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Innovation and the state

We had the pleasure of engaging with an erudite politician at the inauguration of LIRNEasia’s principal capacity-building event, CPRsouth in Bangkok last week. Former Prime Minister Abhisit Vejjajiva, who used to teach economics at Thammasat U before he went into politics, had this to say, as reported in Bangladesh’s Daily Star, about innovation and the role of the state:

“Creativity takes place very much in the private sector, so regulations must be friendly for them,” said Vejjajiva, in his keynote speech at the inaugural session of a two-day conference on Communication Policy Research south 6 (CPRsouth6) in Bangkok on Friday.

Vejjajiva, now the leader of the opposition in the House of Representatives of Thailand, also emphasised independence of the regulatory body, but not without accountability.

I found it quite a contrast to a long article in the New York Times about how the Chinese state is treating innovation by the private sector, ripping it off and bringing it under the control of the state:

The usurping of private enterprise has become so evident that the Chinese have given it a nickname: guojin mintui. That roughly translates as “while the state advances, the privates retreat.”

Some prominent Chinese economists are warning that the potentially corrosive effects of an approach that favors government companies at the expense of the private sector could eventually stifle innovation, saying it could stunt China’s long-term growth and quash the rising aspirations of the nation’s 1.3 billion people.

“If China doesn’t deal with this problem and strengthen the private sector, this country’s growth is not sustainable,” said Xu Chenggang, a professor of economics at the University of Hong Kong.

So, which way will Asia go?

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