Abstract
Thailand has achieved impressive and consistent GDP growth over the past half century in large part through extensive economic diversification. Despite these gains, there is growing evidence that Thailand suffers from a significant gap between the advanced nature of its export structure and the much more modest technological levels of its own firms and labour force. Weak university–industry linkages (UILs) contribute to this problem, though there were sporadic success cases in some key industrial sectors representing high-tech, mid-tech and resource-based industries. The state of Thai UILs is a reflection of weak downstream demand by indigenous Thai firms, limited commercial focus and capacity within the university system and bureaucratic fragmentation. These problems in turn reflect the country’s broader political economy, including Thai development strategy, weak labour as well as business emphasis for upgrading, political fragmentation and the relatively low level of pressures (foreign exchange, external threats and popular protests) on Thai leaders to promote institutions that favour innovation.
Introduction 1
The contribution of knowledge to social welfare and sustained growth through improved competitiveness is now widely recognised. Such recognition has focused attention on the role of universities. In the context of developing countries, the role of universities is important for two reasons. First, these countries cannot rely on rich endowments of natural resources and cheap labour without any contribution of local ‘intellectual added value’. Second, a strong local knowledge base is necessary for local firms to take advantage of the world’s information riches (Sutz, 2005). In leading developing countries like China and India, the roles of universities have been quite dynamic, especially university–industry linkages (UILs). In China, the survey by Eun (2009) illustrates that more than 60 per cent of Chinese professors perceived that UILs improved after 2004. At the same time, most Chinese firms appear to be very positive in evaluating their own experiences of collaboration with universities. In India, though the contribution of universities to gross expenditure on R&D (GERD) and higher education enrolment ratio are relatively low and universities have been quite conservative in collaborating with industry, some universities have emerged as important actors in India’s leading innovation clusters in India’s big cities (Krishna, 2012), Indian Institutes of Technology, in particular, have provided bright and skilled students to the industry. Also after the year 2000, there was a notable rise of spin-offs from campuses (Chandra and Krishna, 2010). In this regard, Thailand is falling behind. As elaborated in the rest of this article, Thai UILs are relatively weak.
The main thrust of this article is that problems in Thailand’s institutions of higher education are major contributors to the technological weaknesses described above. We will analyse the overall situation of the higher education system in Thailand and the strengths and weaknesses of linkages between higher education institutes and industry. We also investigate the underlying institutions and politics. Then we specifically examine such linkages in three of the country’s leading industrial sectors: the hard disk drive sector (representing high-tech industry), the automotive sector (representing the mid-tech industry) and the natural rubber industry (representing resource-based industry).
The Evolution of Thailand’s Higher Education System
Thailand’s educational system grew significantly after WWII. Enrolment expanded from 15,000 students attending a total of five universities in 1961 to 100,000 students enrolled in 17 universities in 1972 (Anderson, 1977). Indeed, accelerated industrialisation in the 1970s led to a labour shortage in science and technology that in turn prompted the creation of open universities and distance learning institutes. Continued expansion resulted from the industrial boom from 1985–1995. The last quarter of the twentieth century witnessed the growth of education’s share in the national budget (from one-sixth to one-quarter), the opening of new private and public colleges, as well as a significant rise in the numbers of Thais obtaining education in the US. By 2006 Thailand had 20 public, four autonomous and over 50 private universities (Schiller, 2006). The result was a 20-fold rise in the number of Thais with tertiary education (reaching 3.4 million) over this period (Pasuk and Baker, 2005). Graduates of the growing number of universities initially became officials; but as the expansion of bureaucratic positions slowed in the 1980s, most became ‘professionals, technicians, executives, and managers in the commercial economy’ (Pasuk and Baker, 1995).
The focus on the ‘commercial’ economy in the preceding quote, though, reflects the weaknesses of Thailand’s expanding higher education system. By the middle of 1990s, the system exhibited several important flaws. First, low-income and rural citizens have generally lacked access to higher education. Second, the focus of secondary curricula has tended to be on university preparation rather than on actual labour market requirements for vocational training. Third, the research performance of Thai universities is substandard both in terms of industrial needs and sheer numbers. With regard to industry needs, Schiller (2006:74) notes that research in Thai universities and research institutes ‘is done for the private sector, but not in interaction with it.’ In terms of numbers, one statistic—the number of publications listed in the Science Citation Index (SCI)—is disturbingly illustrative: In the 1980–1984 period, Thailand’s SCI publication total of 394 exceeded those of Korea (341) and Singapore (253); by 1985–1989, the Thai figure had risen to only 446 compared to 1,043 for Korea and 597 for Singapore; by ‘2011, the Thai figure was 6,549 compared to 48,746 for Korea and 10,217 for Singapore.’ Finally, though Thai student enrolments have increased (see Table 1), the quality of students graduating from Thai universities, especially in math, science and engineering, lags behind regional and world standards resulting in far fewer engineers and scientists per capita than more advanced neighbours such as Singapore, Taiwan and Korea (Ritchie, 2010).
Number of New Enrolment in Bachelor Degree Level in the Field of Science and Technology
Most universities in Thailand are primarily devoted to teaching. Only nine universities 2 were awarded ‘research’ university status and received an additional 3,000 million Baht per year (US$100 million) to do research. On average, the contribution of universities’ research to GERD was around 25 per cent during 2005–2009, while the private sector and government agencies contributed around 40 per cent and 30 per cent respectively during the same period. Nonetheless, in terms of patents (key outputs of R&D), only 5 per cent of total patents were granted to universities during the same period. This signifies the universities’ limited industrial relevance and ineffective R&D and IP management processes.
The levels and structures of funding in Thailand have contributed to weak performance in higher education. Schiller (2006) concludes that government funding for higher education had stagnated as a portion of GDP (around 0.5 per cent), as a portion of government expenditures (around 3.5–4 per cent) and as a portion of education spending overall (around 15–20 per cent). In addition, funding tends to be based on new study programmes and research units, as well as on the bargaining power of each institution. Further, the accounting methods used by the universities make monitoring difficult.
To address these problems, the Thaksin government proposed several revisions, including more demand-based funding, a different budgeting system and more performance-based indicators, but the most important reform was support for university autonomy. The 1999 Education Reform Act 3 mandated that all universities become autonomous within the next five years. Making universities autonomous from the civil service had been part of the ongoing reform debate as far back as the 1970s. Without autonomy, reformers argued, universities would lack incentives to demand high-quality research and teaching from faculty. Without a change in the incentives and focus of the faculty, universities were likely to remain disconnected from the needs of the private sector. More autonomy would provide universities with more flexibility and incentives to encourage for professors to interact and collaborate with the private sector. At present, there are nine autonomous universities in Thailand. King Monkut’s University of Technology, Thonburi (KMUTT) was the first one to change its status to autonomous university in early 1990s. Subsequently, three new universities were established as autonomous universities: Suranaree University, Walailak University and Maefahluang University. In 2008, five more established universities moved to autonomous status: Chulalongkorn University, Mahidol University, Burapha University, Thaksin University and Chiangmai University. It is worth note that the transformation of five established universities to autonomous status happened during military-back government following a coup. This suggests that exceptional political autonomy is required to overcome the resistance from faculty and administrations enjoying civil servant status in long-established universities.
More than ten years following passage of the educational reform act, observers would agree that reform in educational practice has lagged well behind political rhetoric. There is a widespread perception among the Thai public that the impact of these reforms has yet to reach into schools and classrooms in significant ways or on a substantial scale. Due to such failures, a second round of education reform was launched in the year 2009 with three main objectives: significant improvement in education quality, increased access to education and participation from all sectors of the public. It is too early to evaluate the results of this second round of reform.
It is also too soon to evaluate the benefits of autonomy for the five older universities that became autonomous in 2008. But a study by Liefner and Schiller (2008) shows real gains in the case of KMUTT. These include improved administration capabilities in human resources, budgeting and academic affairs; greater latitude for initiative by the university President; and greater targeting of resources toward all functions, including industry outreach. Indeed, it seems that the autonomous universities, such as KMUTT, Suranaree, Khon Kaen and Mahidol, have become more nimble, more tightly networked and more technologically savvy than the older, more established universities like Chulalongkorn and Thammasat. As older, civil service faculty retire, their positions are converted such that new faculty are only hired to replace them as members of an autonomous university with expectations in line with the tenure system in the west. In the meantime, the development of links with industry has been slowed by gaps between older civil servants and newly hired faculty.
However, even the more autonomous and science and technology (S&T) specialised universities have yet to generate clear, positive results. For example, Mahidol University (MU) was the first university to form a company, STANG Holdings, to invest in university spin-offs. Since 2004, only three technical service companies have been established by the firm. Most of the companies are still operated by university staff. Problems hindering commercialisation include the difficulty of selling and commercialising MU products due to general risk aversion towards business start-ups, a lack of marketing ability within MU and the modest size of the firm’s current venture capital fund (Virasa, 2008).
University–Industry Linkages: An Overview
Since the 1990s, Thai government has initiated several policy measures to promote better UILs. The National Science Technology and Innovation Policy and Plan 2012–2021 stipulates the following measures:
In the next five years, ten centres of excellences are to be established every year in universities, public research institutes and government agencies. These organisations can submit proposals to set up centres to the government. If selected, each centre will receive government subsidy of 15 million Baht a year for five years. Selection of discipline on which a centre should be specialised is based on industry demand. Three regional science parks are to be established in major universities in the north (Chiang Mai University), north-east (Konkaen University) and south (Prince of Songkla University) of Thailand. In 2012, the cabinet has approved 8,634 million Baht for development of these three science parks for 3 years (2013–2015). About 6,300 million Baht is for infrastructure and about 2.3 million Baht for operation, including all related activities (Akeanong Pleaksakul, Manager of Science Park Strategy and Collaboration Section, NSTDA, personal communication, 13 March 2013). Geographical area-based networks of industry, university, local government agencies and communities are to be strengthened to solve local problems and demand.
Moreover, the government has tried to strengthen UILs by encouraging universities to set up technology licensing offices (TLOs) and business incubators. The Office of Higher Education Commission provided funding to support incubation activities in universities in three phases: an idea-to-product phase, an incubation phase and an acceleration phase. So far, there have been 56 university business incubators grouped into nine geographical regional networks. There is also on-going attempt to introduce a law similar to the US’s Bayh-Dole Act which would entitle universities to own intellectual property rights resulting from government-funded research.
Despite the above efforts, university–industry linkages have remained relatively weak and fragmented. At the same time, other processes of innovation in Thailand have at least remained constant or, in some cases, have improved. For example, a proportion of ‘design’ patent granted to Thai nationals and firms compared to foreign ones has increased to 60 per cent of the total in latter half of 2000s, although foreign firms still own a majority of granted ‘invention’ patents. Brimble and Doner (2006) argue that this overall weakness is fostered by low levels of collective action among firms and a generally low level of interest in R&D generally. Thai universities often find a mismatch between their own R&D efforts and the interest of local firms, especially SMEs. The mismatch is exacerbated by different working cultures. Over time, a number of factors—weak academic capacity, mismatched supply and demand between universities and MNCs and leading local firms and a political system marked by fragmented bureaucracies (described below)—have undermined incentives for faculty collaboration with firms and diminished the credibility of universities as a viable innovation partner for firms (Schiller and Brimble, 2009).
Recognising this overall weakness, the Thai government has initiated serious education and training reforms, such as the Education Reform Act of 1999 and the second round of reform in the year 2009 noted above. Autonomous universities, it was thought, would be better able to create effective UILs with private firms. The Higher Education Development Project (HEDP), financed in part by a loan of $59.32 million by the Asian Development Bank during the period of 1999–2005, included additional reform aimed at improving UILs. This reform created seven centres of excellence designed to foster collaboration between universities and the private sector. 4 Despite some progress, most of these reforms have not met expectations or early signs of promise.
There are, however, some bright spots. A few universities that were started or have moved out of the government bureaucratic structure have begun to successfully position themselves as value-added partners with several growth industries, including information technology electronics, agriculture (primarily rubber and energy crops), automotive, pharma- and neutra-ceuticals and medical products and devices.
To assess the level of UILs within Thailand, we rely on R&D and innovation surveys carried out by the National Science and Technology Development Agency (NSTDA) starting in 1999. R&D surveys were carried out every year, but the innovation surveys were done only in the years 1999, 2001 and 2003.
5
Between 1999 and 2003, on the whole, the most important sources of information and knowledge for R&D-performing firms and innovating firms were clients and sources within the company. Universities or higher education institutes and public research institutes were not seen as the major source of information and knowledge for these firms.
6
Similarly, firms likely to conduct ‘R&D’, universities were less likely to be used as sources for collaboration. But some firms in this category do regard universities or higher education institutes as relatively more important as a source of collaboration. Such firms were as follows:
founded between 6 and 15 years ago 71–100 per cent locally owned have 200 employees or less in the medical and precision and optical instruments industry for the manufacturing sector in the telecommunication industry for service sector
The pattern for firms likely to ‘innovate’ was largely the same: For most, universities were less likely to be used as sources for collaboration, but those that do regard the university or higher education institute as more important sources of collaboration were as follows:
founded more than 15 years ago more than 71 per cent locally owned have more than 400 employees in textiles industry for manufacturing sector in telecommunication industry for service sector
This suggests that, while generally weak, UILs and links to public research institutes were stronger in some sectors than in others. In the manufacturing sector, universities or higher education institutes were more important as sources of information for innovating firms in traditional sectors like food processing or textiles while public research institutes were more important for innovating firms in printing and synthetic rubber and plastic industries. For the service sector, innovating firms in telecommunication considered ‘both’ universities and public research institutes as important sources of information and knowledge. Not surprisingly, firms providing R&D services consider university and public research institutes as significant sources of knowledge and information. However, R&D spending as percentage of GERD in Thailand has remained very low (0.24 per cent in 2009, the latest available year) compared to other leading ASEAN countries (2.24 per cent for Singapore and 0.84 per cent for Malaysia), China (1.78 per cent) and India (0.80 per cent). And even within the bright spots, spillovers to the economy at large were minimal.
Sectoral Analyses of University–Industry Linkages
In this section we assess UILs in three sectors. Several findings merit note at the outset: First, consistent with the preceding analysis, in none of the three sectors are UILs very strong.
Second, the one sector in which these linkages are the strongest, hard disk drives, is one where a significant downstream producer, Seagate, played a key role in supporting and actually designing ties with universities. In the other two sectors, autos and rubber, the dominant downstream producers are able to internalise R&D and technical training, thus obviating the need for ties with Thai educational institutions.
Finally, government agencies have overall been relatively passive observers of firm initiatives rather than facilitators or instigators of such initiatives.
Hard Disk Drive
Thailand is presently one of the most important global base for hard disk drive manufacturing. Thai-based producers accounted for 41 per cent of total global market share in the year 2010. The industry employed approximately 200,000 workers. At present four TNCs dominate Thailand’s production, namely Seagate Technology, Western Digital, Hitachi Global Storage Technology and Fujitsu. Over 60 supplier companies operate in Thailand: 34 1st-tier suppliers, 17 2nd-tier suppliers, with 3rd-tier suppliers making up the rest. Together, these firms constitute an impressive cluster and, according to an in-depth study by AIT/Asia Policy Research (2003), exhibit strengths in investment, process development and industrial engineering. Despite this growth, the industry has exhibited significant weaknesses. The AIT/Asia Policy Research (2003) also found that the firms showed much weaker capabilities in product engineering and innovation (than in process engineering), although US firms seem to have gone further in building these capabilities in their Thai operations than their non-US counterparts. The industry’s domestic value added remains low at 31 per cent, although value-added in hard disk drives is relatively high compared to the average of the whole Thai electronics sector.
Regarding UILs, Seagate was the ‘first mover’. Beginning in the late 1990s, the firm organised a loose consortium of five universities, including Suranaree University, to furnish customised courses and to train engineers capable of managing the firm’s highly automated production facilities. Seagate also established joint R&D centres, first with Khon Kaen and subsequently with Suranaree University. Both institutions are located in the Northeast, close to some of Seagate’s major production facilities.
These kinds of efforts have gradually been expanded throughout the sector but not initially due to government efforts. Instead, sector-wide efforts to boost the country’s HDD-related technological capabilities, especially its human resources, originated from the Singapore branch of the International Disk Drive Equipment and Materials Association (IDEMA). IDEMA’s initial efforts in 1999, including several drive producers and the Asian Institute of Technology (AIT), aimed at developing a Certificate of Competence in Storage Technology offered at AIT with IDEMA support, similar to the certificate offered by IDEMA in Singapore. 7 This effort met with only modest success, but it generated momentum and interest from NSTDA which, in 2003, financed an HDD industry cluster study to promote industry consensus on beneficial projects. This was followed by the creation of a cluster management organisation, led by the CEOs of the four drive producers, local research institutes and representatives of key governmental organisations, such as the Board of Investment (BOI).
The organisation, officially renamed in 2005 as the ‘Hard Disk Drive Institute’ (HDDI), was headed by a technopreneur-cum-university professor who used to work for the industry. HDDI is pushing forward future projects aimed at upgrading capabilities of the whole industry in Thailand, including improving engineering training, identifying common operational problems and developing visual inspection software. Several of these programmes build on prior Seagate initiatives and most are designed to promote and to make use of academic-industry consortia. The emergence of HDDI as an intermediary organisation has significantly helped to strengthen UILs. Since the year 2006, three leading universities were selected and funded by HDDI as industry/university cooperative research centres specialised in teaching and research in critical fields of hard disk drive technologies. These universities are King Mongkut’s University of Technology Thonburi (specialised in HDD Advanced Manufacturing), Kon Kaen University (specialised in HDD components) and King Mongkut’s Institute of Technology Ladkrabang (specialised in Data Storage Technology and Application). HDDI received and funded research proposed through these three industries and university cooperative research centres. Eligible proposals need to be jointly proposed by a private company. An approved project received a grant worth 55 per cent of its total cost from HDDI. The rest is paid by firms (Somchai Chinsakolthanakron, HDDI Programme Manager, personal communication, 11 March 2013).
Automotive Industry
The automotive industry in Thailand began in early 1960s with the construction of plants to assemble knocked-down kits. Beginning in the 1970s, in response to high demand from assemblers and to government-imposed local contents requirements, Thailand developed South-east Asia’s largest local supplier base. In 2012, the vehicle production reached a record 2.46 million units with 41 per cent of them exported. These exports are based on well-developed automotive clusters of both global assemblers and their largely transplanted parts and components suppliers for whom Thailand has become a key regional, if not global, production base. Toyota was the largest brand with domestic sales of 516,086 units in 2012, followed by Isuzu, Honda, Mitsubishi and then Nissan. Although western firms have established Thai operations, the industry remains dominated by Japanese producers. Since the 2000s, foreign auto assemblers have also exhibited greater interest in conducting technologically sophisticated activities like R&D in Thailand. Toyota set up the ‘Toyota Technical Centre Asia Pacific Thailand’ with an initial investment of almost US$100 million. This is one of five R&D centres in Toyota’s world-wide R&D network. The emphasis of the centre is on materials development, location-specific design and engineering, parts improvement (for example, strength and durability) and vehicle testing. Apart from Toyota, Honda, Isuzu and Nissan have established technical centres in Thailand. Japanese first-tier suppliers such as Denso, Honda Lock, Polyplastics, AISIN, NSK, KYB, Tokico and Yazaki also followed car makers by setting up technical centres in Thailand.
Nonetheless, R&D and human resource development have occurred largely ‘within’ foreign firms and this pattern has emerged despite a number of efforts to link industry and education. For example, Chulalongkorn University established a bachelor-degree programme in its automotive engineering department in the early 1990s with support from Toyota. Every year, 15 automotive engineers graduated. Since 2000, other universities have launched automotive engineering programme. For instance, Thammasat University established a curriculum in automotive and design engineering in 2005. It also received some support from Japanese carmakers. The Sirindhorn International Thai-German Graduate School of Engineering of King Mongkut’s University of Technology in North Bangkok (KMUTNB) also opened a master programme on automotive engineering in 2004. The programme focused on industrial R&D practice and on modern manufacturing processes of vehicles and their subsystems. This programme is supported by one of the world’s leading departments of Automotive Engineering, ‘ika’ at RWTH Aachen University, which also closely collaborates with companies like BMW, DaimlerChrysler, Siemens, as well as Asian and American manufacturers. Last, the joint master degree programme was offered by National Science Technology Development Agency (NSTDA), Tokyo Institute of Technology (TIT) and King Mongkut’s Institute of Technology Ladkrabang (KMITL) since the year 2007. Every year, around 10 students were accepted and provided with scholarship by NSTDA. The course was taught by professors from KMITL and TIT. Although promising, the impact of these programmes seems limited by their relatively small scale, a lack of the ‘cooperative engagement’ seen in the disk drive case, a lack of emphasis on process R&D (as opposed to product R&D), a lack of incentives for engineers to emphasise technology as opposed to administration and constraints on curriculum development imposed by university requirements.
Since production technologies in the automotive industry are mostly embodied in people, the roles of ‘technicians’ at the shop floor level are very crucial. Technicians in the automotive industry are also important even in product development activities. They were required in making prototype for new products. Due to their importance, a company like Toyota, the largest manufacture in Thailand set up its own technical college in 1998 under the name ‘Toyota Automotive Technological College’. It offers high vocational certificate programmes in automotive technology and automotive services. However, shortages of automotive technicians intensified to the point that, in 2006, with the encouragement of the Thai Automotive Institute, several large Japanese firms created the Automotive Human Resources Development Project. The AHRDP is essentially a ‘train-the-trainer’ programme involving cross-firm agreement on skill-specific certification standards and training curricula (Doner, 2009).
Natural Rubber (NR)
During the 1980s, Thailand overtook the traditional leader, Malaysia, to become the world’s largest producer and exporter of natural rubber, accounting for roughly 40 per cent of global exports (compared to 26 per cent for Indonesia and 17 per cent for Malaysia). 8 One reason for Thailand’s ascension to the number one position as global producer and exporter has been its success in ‘expanding rubber planting areas’; a process that has begun to occur in the North and North-east as well as in the South. Equally important has been the country’s impressive performance in ‘yield increases’. Since the middle of 1980s, Thailand’s yields have risen consistently through improvements in breeding, planting techniques, tapping and overall crop husbandry. By 2004 Thai yields exceeded those of Malaysia and Indonesia, a significant achievement that reflects effective extension work, especially by the Office of Rubber Replanting Aid Fund (ORRAF).
But if Thailand has outpaced Malaysia with regard to volume of NR, the latter has far outperformed Thailand in terms of innovation and technology development. Malaysian achievements in the upstream segment of the rubber value chain include the development of new clones, specialty rubbers and automated tapping systems. 9 In the midstream segment, Malaysia invented ‘technically specified’ (‘block’) rubber, an innovation adopted by all the major rubber producing countries, including Thailand (much of whose NR production is still processed in the older ‘smoked sheet’ form). Thailand has also lagged Malaysia with regard to the development of a downstream, rubber-based industrial sector. Almost 90 per cent of Thailand’s NR is exported in largely unprocessed form and very little is used in the production of rubber-based manufactured goods. In contrast, well over 50 per cent of Malaysia’s rubber is used in domestically manufactured rubber products, especially medical gloves, produced largely by Malaysian firms. Malaysia’s downstream leadership in medical gloves includes major process and product innovations in response to latex allergies that threatened to destroy the industry in the 1980s.
Strong links between the rubber industry and educational institutions have been a key component in Malaysia’s impressive rubber performance. An entire generation of rubber specialists (for example, polymer chemists) was trained in the first three post-war decades in English universities initially established as part of Britain’s colonial presence in Malaya. And while these linkages have weakened in recent decades, the industry maintains important ties with universities and technical institutions for specific initiatives. A critical mechanism through which these linkages are organised is the Malaysian Rubber Board, the industry’s government coordinating body that includes the Rubber Research Institute of Malaysia (RRIM). For example, in response to the allergy threat to Malaysian glove producers, the RRIM worked with universities in both Malaysia and Finland, to identify latex protein allergens. 10 A key feature of the MRB is its focus on coordinating all segments of Malaysia’s rubber value chain.
Links between Thailand’s educational institutions and its rubber and rubber product producers are much weaker. 11 In the last decade, the number of Thai universities and related educational institutions has expanded. The most important of these are the Prince of Songkla University whose campuses in Pattani, Hat Yai and Surathani offer the BA, MA and PhD degrees, Chulalongkorn University, which offers degrees on polymer chemistry and Mahidol. More recent additions include universities in Ubon, Chiang Mai, Phuket, Nakorn Sri Thammarat (Walailak University), Phitsannulok (Narasuen) and Khon Kaen.
This seems like an impressive list, but interviewees suggest that the function of these institutions is largely manpower training rather than actual links with mid- and downstream producers. For example, a professor of polymer chemistry at Mahidol University has established a Centre for Rubber Research and Technology with support from the Ministry of Industry’s Materials Technology Center as well as from local firms in the Thai Rubber Products Industry Club. Building on its testing and standards service, the Center’s goal is to find ways to increase productivity and quality of Thai latex and to improve NR utilisation of NR for manufactured goods. The Center has 14 researchers and 6 assistants but suffers from inconsistent support from both private and public sources. Members of the Industry Club are small, indigenous firms with few resources. 12
Underlying these weaknesses is bureaucratic fragmentation. Unlike Malaysia, whose Malaysia Rubber Board coordinates development in up-, mid- and downstream segments, the governance of Thailand’s rubber industry is divided among the Ministry of Agriculture and Cooperatives, which focuses only on agriculture, the Ministry of Industry, which supports existing factories, not technology promotion in agro-related manufacturing and the Ministry of Commerce, which focuses only on exports. Efforts to establish a high-level coordinating body have run up against (a) the weakness of indigenous downstream producers, many of whom are relatively small (compared to the multinationals in sectors such as tires and condoms, who are largely self-sufficient and uninterested in developing linkages with universities); (b) the power of upstream producers focused largely on exporting NR to China; (c) bureaucratic/ministerial turf battles; and (d) the interests of parties and factions involved in different ministries and departments. We turn now to a more explicit consideration of the political landscape in which Thai UILs operate.
The Political Sources of Weak UILs
We have argued that weak UILs in Thailand are in large part a function of two factors: weak indigenous, downstream producers and bureaucratic fragmentation. But these factors are themselves a function of conditions that constitute Thailand’s broader political economy of policies and politics.
At the level of ‘development strategy’, there are several reasons why firms, both foreign and local, have been either lethargic or ineffectual in ‘demanding’ help with technology and innovation. First, smart macroeconomic, fiscal and infrastructural policy have reduced the pressure for such demand by promoting extensive growth that in turn generated foreign exchange and jobs. Competitive advantages in wages, labour and land led to rising incomes and production, but without a long-term rise in capacity.
Second, Thailand’s trade and investment regimes favoured foreign manufacturing firms over domestic enterprises, especially after the 1997 crisis. Incomes and costs rising prior to the crisis were reset to levels comparable to competing nations, such as China and India. FDI again flowed into Thailand not to take advantage of new technical capacities, but rather to exploit suddenly lower costs in labour and land. Again, the short term match between government needs for foreign exchange and foreign industries’ search for lower costs resulted in a renewed push for extensification. Intermediary institutions, such as the Thai Board of Investment or the National Science and Technology Development Agency turned their focus to developing new technological capacity within the foreign-owned manufacturing firms. This focus naturally led to gains in process rather than product engineering and then mostly within the foreign rather than locally owned firms (Ritchie, 2010).
Third, the focus of Thailand’s S&T promotion strategy on technology transfer from foreign firms meant that targeted efforts on other technological development activities (process improvement, engineering, design) that are often more feasible for local firms were relatively minor. For almost all companies, the ability to take advantage of tax incentives and other government incentives was limited by the costs of navigating bureaucratic red tape involved in getting the incentives. Foreign and local firms alike bemoan the difficulty of actually getting government incentives. But even for those firms with the resources, expertise, or connections to receive the incentives, the amounts were small and often not focused on increasing long-term capacity.
At the level of ‘interests’, this development strategy has effectively strengthened foreign firms, such as multinational auto assemblers and condom producers who, in general, have little need for the kinds of public goods in technology and training critical to the growth of indigenous firms. FDI policies are focused first on attracting new industry to Thailand and only tangentially on the improvement of the technological base of the economy. As primary manufacturers, mostly foreign-owned, bring in their first, second and even third tier suppliers to the region, extensification of the economy but not intensification occurs. Local firms lose policy leverage as the economy has expanded through assembly- and natural resource-based products. The incentive for foreign firms to invest in the technology capacity of local firms diminishes, further pushing these local firms to the technological margins of the economy. This has shifted the most powerful indigenous business interests into services and areas enjoying natural protection. A further consequence is that Thailand’s business associations generally exhibit little coherence and/or collective focus on technology-driven, productivity improvement. 13
At the level of ‘politics and institutions’, the country’s very expansion has facilitated the use of ministerial position for particularistic ends. The result has been bureaucratic fragmentation and the pervasiveness of multiple ‘veto players,’ that is, official actors able to block policy changes. In addition to the divisions among rubber-related ministries noted earlier, prominent examples include overlapping responsibility for industry, training and technological development in the Ministry of Commerce, the Ministry of the Interior, the Ministry of Education and the Ministry of Science, Technology and the Environment. Rather than cooperating to effect meaningful policy reform and implementation, the result is instead one of turf battles, incoherent and overlapping policy, duplication of implementation and enforcement and conflicting incentives. An important example is that while R&D overall is under the Ministry of Science and Technology and its R&D operating agencies, the S&T manpower policies are largely under the education policy of the Ministry of Education. Not surprisingly, this division has led to a mismatch between the supply of and demand for R&D personnel, including contradictory career incentives for such personnel.
All of this impacts educational institutions. Operating within the formal civil service, most universities have been unable to extricate themselves from the preferences, incentives and rewards of government bureaucracy. The highly fragmented Thai bureaucracy makes the education and training infrastructure extremely atomised and disconnected (Ritchie, 2010). Fragmentation hinders firm collaboration with academic institutions that are connected to multiple ministries, departments and agencies. Operating within the bureaucracy also creates incentives for university faculty and administrators to avoid investing in research and innovation. For example, since promotion and tenure does not require grants and funding outside the university, relationships between faculty and private firms are most frequently of a consultative type, with the monetary rewards not being invested in research but accruing directly to the faculty as salary.
Policy decisions can be traced in good part to Thailand’s unique combination of ‘structural conditions’. Relatively abundant natural resource, including informal and migrant labour, coupled with low levels of security threat and weakly organised popular sectors combine to reduce pressures on ruling elites to create institutions that favour innovation. When compared to countries such as Korea, Taiwan and Singapore, Thailand has not emphasised technology acquisition within its human capital. The technical and local colleges were slow on the uptake in areas of expanding technological demand, such as hard disk drives, automobiles and textiles. Instead, they focused on teaching, culture and agriculture that, while important for society, missed creating the intellectual capacity necessary to participate in the world-changing technological trajectory of advanced manufacturing, software and IT, energy and so forth. Under these conditions, extensification of economic activities rather than intensification and innovation constituted a reasonable strategy. Such a strategy has required little attention to the development of educational institutions and their links with private producers. This is true at all levels of education, from K-12 through technical institutes and university (for example, Douangnguene et al., 2005; Jiminez et al., 2012).
Conclusion and Policy Options
Even though Thailand has achieved impressive growth and diversification of its production and exports over the past half century, it is still weak in terms of industrial and technological upgrading. Weak university–industry linkages (UILs) contribute to this problem, though there have been sporadic, partial successes in some industrial sectors, such as hard disk drives and autos. What explains this persistent low level of collaborative interaction between universities and firms in Thailand? Perhaps the largest hurdle keeping Thai universities from being valuable innovation partners is the generally low level of scientific and technological research capacity and sophistication in these institutions. These weaknesses are in turn a function of weak downstream demand by indigenous Thai firms, limited commercial orientation within the university system, bureaucratic fragmentation, fragmented political coalitions and the ability to sustain GDP growth through extensive growth rather than technological upgrading.
Given the aforementioned conditions, what policy options are available to Thai policy makers? First, ‘downstream leadership’ is helpful. That is, demand from those producers both requiring domestic inputs and close to final consumers is likely to be most powerful in stimulating local institutional development, including local universities. Policy makers should focus on supporting the development and strengthening of downstream industries. Second, small numbers of producers, along with a clear sense of competitive threat, will facilitate collective action and stronger demand among firms for technology and innovation-related services, which can be provided by universities. Therefore, rather than trying to overhaul the whole education system and UILs with limited successes as before, government should focus on targeting particular groups of firms having higher technological and innovative capabilities to become downstream leaders demanding serious, lasting and evolving collaboration with universities.