McKinsey strategist maps the path to Thailand’s economic future

 

Thailand should pivot strategically towards high-growth industries to compete in “arenas of competition" in the digital economy, McKinsey strategist Chris Bradley said in offering a compelling vision for Thailand's economic future.

 

He was speaking at MFC Asset Management's 50th anniversary celebration in Bangkok on Friday evening.

 

Bradley, reflecting on Thailand's remarkable economic journey since 1975, noted that the country has transformed from a rural economy with 60% of its population living below the poverty line to a nation with seven times higher GDP per capita and poverty had reduced to below 6%. However, he warned that Thailand now faces new challenges that require a strategic shift in its industrial focus.

 

"Growth will no longer come from urban development, capitalists, traditional industries, and consumer spending. Thailand must build new strengths to overcome the structural problems it is facing, one of which is an ageing society," Bradley said during his special lecture titled "The World's Next Opportunity and Beyond."

 

 

 

ASEAN's minimal participation in the digital revolution

Bradley's analysis revealed that ASEAN, including Thailand, has largely missed the first wave of the digital revolution.

 

While examining the world's top companies, he highlighted that nine of the 10 largest companies by market capitalisation in 2005 have been replaced by technology giants that are approximately 10 times larger, averaging a market capitalisation of US$2 trillion.

 

"These new industries, which we call 'arenas of competition', have different rules of competition," Bradley said. "These new companies grow faster, have more research and development, are more profitable, and are much larger."
 

 

 

Most strikingly, Bradley revealed that "ASEAN companies in these arenas are worth less than 1% of the total value," illustrating the region's minimal participation in this economic transformation.

 

 

Future growth industries through 2040

Looking ahead to 2040, the McKinsey Global Institute has identified 18 industries with enormous growth potential.

 

According to Bradley, "These industries will generate $29-48 trillion in revenue and $2-6 trillion in after-tax profits, accounting for one-third of all GDP growth during this period."

 

For Thailand specifically, Bradley categorised future industries into three strategic "strike zones" based on the country's existing capabilities:

Zone 1 (highest competitiveness): E-commerce; digital advertising; video games; modular construction; semiconductors; electric vehicles

Zone 2 (medium competitiveness): Video streaming; air transportation; robotics; cloud services; space technology

Zone 3 (lowest competitiveness): AI and software; cybersecurity; biotech; drugs for obesity and related diseases; nuclear industry

 

Bradley estimated that the potential groups alone represent "opportunities in a market with $7-11 trillion in revenue and $3 trillion in global profits," significantly larger than ASEAN's entire current GDP.

 

 

Thailand's emerging signs of progress

The strategist highlighted positive signs of Thailand's potential, noting it is already "a growing hub for EV manufacturing", though he cautioned the country "remains an outpost in the network rather than a young driver."

 

 

 

Bradley also pointed to promising developments across ASEAN, including Indonesia building Asia's first giant battery factory, Vietnam's rapidly growing semiconductor sector, and various initiatives in robotics and space technology.

 

"We know we need to adapt, we have the demand, we have the beginnings of supply, and if something special happens, we will be able to play a more significant role in the new industries of the future," Bradley said.

 

 

The investment challenge

A key insight from Bradley's analysis is the scale of investment required to compete in these new arenas. He illustrated how just six major global technology companies invested half a trillion dollars in R&D and capital expenditure last year—equivalent to the entire Apollo space programme compressed into a single year rather than 13 years.

 

This "escalation" of investment creates competition that resembles an Olympic tournament rather than day-to-day industrial competition, making the stakes much higher for countries like Thailand that aim to participate.

 

 

The imperative for bold action

Bradley concluded with three key insights: first, despite unpredictable evolution, Thailand must engage and adapt; second, the future is already visible in emerging technologies today; and third, "the best way to understand the future is to create it".

 

His parting message encouraged Thai business leaders to "think boldly about shaping Thailand for the next 50 years and winning in the next big arenas of competition".

 

As Thailand faces ageing demographics and quite a low fertility rate, Bradley's analysis suggests that strategic investments in the identified high-competitiveness sectors could be critical for maintaining economic growth in a changing global landscape.

 

The question now facing Thai policymakers and business leaders is whether they can capitalise on these "strike zone" opportunities and claim a more significant role in the next wave of global economic transformation than they did in the first digital revolution.