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Foreign direct investment and wage spillover in Thailand

Author

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  • Sasiwimon Warunsiri Paweenawat

Abstract

Purpose - The purpose of this paper is to investigate whether foreign direct investment (FDI) benefitted Thai workers in domestic firms. Design/methodology/approach - By utilizing existing firm-level unbalanced panel data from the survey of the Office of Industrial Economics, Ministry of Industry, Thailand, between 2004 and 2013, this study applies dynamic panel data analysis, using the generalized method of moments proposed by Arellano and Bond (1991), to estimate the wage spillover from multinational enterprises (MNEs) to domestic firms in Thailand. Findings - The study reveals that there is a positive wage spillover from the presence of MNEs in the industry to domestic firms. Furthermore, a wage spillover also exists in the low-technology industry, as well as in firms located in the Metropolitan and Northern regions. These findings confirmed that FDI offers a significant advantage in Thailand’s labor market. Originality/value - This study is the empirical research to utilize existing firm-level unbalanced panel data in Thailand, applying dynamic panel data analysis to data from 2004 to 2013 to estimate the wage spillover from MNEs to domestic firms.

Suggested Citation

  • Sasiwimon Warunsiri Paweenawat, 2019. "Foreign direct investment and wage spillover in Thailand," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 46(10), pages 1198-1213, October.
    • Handle: RePEc:eme:ijsepp:ijse-01-2019-0055
    DOI: 10.1108/IJSE-01-2019-0055
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    More about this item

    Keywords

    Thailand; Foreign direct investment; Dynamic panel data; Wage spillover; F21; F23; J31;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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