thaksin Shinawatra, prime minister of Thailand from 2001 until his ouster in 2006, spoke in parables about a changing global economy, and the need for Thailand to adapt to a digital and networked world. World Policy Institute, in partnership with the World Economic Roundtable, hosted the telecom billionaire as part of its Global Leader Briefing Series, in an event inaugurated by days of protest as well as a dueling rally by his supporters.
In his speech, Shinawatra talked about the changing face of global business. Referring to Jack Ma, the CEO of Alibaba—the Chinese e-commerce company that the Economist has called the “world’s greatest bazaar”—he said: “There is a tale of a poor English teacher in China who neither built a factory nor invested in any production facility. But people paid for his service, simply to reach the network of supply and demand on a grand scale.” Enabled by the Internet, companies such as Alibaba have transformed business, Shinawatra said, giving the average consumer the power to purvey goods and services himself and triggering the emergence of an atomized “network economy.”
In 2013, Shinawatra said, business-to-business trade amounted to more than $15 trillion, according to the United Nations Conference on Trade and Development, while the figure for business-to-consumer trade—the traditional model—was only $1.2 trillion. This balance will become the “new normal,” he predicted, and an economy that does not retool itself, developing new means for new realities, will stagnate. He likened the impact of the network economy to that of the sea route between Europe and Asia, charted by the Portuguese in the 15th century: As the sea route flourished in spite of its faults, the land route—the famous Silk Road—became obsolete.
Shinawatra characterized the free-market capitalism and state-led capitalism of Washington and Beijing as a “tale of two cities,” where each system, successful in its own right, has offered a “competing” model for growth. These two economies, he said, have launched parallel initiatives to harness the power of the global network economy: the United States with the Trans-Pacific Partnership and China with its “One Belt, One Road” initiative.
The TPP, signed in February 2016 between 12 Pacific Rim countries (which make up 40 percent of the world’s GDP) will create an extensive free-trade zone. The OBOR, which is infrastructure-focused, will create physical trade routes between countries that lined the historical Silk Road, as well as countries that fall on the so-called “maritime Silk Road.”
Thailand and the rest of Southeast Asia must strive to create mutual economic benefit, Shinawatra said. (Thailand is not yet a member of the TPP but is predicted to join OBOR.) He said that although the TPP and OBOR are often thought of as antagonistic, evincing a global power struggle between the two countries, the interdependence of the American and Chinese economy—the U.S. is China’s largest trading partner and China the largest holder of U.S. government securities—undermines such a view.
But before Thailand can benefit from such initiatives, it must address several concerns, Shinawatra said. Legislative freedom is essential to creating responsive economic policy, and freedom of speech and rule of law are required to sustain economic cooperation between Thai citizens and the global community. He warned that Thailand’s new draft constitution, unveiled earlier this year, jeopardizes all three: Under it, the Senate would gain unprecedented authority to block legislation, and the judiciary’s power would outstrip that of the legislative and executive branches.
Shinawatra argued that such a constitution would curtail Thailand’s ability to adapt to the new economy. A better constitution would provide “sufficient institutional infrastructure” for investment and production, giving space for Thailand’s economy to grow. He related another parable: At a Thai restaurant, a chef’s protégé is unable to correctly mix the ingredients for a meal; when the meal is served, mayhem ensues. “The moral of this tale,” Shinawatra said, “is that one must make the written recipe right.”
Atul Bhattarai is an editorial assistant at World Policy Journal.
[Photo courtesy of Thaksin Shinawatra: Life & Times]