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Thailand’s Automotive Manufacturing Corridor

Author

Listed:
  • Warr, Peter

    (Australian National University)

  • Kohpaiboon, Archanun

    (Thammasat University)

Abstract

Thailand’s export-oriented automotive industry is a recognized economic success story. How did it happen and what lessons might other countries draw? This paper argues that the success of the industry was based on three factors. First was the substantial public investment in port facilities and related infrastructure, beginning in the 1990s, that constituted the Eastern Seaboard economic corridor. Second was the exchange rate depreciation that followed the 1997–1999 Asian Financial Crisis, making manufacturing production for export more profitable. The third factor was two key policy changes adopted by the Thai government shortly after the crisis, and partly in response to it: (a) abolition of restrictions on foreign ownership and (b) abolition of local content requirements. Neighboring countries, including Malaysia, Indonesia, and the Philippines, also experienced the crisis and were potential competitors in attracting foreign investment in automotive production for export. But they did not adopt these two key reforms.

Suggested Citation

  • Warr, Peter & Kohpaiboon, Archanun, 2017. "Thailand’s Automotive Manufacturing Corridor," ADB Economics Working Paper Series 519, Asian Development Bank.
  • Handle: RePEc:ris:adbewp:0519
    as

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    File URL: https://www.adb.org/publications/automotive-manufacturing-corridor-thailand
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    References listed on IDEAS

    as
    1. Yveline Lecler & Patarapong Intarakumnerd, 2010. "Sustainability of Thailand's Competitiveness: the Policy Challenges," Post-Print halshs-00563666, HAL.
    2. Doner, Richard F. & Noble, Gregory W. & Ravenhill, John, 2006. "Industrial competitiveness of the auto parts industries in four large Asian countries : the role of government policy in a challenging international environment," Policy Research Working Paper Series 4106, The World Bank.
    3. Brunner, Hans-Peter, 2013. "What is Economic Corridor Development and What Can It Achieve in Asia’s Subregions?," Working Papers on Regional Economic Integration 117, Asian Development Bank.
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    Cited by:

    1. Jason F. Bell & Lorenza Monaco, 2021. "Power and supply chain development in the South African and Thai automotive industries: What lessons can be learnt?," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(3), pages 457-471, April.
    2. Peter Warr & Archanun Kohpaiboon, 2018. "Explaining Thailand’s Automotive Manufacturing Success," Departmental Working Papers 2018-02, The Australian National University, Arndt-Corden Department of Economics.
    3. Oscar Fernando & Lili Yan Ing, 2022. "Indonesia’s Local Content Requirements: An Assessment on Consistency with Free Trade Agreement Commitments," Working Papers DP-2021-53, Economic Research Institute for ASEAN and East Asia (ERIA).

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    More about this item

    Keywords

    automotive exports; Eastern Seaboard scheme; final assembly; parts and components; Thailand;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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