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Constructive Thoughts for the Day


Solving R&D Problems through Demand-Side Management
 

6 April 2007

Dear friends,                                       

                The Ministry of Industry and the Ministry of Science and Technology are working on a master plan to strengthen the intellectual infrastructure and support sufficiency economy, as well as to increase Thailand’s competitiveness in a sustainable manner.

The master plan consists of human resource development, technology and innovation development, basic industrial research and development, standards and regulations, and infrastructural and institutional development.  It has three main objectives-to develop the technological innovation capacity of at least 35 percent of domestic enterprises, to enhance closer cooperation among research institutes, universities, and the manufacturing sector, and to support the increase of research and development personnel.

From the analysis of problems facing Thailand’s research and development in science and technology, it was found that the R&D rationale was off-balance, with a singular focus on solving the supply-side problem of R&D such as basic infrastructure, budgetary allowance for research institutes, and R&D human resource development. These supply-side factors, while important, are not adequate in making up the right balance of national R&D blueprint.

Thailand still lacks adequate demands for R&D in science and technology. Due to the country’s relatively small economy, the private sector often does not have enough incentives to invest in R&D in science and technology. As the market for such R&D is usually small, it is often thought that the return on investment would not be worth the money.

In most developed countries, the private sector is usually the main investor in R&D, particularity in large undertakings that require huge investment and have a large market base to support large-scale R&D. However, most large businesses in Thailand are not the main driving force in R&D as they usually emerged in the atmosphere of market monopoly as a result of the protection afforded by concession systems, market obstacles, and other privileges associated with political cronyism. These enterprises hence faced no necessity to investment in R&D, as their political investment already gave them the monopoly that generated valuable profits and much fewer risks than R&D investment.

The Thai society also often fails to attach enough importance to creating innovation or differences. This can be observed from the way most entrepreneurs in Thailand imitate other successful innovators rather than inventing new products or services. One reason for this may be the inefficiency of Thailand’s intellectual property protection regime, which disencourages producers from investing in R&D to achieve innovation or new manufacturing processes that are at risk of being emulated.

Besides, Thai consumers sometimes do not possess sophisticated taste in their consumption behaviours, are not very particular or fastidious about buying goods and services, or do not really stand up for their consumers’rights upon receiving sub-standard or unreasonably priced products or services. These, when coupled with the fact that mechanisms in protecting consumers’rights in Thailand remain relatively weak, result in inadequate protection of consumers’rights in general. Within such a context, producers of goods and services feel no need to invest in R&D to improve the quality of their offers. Despite the not-so-good quality, their products and services will still sell.

My proposal, therefore, is that the support for R&D in science and technology should not focus only on the supply-side by making available financial incentives, resources,body of knowledge body, or R&D personnel.

Rather, it should also focus on the demand-side management of R&D, such as the creation of enviroments conducive to competition by further liberalizing the market, the improvement of legal systems and the enforcement of anti-trust laws, the elimination of corruption problems and conflicts of interests, the strengthening of intellectual property protection regime, and the more rigorous protection of consumers’rights.Other things that could be done include the improvement of educational systems and business culture that make entrepreneurs realize the importance of R&D and equip them with capabilities fo innovation. Consumers,meanwhile,must be encouraged to better understand and stand up for their own rights.

 

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