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Weighing up Thailand’s benefits from global value chains

In: Globalisation and deglobalisation

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  • Bank of Thailand

Abstract

As an export-oriented economy, Thailand is often faced with the question whether international trade yields real and sustainable benefits to its citizens, over and beyond what is reflected in its GDP figures. This paper attempts to answer that question, using the trade in value added (TiVA) approach to overcome the shortcomings of trade statistics. From a global perspective, we find that, since the early 2000s, the centre of global value chains (GVCs) has shifted from the G3 to China. From 2005 onwards, China emerged as a key player in GVCs, effectively replacing Japan as one of the top three centres for GVCs and even surpassing the United States in this ranking by 2011. Nevertheless, in terms of value added flows, China remains on the receiving end, while the United States maintains its status as the dominant exporter of value added. In Thailand’s case, we find that most manufacturing sectors lie towards the end of GVCs, and therefore export figures are likely to be large, even on a net basis. This is an ongoing concern for Thailand, given that the growing bilateral trade surplus continues to put upward pressure on the domestic currency. On the domestic front, we also document the diminishing benefit from backward participation, as labourreplacement automation penetrates into more sectors, not least in the electronics sector, where its impact is already apparent.

Suggested Citation

  • Bank of Thailand, 2018. "Weighing up Thailand’s benefits from global value chains," BIS Papers chapters, in: Bank for International Settlements (ed.), Globalisation and deglobalisation, volume 100, pages 345-354, Bank for International Settlements.
  • Handle: RePEc:bis:bisbpc:100-23
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    References listed on IDEAS

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    1. Ikuo Kuroiwa, 2017. "The Automotive Value Chain in Thailand," Working Papers DP-2016-33, Economic Research Institute for ASEAN and East Asia (ERIA).
    2. Javier Lopez Gonzalez & Przemyslaw Kowalski & Pascal Achard, 2015. "Trade, global value chains and wage-income inequality," OECD Trade Policy Papers 182, OECD Publishing.
    3. Ahmed,Swarnali & Appendino,Maximiliano Andres & Ruta,Michele, 2015. "Depreciations without exports ? global value chains and the exchange rate elasticity of exports," Policy Research Working Paper Series 7390, The World Bank.
    4. Robert Koopman & William Powers & Zhi Wang & Shang-Jin Wei, 2010. "Give Credit Where Credit Is Due: Tracing Value Added in Global Production Chains," NBER Working Papers 16426, National Bureau of Economic Research, Inc.
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