What about Thailand?
Thailand has been implementing a mixed economic system. The economy is considered to be free and driven by the price mechanism. The state provides infrastructure. Although the Thai economic system does not have a clear definition like the social market economy of Germany, it can be considered as a mixed economy comprised of socialism and market economy leaning to the latter one.
The Heritage Foundation has been providing “Index of Economic Freedom” for 27 years. The index covers 4 groups of freedom as follow;
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1) Rule of Law : property rights, government integrity, judicial effectiveness
2) Government Size : government spending, tax burden, fiscal health
3) Regulatory Efficiency : business freedom, labor freedom, monetary freedom
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4) Open Markets : trade freedom, investment freedom, financial freedom
On the current index, Thailand ranks on place 42. According to the Heritage foundation, the rule of law in Thailand is weak. Corruption, bribery, cronyism and nepotism are common. The judicial system is supposed to be independent, but the courts are trapped in conflicts of interest and political influence.
According to the 2021 index of the Heritage foundation, Singapore is ranked at the first place. It is followed by New Zealand, Australia, Switzerland, and Ireland. These countries share some similarities such as strong property rights, security of contracts, transparent government, independent judicial system, support on local business, competitive financial sector, labor protection, and openness to global trade. In the same year, the lowest five ranks consist of Zimbabwe, Sudan, Cuba, Venezuela, and North Korea. They share some common characteristics such as weak rule of law, state interference, weak property rights, labor issues, inflation, and corruption.
Hierarchical Capitalism
Let’s take a closer look on Thailand. According to the scholars Prajak Kongkirati and Veerayooth Kanchoochath, programs and regulations since 2015 reflect the tight relations between the Thai conglomerates and the military government. In this kind of system, hierarchy often biases interactions in the market.
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“‘hierarchical capitalism’, characterized by their crafting of a hierarchical mode of economic participation and reinforcement of power asymmetries in the economy, in the circumvention of a ‘level playing field’ competition.”
(Kongkirati and Kanchoochath, 2018).
These practices cause unfair competition and result in long terms issues such as inequality, weak freedom of contract, oppressed labors, monopolization of customer’s choice and slowed innovation.
Anti–trust Policy
The enforcement of anti-trust policy is notably weak in Thailand and there are monopolizing activities in many sectors. One example of concentrated market power is liquor production, which is highly centralized within a few major companies. In the past, businesses required a high investment and special technologies. The advancement of production process has allowed more people entry this business. As a result, there are more products like craft beer and community liquor. Nevertheless, strict rules harm the competitiveness of the minor producers and cause high entry barriers to the market. As a result, small breweries are criminalized and they have to move production out of the country.
Another example of a weak anti-trust policy is the merger between CP Retail Development Co and Tesco Stores. The state authority confirmed that this deal will not affect the people nor the monopolization of retail business. However, some experts fear that the merger could lead to concentrated market power in retail business harming competition and thus the consumers.
Source: https://t-tees.com
Category: WHY
