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The effect of trade policy on firm productivity in Thai manufacturing

Author

Listed:
  • Archanun Kohpaiboon

    (Thammasat University, Thailand)

  • Juthathip Jongwanich

    (Thammasat University, Thailand)

Abstract

The paper examines the effect of trade policy on firm productivity using two recent industrial censuses of Thai manufacturing (i.e., 2006 and 2011). Trade policy and global participation are treated as two different variables in our analysis. Controlling for firms’ global participation, which is defined as export-sale ratio and the extent to which raw materials are imported, our study finds that trade liberalization could induce firms to commit to activities that improve productivity. The effective rate of protection, where output and input tariffs are taken into consideration together, matters in improving firm productivity. Thus, it would be risky to continue tariff reform by focusing solely on a reduction in input tariffs while leaving output tariffs untouched. In fact, both input and output tariffs must be taken into consideration to neutralize incentives in trade policy reform.

Suggested Citation

  • Archanun Kohpaiboon & Juthathip Jongwanich, 2015. "The effect of trade policy on firm productivity in Thai manufacturing," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 52(2), pages 143-169, December.
    • Handle: RePEc:phs:prejrn:v:52:y:2015:i:2:p:143-169
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    File URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/928/829
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    More about this item

    Keywords

    trade policy; Thai manufacturing; effective rate of protection; productivity and developing countries;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • N75 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Asia including Middle East

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