The policy implementation paradox: governance failure and elite capture in Southeast Asia’s green transition

Abstract

Achieving equitable green growth requires substantial institutional reorganization, often committed to through formal Circular Economy (CE) and Bio-Circular-Green (BCG) transition frameworks. Despite public policy narratives highlighting grassroots sustainability and the inclusion of small enterprises, the underlying political-economic processes and structural barriers that dictate their execution remain insufficiently understood. This study investigates the circular economy and the architecture of business model transitions in Southeast Asia, with Thailand serving as the primary empirical reference, through the lenses of public administration and political economics. It articulates a novel “policy implementation paradox” wherein institutional design intrinsically promotes exclusion. This study uses secondary document analysis in conjunction with credible macro-governance metrics, including the Corruption Perceptions Index (CPI) and Worldwide Governance Indicators (WGI), to assess the impact of institutional quality on the allocation of green public resources. The structural analysis indicates that in low-governance contexts, substantial, politically affiliated corporations frequently synchronize their strategic objectives with green funding and sophisticated technological instruments. Opaque procurement systems and elite patronage networks convert public frameworks into exclusive pathways of a “circular economy” by contract. Consequently, micro, small, and medium-sized enterprises (MSMEs) face substantial structural “capital barriers” identified through secondary datasets and multilateral evaluation literature, restricting them to low-margin, informal sectors. This paper presents a significant theoretical correction to traditional state capture frameworks by illustrating a structural transition from upstream legislative subversion to downstream compliance-induced exclusion. In low-governance environments, politically shielded conglomerates leverage advanced, internationally standardized green criteria to legally establish monopolies, converting impartial sustainability indicators into structural impediments for informal market participants. This analysis improves the understanding of governance failures impacting sustainability transitions by demonstrating that the exclusion of MSMEs is due to systemic policy design rather than shortcomings in firm-level capabilities. It underscores that attaining genuine, inclusive green transitions requires beyond technocratic resource efficiency goals in favor of crucial transparency, reformed financial instruments, and improved participatory anti-corruption mechanisms.