We are not alone. There is another country that can compete with Turkey in incompetence: Thailand.

It seems that “it was the best of times, it was the worst of times” in 2011 for Thailand.  Just like for Turkey. In July 2011, the World Bank announced that Thailand, with its US $4200 per capita income, had been upgraded from a lower-middle income country to an upper-middle income country. Again, just like Turkey. In August 2011, elections in Thailand overthrew the military rule. Yingluck Shinawatra, born in 1967, became the first female leader of the country and the youngest political leader in the previous 60 years. However, the monsoon rains have been heavier than expected. Crocodiles have been seen swimming in the streets of Bangkok, just as they had in the nineteenth century. Harry Parkes Smith wrote in the 1850s about the close relationship between the city and the river. And history repeated itself. I wanted to draw your attention to Bangkok to comfort you. We are not alone. There is another country like Turkey; one that can compete with Turkey in incompetence. That is, we are not exclusively abnormal.

Thailand was one of the countries that dazzled the world with the economic transformation it accomplished. It is among the countries that first come to mind when talking about home electronics. Twenty-five percent of all hard disk drives in the world are manufactured at industrial estates in Thailand. Eight of these are flooded, currently. Seven out of these have been shut down. It is said that people will be waist-deep in water for at least another month. This implies that the home electronics value chain will be inoperable for a month. Firms that make production with inputs from Thailand will be facing difficultly for some time. The infrastructure problems of Thailand will put pressure on the budget of a young Latin American. Such is the new world.

I first came across Thailand in the reports of the Japan International Cooperation Agency (JICA) reports. It was years ago. The reports stressed that Vietnam could become like Thailand in southeastern Asia. According to this, Thailand was more suitable for high-tech operations that required skills whereas China was right for lower-segments of economic activity that did not require skills. Of course, the Japanese located themselves in the highest value-added segments of the value chain design.  Today, Thailand is one of the indispensible parts of the global value chain. Foreign investors visit Thailand not to benefit from the Thai market, but to utilize its production capacity. From this perspective, Thailand is a country through which a global value chain passes. As you might remember, I wrote some time ago that, “Becoming a country through which a global value chain passes is harder than becoming a country through which a pipeline does.” Thailand has accomplished the mission, but Turkey has not.

Then, what is it that the crocodiles in Bangkok should evoke in our minds? This might be evidence that Thailand’s infrastructure has not been able to keep pace with the economic transformation process. It might be evidence that Thailand is not well managed. Not knowing what to do when a flood hits a country located in a region that receives monsoon rains is the same as neglecting building inspection and disaster management in a country located on one of the most important seismic belts in the world. A country which neglects infrastructure improvements cannot sustain the leap. It becomes a pleasant moment in history. Have you ever read an economic text on Thailand? Do you know what the most highlighted subjects are? The rising importance of productivity gains for sustaining the successful economic performance of the crisis period; innovativeness, skills, and training. The main challenge facing the country otherwise is getting stuck in the middle-income trap. This is what experts argue. Just like Turkey, ha?

Becoming a country through which a global value chain passes is harder than becoming a country through which a pipeline does. Crocodiles swimming in the streets of Bangkok do not damage the pipelines, but drive back global value chains. It is not the location but the quality of the country that matters for global value chains.

Thailand’s luck is that it has Yingluck Shinawatra, a three-month old prime minister.

This commentary was published in Radikal daily on 01.11.2011