Archanun Kohpaiboon

Vertical and Horizontal FDI Technology Spillovers: Evidence from Thai Manufacturing

This paper examines Foreign Direct Investment (FDI) spillover, using an unbalanced panel data set of the manufacturing survey of Thailand during the period 2001-03. In this paper, not only are both horizontal and vertical FDI technology spillovers examined, but the former is also assumed to vary across industries. The key hypothesis is that horizontal FDI spillovers depend on the trade policy regime as well as the absorptive capability of locally owned plants. Our panel data econometric analysis highlights the important role of the trade policy regime as a conditional gain of horizontal FDI spillovers. In particular, positive horizontal FDI spillovers are found only in an industry operating in a relatively liberal environment. Interestingly, imposing an assumption of identical horizontal FDI spillovers across industry could result in biased estimates of vertical FDI spillovers. The key policy inference highlights the relative importance of the trade policy regime in harnessing the gain from foreign presence. Liberalizing the foreign investment regime thus has to go hand in hand with liberalizing the trade policy to gain FDI technology spillovers. Our finding here gives a warning not to overemphasize the role of linkages. It is the quality rather than magnitude of linkages that should be used a proxy of the magnitude of vertical FDI spillovers.

Australian–Thai Trade: Has the Free Trade Agreement Made a Difference?

This article examines the impact of the Thailand–Australia Free Trade Agreement (TAFTA) on bilateral trade between the two countries, paying attention to the implications of rules of origin and the utilisation of tariff preferences. It is found that trade has expanded faster since TAFTA came into effect, but the impact has heavily concentrated in a few product lines in Australian imports from Thailand, reflecting the influence of commodity‐specific, supply‐side factors which have a bearing on the rate of preference utilisation. The findings, inter alia, suggest that the use of officially announced preference rates in trade flow modelling is likely to exaggerate trade flow effects of free trade agreements.

Science park, triple helix, and regional innovative capacity: province-level evidence from China

By precipitating a clustering effect and encouraging the establishment of links among firms and academic and research institutions (the so-called triple helix), science parks are expected to have both direct and indirect effects on promoting regional technological capacity. Based on a provincial-level panel dataset over the 1997–2009 period together with adopting patents as an indicator of innovative capacity, this studys empirical results show that science parks, in terms of various measures, indeed have a significantly positive impact on regional patenting. More importantly, science parks play a key role in coordinating research and development (R&D) collaboration across various R&D performers within the region and indirectly contribute to upgrading the regional technological ladder. Moreover, we find a positive innovation-enhancing effect brought about by R&D cooperation between industries and universities, rather than research institutes, highlighting both the importance and inherent problems of Chinas regional innovation systems.

Structural Adjustment and International Migration: An Analysis of the Thai Clothing Industry

Abstract This paper examines the structural adjustment process using evidence from the Thai clothing industry, with a view to informing the policy debate about international migration. The analysis is based on in-depth interviews with 50 clothing firms in Thailand during November 2009–February 2010. The key finding is that not all firms opt to hire unskilled foreign workers. The differences in company characteristics between firms that hire foreign workers and those that do not are clear. The latter are likely to be relatively large in size (in terms of both employees and sales), perform better and actively undertake upgrading activities. The former are typically struggling to maintain their profit margins, are relatively small and do not adequately invest in upgrading activities. Interestingly, hiring foreign workers is not the first response of firms, but reflects a tightening in the labour market and the fact that these companies have not yet successfully undertaken process upgrading. Allowing unskilled foreign workers in on a temporary basis with appropriately designed measures would be a win–win solution for labour-importing and exporting countries, as well as for the migrants themselves. The paper raises concerns about imposing one-size-fits-all policy measures in managing the flows of unskilled foreign workers.

Industrial Upgrading and Global Recession: Evidence of Hard Disk Drive and Automotive Industries in Thailand

This paper illustrates the upgrading experiences of the automotive and hard disk drive (HDD) industries in Thailand, chosen because of their outstanding export performance in the developing world. An understanding of their upgrading experiences can shed some light on the ongoing debate regarding the relative importance of international production networks (IPNs) and industrial clusters (ICs) and their implications for prudential industrial policy. The impact of the recent global recession is also discussed in this paper. There is evidence of industrial upgrading in both the automotive and HDD industries. Yet one primary policy challenge still remains, that is, the limited role of indigenous suppliers in the multinational enterprise (MNE) production networks. This limited role is, to a certain extent, related to the overall incentive structure. Where these two industries differ is in their mode of networking, that is, whether they are part of an IPN or an IC. In the case of the automotive industry, industrial clustering has been observed and has reached a level where the local content of a locally manufactured vehicle is approaching 100%. In the case of the HDD industry, industrial clustering has naturally occurred and reached a certain level.

Global Recession, Labour Market Adjustment and International Production Networks: Evidence from the Thai Automotive Industry?

This paper examines how workers in international production networks adjust to the recent global recession, using Thai automotive industry as a case study. The papers core methodology involves comprehensive interviews with managers and workers in the industry conducted between July and September 2009. It was found that the magnitude of output contraction was far greater than that of employment contraction, reflecting the high degree of skilled-labour intensity of production and the efforts of enterprises to avoid retrenchment of trained workers. Employment adjustment has mainly taken the form of reducing working hours rather than retrenchment. This seems to have adversely affected skill upgrading and the workers earnings. In response to the contraction in urban wage premium, some workers have returned to their hometown in rural areas. There is evidence that the agricultural sector and local community oriented business facilitate labour market adjustment by absorbing retrenched workers. The findings points to the need for the government to provide firms with financial support to holding their trained workers over and above helping retrenched workers.

Multinational Enterprises and Globalization of R&D: A Study of U.S-based Firms

This paper examines patterns and determinants of overseas R&D expenditure of US-based manufacturing MNEs using a new panel dataset over the period 1990-2001. It is found that inter-country differences in R&D intensity of operation of US MNE affiliates are fundamentally determined by the domestic market size, overall R&D capability and cost of hiring R&D personnel. The impact of domestic market orientation of affiliates on R&D propensity varies among countries depending on their stage of global economic integration. Intellectual property protection seems to matter largely for mature economies with complementary endowments. There is no evidence to suggest that financial incentives have a significant impact on inter-country differences in R&D intensity when controlled for other relevant variables. Nor is there a statistically significant relationship between the size of the capital stock of MNEs and R&D intensity of their operation across countries. Overall, our findings serve as a caution against paying too much attention by host country governments on turning MNEs affiliates into technology creators as part of their foreign direct investment policy.

Global Production Sharing and Wage Premiums: Evidence from the Thai Manufacturing Sector

The paper aims to promote a better understanding of the determinants of wage skill premiums in developing countries, with emphasis on the role of firm heterogeneity as well as global production sharing. An interplant, cross-sectional analysis of the Thai manufacturing sector is undertaken. Our key finding is in line with the theoretical postulation of the established firm heterogeneity literature—i.e., tariff cuts have different effects on firms depending on the mode by which firms are globally integrated. We also find that outsourced economic activities to developing countries are skills intensive. Our finding has implications for the management of economic globalization. First, reluctance to continue trade policy reform could inflate demand for unskilled workers and eventually jeopardize the competitiveness of exporting firms. Second, participation in global production sharing provides not only lucrative business opportunities, but also the chance to move up to a higher rung on the technology ladder. In addition, increasing economic globalization by participating in global production sharing could bring adverse effects to unskilled workers. Social safety net programs must be put in place to mitigate such adverse effects.