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Grand Strategy Moving Thailand Towards the Next Decade

Grand Strategy Moving Thailand Towards the Next Decade. S uvit M aesincee Sasin Institute for Global Affairs (SIGA). I n the pas t, even though sometimes fuzzy …. … the picture s were understandable. T hings then started to be harder to recognize.

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Grand Strategy Moving Thailand Towards the Next Decade

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  1. Grand Strategy Moving Thailand Towards the Next Decade SuvitMaesincee Sasin Institute for Global Affairs (SIGA)

  2. In the past, even though sometimes fuzzy… …the pictures were understandable

  3. Things then started to be harder to recognize We could still tell what was going on, but it was getting harder and harder to understand

  4. Finally, it became impossible to see what was going on... ..by looking at things in aconventional way

  5. Passing through the Sea of Change—Our Time Picasso Time Our Time Linear Static A Clear Enough Future Alternate Futures A B C Y A Range of Futures X True Ambiguity Nonlinear Dynamic ?

  6. Requires a New Mental Model to Lead the Change Mental Model Leading Change Systemic Structure Intelligence Required Anticipating Change Pattern/ Trends Reacting to the Change Event A Clear Enough Future Alternate Futures A Range of Futures True Ambiguity Level of Complexity

  7. Leading Change New Reality New Mind-Set New Skill-Set New Mental Model Global Dynamics New Operating Model • Global Imbalance • Global Common • Democratization of Power & Wealth • The New USA • The Non-Polar World • Philanthro-Capitalism • Global Financial Regime • Global Civic Society • Constitutive Governance • Free Culture • Sufficiency Economy Philosophy • Global Coordinating Mechanism • Global Standards • Public Private Partnership • Open Collaborative Platform • Carbon Minimization • Climate Resilience

  8. Leading Change What How Who Vision Strategy Leadership Global Dynamics New Mental Model New Operating Model New Reality New Mind-Set New Skill-Set

  9. From Vision to Action Vision Strategy Leadership • New Value System • New National Ideology • New Social Contract • New Path to Development • New Growth Engine • New Set of Ecosystem - Institutional Framework - Enabling Infrastructure - Capacity Building • Structural Transformation • New Axioms • New Set of Critical Issues • New Definition & • Scope of Nation’s • Wealth Creation • Representation & Legitimacy • Collective Leadership • People Empowerment • Soft Power • Responding to Change • Renewal Capacity Conceptual Design Mechanism Design

  10. Each Ingredient is Essential to Successful Change Vision Strategy Leadership Outcome • Successful change Change cannot cascaded to all levels • • No focus: Change initiatives haphazardly chosen • Chaos: No process for implementation • An academic exercise • Bureaucracy • Empty charisma

  11. Global Structural Change

  12. Civilization in the Making Between 1000-1800 19th Century 21st Century Society Static Growth Dynamic Centricity Local International Transnational Community Rural Urban Virtual Pace of Change Months Days Seconds

  13. Perpetual Crises are a Normal State of Being The Commodity Price Bubble The Global Economic Crisis European Sovereign Debt Crisis The Dot Com Burst The Global Financial Turmoil The Asian Financial Crisis The Real Estate Bubble We are currently facing the “Currency War”

  14. History has declared “Capitalism” and “Economic Globalization” the winner of the 20th century • While global GDP has expanded by some four times since 1980: • World trade has grown more than sixfold • The stock of FDI has shot up by twenty times • Portfolio capital flows have surged more than tenfold • Global financial assets are roughly four times the size of Global GDP • MNCs today number some 80,000, more than double the level of 2000 • In 2007, the cross-border M&A rose to total a record of $1.8 trillion, • 21 percent above the levels attained at the turn of the millennium

  15. The ratio of merchandise trade to world GDP grew from • 2 percent in 1800 to 22 percent in 1913, reaching 20 percent • in 1950, and more than 60 percent today • Over a period of fifty years, between 1950-2000, the growth • of trade surpassed the growth of output in every region • Trade as a share of national GDP skyrocketed • - from 20 percent to 100 percent of GDP in Japan • - from 40 percent to above 80 percent in Canada • - from 60 to 80 percent in Western Europe • - from 35 to about 60 percent in Latin America • - from 50 to 70 percent in sub-Saharan Africa • - from 10 to 20 percent in the US.

  16. The share of inward FDI of global GDP in now 27 percent • For Europe, the ratio exceeds 40 percent of GDP • For developing countries as a group, 30 percent of GDP • For the US, 15 percent

  17. Damage caused by the Great Crisis • Net private capital flows to the emerging markets plunged from $929 billion in 2007 to $667 billion in 2008 • - Emerging European nations faced the biggest drop—the volume of $20 billion in 2009 was less than a tenth of the level of $267 billion 2008, and less than almost one-twentieth of the level of $393 billion in 2007 • Global commerce stagnated and started collapsing in late 2008, and shrank by 12 percent in 2009 • Global FDI fell from $1.98 trillion in 2007 to $1.7 trillion in 2008 and further to $1.04 trillion in 2009 • - The richest economies took the worst hit, with FDI flows falling by 41 percent in 2009, after the already bad 2008

  18. Global Structural Change A Change in Geo-Climatics A Change in Geo-Politics A Change in Geo-Economics A Change in Geo-Demographics

  19. Change in Geo-Economics… The New World Economic Structure World Economic Structure Global GDP* % 75 Developed Countries The Rise of the Rest The Triad 50 Developing Countries The Rest of the World The Rise of Asia 25 1820 70 1913 50 73 2005 The Rest of Asia China/India

  20. The spending power has already shifted away from the richest countries towards a growing middle income bloc

  21. By 2050, China and India will together, account for nearly 50% of the global GDP

  22. The world economy is gradually shifting from the American Century to the Asian Century

  23. An Emergence of the New Global Middle Class • By 2030 citizens from China and India will have a combined share of 44 % of the Global Middle Class, with the great majority (38 %) being Chinese • By 2030, the number of middle class segment in Indonesia could rise by more than 50 million, in Malaysia by 20 million and in Thailand by more than 25 million Source: Bussolo, Maurizio (2007). World Bank 2007

  24. …This can help explain the boom in consumer products such as televisions and mobile phones throughout Asia As of 2007, India had more cell phone users than the United States, while China had twice as many

  25. Car ownership rises as income grows • Automotive industry is growing at an • unprecedented speed in developing Asia, • with China, India, and the ASEAN economies • as the major growth markets for the Asian • automotive industry • By 2025 China could overtake the US as the • country with the most cars in the world— • around 200 million in all • Moreover, there will be flow-on effects across • the board--More cars mean more roads, more • demand for demand for insurance, more • service stations; more tourists mean more • aircraft, airports, customs officers, metal • detectors, hotels, and demand for souvenirs Number of Cars Owed From January through August 2009, more passenger cars were sold to Chinese consumers than to their American counterparts

  26. Demand more and better services-- Education, Health, and International Tourism World Tourism is expected to double between 2004 and 2020 • International travel: as income increase • so does the incidence of leisure activities, • including international travel • Already in 2004, 20 percent of all • outbound tourism came from East and • South Asia • By 2020 the overall number of tourist • arrivals is expected to double to 1.5 • billion, with growing share coming • from developing regions

  27. Is Thailand able to keep up with “The Rise of Asia” trend ? 3,284 mil (50% World Population) 12,250 bil US$ (22% World GDP) ASEAN + 6 2,068 Mil (31% World Population) 9,901 bil US$ (18 % World GDP) ASEAN + 3 ASEAN 585 Mil (9% World Population) 1,275 bil US$ (2 % World GDP)

  28. Change in Geo-Climatics… Four Southeast Asian countries are likely to face more severe consequences than the global average due to limited adaptive capabilities

  29. Both developed and developing countries actively engaged in the Copenhagen Accord last year Mexico Accord 2010 • Reduction of GHG Emission by both developed & developing countries; • Low Carbon Development Pathway; • Reduction of emissions through deforestation and degradation (REDD+); • Copenhagen Green Climate Fund & Technology Transfer. Emission Trading Adaptation CopenhagenAccord 2009 Linkage to trade measures Nationally Appropriate Mitigation Actions (NAMAs) Carbon Off-shoring Carbon Credits Numerical targets of emission reductions Finance REDD+ Carbon Leakage Sectoral Approach for Heavy Emitters - e.g. Steel, Cement, Electricity , Paper pulp …(possibly including agriculture sector) Technology

  30. Thailand: Extreme Risk

  31. Environmental Climate Dimension (+) Climate Change is affecting or will affect a wide range of industry sectors, some more than others Double Winners Beneficiaries from Climate Change under Government Control Construction& Associated Sector Tourism Chemical Industry Mechanical & Electrical Engineering Renewable Energies Building Materials, Paper Industry Metal Industry Auto- motive Regulatory Market Economy Condition (+) Energy Sector (Fossil Fuels) Textile & Clothing Agriculture & Forestry Finance (-) Transportation Food Industry Beneficiaries from Government Measures with Climate Risks Double Losers (-) Source: DB Research

  32. Change in Geo-Demographics… The First World of the Aging Industrialized Nations North America, Europe, and Asia’s Pacific Rim Developed Countries • South Korea • It’s total population is projected to decline by almost 9% by 2050 (from 48.3 million to 44.1 million) • Its working-age segment is expected to drop by 36% (from 32.9 million to 21.1 million) • The number of citizen aged 60 and above will increase by almost 150% (from 7.3 million to 18 million) The First World The Second World The Third World Developing Countries Aging Society Dynamic Young Society

  33. The Third World of fast growing, young, and increasingly urbanized countries with poorer economies and often weak governments Developed Countries • Today, roughly nine out of ten children under the age of 15 live in developing countries • Over 70% of the world’s population growth, between now and 2050, will be concentrated in 24 countries, all of which are classified by the World Bank as low income or lower-middle income The First World The rest of the world The Second World The Third World Developing Countries Aging Society Dynamic Young Society

  34. The Second World of fast growing & economically dynamic countries with a healthy mix of young and old inhabitants Thailand’s Potential Supportive Ratio Developed Countries The First World 7 6 Brazil, Iran, Mexico, Thailand, Turkey, and Vietnam 5 The Second World 4 3 2 The Third World 1 Developing Countries 0 2000 2020 2050 Aging Society Dynamic Young Society Source: Kua Wongboonsin

  35. TheThree Great Waves of Outsourcing The First Wave The Third Wave The Second Wave Manufacturing Services Food & Agriculture The Resources Battle --The world will demand 70 % more food by 2050, outstripping population growth

  36. In the new global landscape, the interactions go beyond the nation-state actors Multipolar World State Actors Nation-State Non-State Actors Nonpolar World Global Civil Society Many non-state actors have stayed on the front lines of international affairs

  37. The World After September 11 • The Death of the Nation-State • The Absence of Hegemonic • Power on the Global Scale • The Irrelevance of Sovereignty Damage $ 60,000 mil Restore $ 140,000 mil Invest $500,000

  38. The terrorist risk is transforming the foundations of international politics Formalization of War Individualization of War Indirect / Uncertain Approach Direct / Certain Individual (s) 2 Mass State 2 State Scope Many 2 many Few 2 Many Pattern

  39. What differentiate the old nation-state security agenda from the new post-national security agenda is the regime of non-knowing Agent Agent Potential Potential Intention Intention Nation-State Security Agenda Post Nation-State Security Agenda

  40. Globalization, however, has both a bright side and a dark side Organized Crimes Private Armies Terrorists Mercenaries Pirates The World of Threats & Risks It not only drives the world in which we live, but also the underworld

  41. In the world of threats and risks, fear determines the attitude towards life National Security Freedom & Equality Human Security Security Construction & maintenance of social & political order Laissez-faire Management of uncertainty, risk & insecurity Precaution

  42. The New Normal Unsustainability • Economic Imbalance • Environmental Imbalance • Demographical Imbalance • Political Imbalance Bounded Prosperity Instability Insecurity

  43. Do Thai’s Enperprises accommodate global risks and opportunities? The Rise of the Rest The Age of Africa World The Rise of Asia Relationship w/ China, India Opportunities Asia • Climate • Change • Endemic/ • Chronic • Disease • Economic • Crisis AEC Mekong Region ASEAN North Korea Terrorism Border Conflict Myanmar Migration Regional Hub Thailand Risks Political Turmoil

  44. Bridging policy and managerial implications Thailand World Macro Opportunity Macro Risk Opportunities Opportunities Industry Asia ASEAN Corporate Micro Risk Micro Opportunity Product/ Market Thailand Risks Risks

  45. Changing the State of Nature

  46. Globalization changes the State of Nature Country A B C Nation-State Company People Liquid Modernity Solid Modernity • Connectivity • Interactivity • Mobility • Virtuality

  47. The New Politics of Space & Time • The World in Pieces • Open Multiplicity • Dis-embedding /Re-embedding • Nonlinearity Spatial Politics • Temporariness • Instantaneity • Ephemeral • Disposability • Delay Gratification • Make & Break Temporal Politics

  48. Seven Critical Issues Duality Parity Chaos & Order Inclusion & Exclusion Legitimacy Collapsibility Commonality Space & Time Externality & Internality Conflict & Coherence Identity Unity & Uniqueness Knowing & Not Knowing Knowlegeability

  49. The Major Shifts • Truth Relativized • Power De-territorized Unsustainability Instability Insecurity • Identity Pluralized • Risk Commonized

  50. The End of Nation-State /Government ? Global Governance Cosmopolitanism Global Commons Nation-State Liquid Modernity Government Individualism Parochialism Self Governance

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