ASEAN
14 June 2014
Thailand's failed experiment in inclusive growth
Thailand's recent military coup is a consequence of its failed experiment with "inclusive growth" policies. But the coup will not solve Thailand's problems. It needs a new social contract.
Thailand's recent military coup is a consequence of its failed experiment with "inclusive growth" policies. But the coup will not solve Thailand's problems. The country needs a new social contract.
Inclusive growth is the new mantra of international organizations like the Asian Development Bank, World Bank, the IMF and the OECD. In this world of growing inequality, they are preaching the importance of providing economic opportunity to all our citizens, and empowering them with a good education and health.
Indeed, inclusive economic institutions are the key to long-term prosperity in any nation. They can harness the potential of inclusive markets, encourage innovation, invest in people and mobilize the talents and skills of a large number of people -- ultimately for the benefit of everyone.
"Inclusive growth is about putting in place better policies for better lives", according to OECD Secretary General Angel Gurria.
Thailand has been one of the miracle economies of South East Asia, despite a history of military coups and bouts of political and social instability.
It has benefited from large inflows of foreign direct investment, especially from Japan. It is a major destination for international tourists. And thanks to its "locational advantage", it has been able to attract many corporate regional headquarters.
But despite Thailand's strong performance, its economic growth has not been "inclusive". Income inequality is high. One of the most striking aspects of inequality is the large gaps between the poor, rural north and north-east regions, and Bangkok and its neighboring area.
In 2001, Thaksin Shinawatra was elected Thailand's Prime Minister as a "champion of the poor", much to the displeasure of the Bangkok elites. Thaksin himself is not poor, he is an extremely rich telecommunications tycoon.
Thaksin implemented pro-poor policies for public health, access to cheap loans, and public services. Most agree that these policies bettered the lives of poor rural communities in the north and north-east of Thailand. Moreover, Thaksin proved to be a politician who honored his promises to the poor, who still support his party strongly today.
Critics of Thaksin's pro-poor policies describe them as "populist" or even vote-buying. Others would describe them as "inclusive growth" policies.
But there was more to Thaksin than inclusive growth. Aggressive efforts to tackle the drug trade involved brutal, extrajudicial violence. High-handed policies in Thailand's deep south helped fan a violent separatist insurgency. Moreover, Thaksin was seen as being extremely corrupt, even by Thai standards, for example, by exploiting government contracts.
In short, Thaksin proved to be a divisive, polarizing figure, who was pitted against the traditional Thai elite, which is based in Bangkok, and is close to the royal family and the military.
Thaksin was then ousted in a bloodless military coup in 2006. He was convicted of corruption, and now lives in exile in Dubai.
His proxy party was re-elected in 2007. Defections led to a change of government in 2009. The Democrat Party, led by Abhisit Vejjajiva, ruled from 2009-2011. However, it failed to win the support of the rural north and north-east, and lost an election to Thaksin's sister Yingluck Shinawatra and her Phue Thai Party.
The reign of Yingluck was also marked by controversy such as accusations of behind-the-scenes interference by Thaksin, abuse of power in government appointments, and a flawed rice scheme that created a national financial disaster. A major catalyst for recent social unrest was an attempt to pass an Amnesty Act that would have absolved not only Abhisit and others for the May 2010 crackdown on the red shirts, but would also have allowed Thaksin to return to Thailand without having to face a two-year jail sentence for corruption.
Yingluck was very recently removed from power by the constitutional court, rather than through the democratic electoral process. The military has now taken over in a coup, by one count the 12th coup since 1932. One of the reasons given for the coup is the often violent civil unrest between the supporters of the two sides, "yellow shirts" and the "red shirt", which has been intense over the past six months, but which has been a recurrent feature in recent years.
At the time of writing, the military coup leaders are imposing widespread restrictions on freedom of speech, freedom of the press and so on, and there many reports of human rights abuses. These leaders have made vague promises of holding elections next year.
Thailand now has a broken society and broken political system, and it is difficult to see a way out of its impasse towards national reconciliation.
The Bangkok elite does not have the numbers to win a democratic election. It refuses to accept election results and has thus boycotted recent elections. Indeed, it hasn't won an election in over 20 years.
Rather than trying to seek a compromise, for example on more inclusive growth policies, it is lobbying for the non-democratic appointment of a new government. Indeed, by all reports, this elite holds the nation's poor in contempt.
The King of Thailand, who has traditionally played the role of national conciliator, is gravely ill and there is no-one else in the royal family who can play this role. Despite the King's revered status, through his interventions over the years on the side of the Bangkok elite, he has prevented the development of institutions for the peaceful resolution of disputes and political differences. Indeed, the elite has come to expect the King and the military to solve social and political problems for the.
The poor from Thailand's north and north-east have tasted the benefits of inclusive growth, and many are willing to fight on for social justice. Further, Thailand's social divide is widening beyond the traditional urban/rural split, with a growing lower middle class, a more educated population, access to the Internet and social media, a broader political awareness and desire for political participation.
In short, national reconciliation and a new social contract are necessary. This requires wise and balanced leadership, a willingness to compromise by the elite, and the adoption of genuine inclusive growth policies. A new democratically elected government must govern on behalf of the whole nation, based on a new deal which is seen to be a fair deal by all major groups of society.
A solution as sensible as this should be possible. But at this stage, that does not seem to be the case.
Executive Director
Asian Century Institute
Inclusive growth is the new mantra of international organizations like the Asian Development Bank, World Bank, the IMF and the OECD. In this world of growing inequality, they are preaching the importance of providing economic opportunity to all our citizens, and empowering them with a good education and health.
Indeed, inclusive economic institutions are the key to long-term prosperity in any nation. They can harness the potential of inclusive markets, encourage innovation, invest in people and mobilize the talents and skills of a large number of people -- ultimately for the benefit of everyone.
"Inclusive growth is about putting in place better policies for better lives", according to OECD Secretary General Angel Gurria.
Thailand has been one of the miracle economies of South East Asia, despite a history of military coups and bouts of political and social instability.
It has benefited from large inflows of foreign direct investment, especially from Japan. It is a major destination for international tourists. And thanks to its "locational advantage", it has been able to attract many corporate regional headquarters.
But despite Thailand's strong performance, its economic growth has not been "inclusive". Income inequality is high. One of the most striking aspects of inequality is the large gaps between the poor, rural north and north-east regions, and Bangkok and its neighboring area.
In 2001, Thaksin Shinawatra was elected Thailand's Prime Minister as a "champion of the poor", much to the displeasure of the Bangkok elites. Thaksin himself is not poor, he is an extremely rich telecommunications tycoon.
Thaksin implemented pro-poor policies for public health, access to cheap loans, and public services. Most agree that these policies bettered the lives of poor rural communities in the north and north-east of Thailand. Moreover, Thaksin proved to be a politician who honored his promises to the poor, who still support his party strongly today.
Critics of Thaksin's pro-poor policies describe them as "populist" or even vote-buying. Others would describe them as "inclusive growth" policies.
But there was more to Thaksin than inclusive growth. Aggressive efforts to tackle the drug trade involved brutal, extrajudicial violence. High-handed policies in Thailand's deep south helped fan a violent separatist insurgency. Moreover, Thaksin was seen as being extremely corrupt, even by Thai standards, for example, by exploiting government contracts.
In short, Thaksin proved to be a divisive, polarizing figure, who was pitted against the traditional Thai elite, which is based in Bangkok, and is close to the royal family and the military.
Thaksin was then ousted in a bloodless military coup in 2006. He was convicted of corruption, and now lives in exile in Dubai.
His proxy party was re-elected in 2007. Defections led to a change of government in 2009. The Democrat Party, led by Abhisit Vejjajiva, ruled from 2009-2011. However, it failed to win the support of the rural north and north-east, and lost an election to Thaksin's sister Yingluck Shinawatra and her Phue Thai Party.
The reign of Yingluck was also marked by controversy such as accusations of behind-the-scenes interference by Thaksin, abuse of power in government appointments, and a flawed rice scheme that created a national financial disaster. A major catalyst for recent social unrest was an attempt to pass an Amnesty Act that would have absolved not only Abhisit and others for the May 2010 crackdown on the red shirts, but would also have allowed Thaksin to return to Thailand without having to face a two-year jail sentence for corruption.
Yingluck was very recently removed from power by the constitutional court, rather than through the democratic electoral process. The military has now taken over in a coup, by one count the 12th coup since 1932. One of the reasons given for the coup is the often violent civil unrest between the supporters of the two sides, "yellow shirts" and the "red shirt", which has been intense over the past six months, but which has been a recurrent feature in recent years.
At the time of writing, the military coup leaders are imposing widespread restrictions on freedom of speech, freedom of the press and so on, and there many reports of human rights abuses. These leaders have made vague promises of holding elections next year.
Thailand now has a broken society and broken political system, and it is difficult to see a way out of its impasse towards national reconciliation.
The Bangkok elite does not have the numbers to win a democratic election. It refuses to accept election results and has thus boycotted recent elections. Indeed, it hasn't won an election in over 20 years.
Rather than trying to seek a compromise, for example on more inclusive growth policies, it is lobbying for the non-democratic appointment of a new government. Indeed, by all reports, this elite holds the nation's poor in contempt.
The King of Thailand, who has traditionally played the role of national conciliator, is gravely ill and there is no-one else in the royal family who can play this role. Despite the King's revered status, through his interventions over the years on the side of the Bangkok elite, he has prevented the development of institutions for the peaceful resolution of disputes and political differences. Indeed, the elite has come to expect the King and the military to solve social and political problems for the.
The poor from Thailand's north and north-east have tasted the benefits of inclusive growth, and many are willing to fight on for social justice. Further, Thailand's social divide is widening beyond the traditional urban/rural split, with a growing lower middle class, a more educated population, access to the Internet and social media, a broader political awareness and desire for political participation.
In short, national reconciliation and a new social contract are necessary. This requires wise and balanced leadership, a willingness to compromise by the elite, and the adoption of genuine inclusive growth policies. A new democratically elected government must govern on behalf of the whole nation, based on a new deal which is seen to be a fair deal by all major groups of society.
A solution as sensible as this should be possible. But at this stage, that does not seem to be the case.
Author
John WestExecutive Director
Asian Century Institute