A push toward the digital economy is the cornerstone of the Thailand 4.0 initiative, a little policy I have been writing about here and there. Something that might seem a bit abstract, but it indeed has metrics that can be measured and analyzed.
Developing a digital economy helps a country move into the future, foster job growth and help develop new sectors. My roots in the realm of digital go back to just before this century began. During the Dot Com boom I landed a job with Amazon-backed Kozmo.com in 1999, back when the tech was crude and business models were thin (though that doesn’t seem to have changed). But investor dollars were flowing: The Internet had arrived.
In less than half a decade the internet had gone from AOL chat rooms and dancing raisin icons to large ecommerce companies and startups in all areas of the digital economy. And despite the Dot Com bubble burst of 2001 – which put me out of a job – the growth of the digital economy kept on.
A recent study funded by Mastercard and carried out by the Fletcher School at Tufts University takes a look at countries in which the digital economy has become a key focus and ranks them according to four key metrics identified as vital to it: Supply of internet access and infrastructure, consumer demand for digital technology, institutional environment (government policies and resources) and innovation which includes investments into R7D and digital startups.
All of these metrics were used by the report to rank countries in the index but also to categorize them in four areas:
- Stand Out: Countries that are leaders in innovation
- Stall Out: Countries that have had strong growth but are losing momentum
- Break Out: Countries that have low levels of digital advancement but all the right factors are in place for them to experience growth
- Watch Out: Countries with low levels of digital advancement and poor growth
While Norway, Sweden and Switzerland top the Digital Index list respectively, they are all classified by the report as being in the Stall Out classification as they have lost momentum in the areas of digital innovation. Singapore, UK and New Zealand round out the top of the stand out section – all three of those countries landing in the top 15 on the Digital evolution index, Singapore and the United Kingdom both being in the top 10.
What’s really interesting is the Break Out classification, which had much more representation from the region seeing China, Malaysia and Saudi Arabia round out that list. These are countries that are not prominent figures in the digital economy at the moment, but have the right pieces in place to really make a run at becoming Stand Out nations. They all fall outside of the top 25, but are on the rise.
So, what does all of this mean for 42nd-ranked Thailand, categorized as one to Watch Out and one that faces “significant challenges with their low state of digitalization and low momentum”? Basically, Thailand is lagging behind. Especially when we see other countries in the region gaining speed with the digital economy, their lead on the kingdom is only going to increase.
But the index doesn’t just stop at its overall score, it’s broken into several subcategories where we can derive a bit more insights. First being the momentum score, the measure of how well countries are advancing into the digital future. We see China and Malaysia top this list respectively, and other players in the region such as the Philippines and Indonesia are in the top 15, while Singapore and Vietnam fall just outside the top 20. This further highlights that Thailand, which ranks in at 41 on the index for momentum has a lot of catching up to do – not just globally, but regionally.
The report doesn’t paint the best picture for Thailand’s digital economy. The kingdom generally finds itself below the halfway mark, which isn’t good no matter how you slice it. Something to keep in mind is that digital economy growth is something the current government is focused on.
If it plays its cards right, enacts some smart policy changes in line with the Thailand 4.0 framework we could see Thailand start to climb this list. Those would involve making it easier to start new businesses and changing some of the rules to obtain work permits for workers that fill skill gaps in digital economy (developers, researchers, executives). It would also be necessary to enact incentives that will attract existing companies in these spaces away from places such as Singapore and Hong Kong.
If not, I wouldn’t be surprised to see the skeptics proven right. Time will tell.