Innovation is the key to breaking the
"middle-income trap", which Asean countries outside of Singapore all
face, says Surin Pitsuwan, the Asean secretary-general.
Mr
Surin, in an address to the Federation of Thai Capital Market Organizations,
said without investment in innovation and R&D, escaping the trap will be
difficult.
"If
we want to get out of the trap, then we must put more effort into innovation
and attract more foreign investment to generate growth for this region,"
he said.
Asean
nations excluding Singapore currently spend less than 1% of their gross
domestic product on R&D activities.
Within
the 10-nation Asean bloc, Singapore ranks highest in R&D spending as a
percentage of GDP with 2.6%, while Thailand is lowest with just 0.2%.
In
contrast, Japan spends more than 3% of its GDP on R&D, South Korea 3.4%,
China 1.6% and India 0.9%.
"With
so little R&D spending, it will be hard to break out of the middle-income
trap," said Mr Surin.
Small
and medium-sized enterprises (SMEs), which represent the economic foundation
for Thailand and other Asean nations, can leverage innovation and R&D to
have the capacity to invest outside of their own countries.
Mr
Surin said this in turn will help generate greater prosperity for Asean.
Asean
members, which have committed to creating a single market by 2015, also plan to
link infrastructure and capital markets to foster stronger economic growth and
help countries break into the ranks of high-income developed economies.
Kevin
Steinberg, the chief operating officer of the World Economic Forum USA, said
capacity-building alone is insufficient to help accelerate progress and realise
the opportunities from regional integration.
He said
policymakers should look to do more to help SMEs access capital, which in turn
would help boost economic growth overall.
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