Economic Rent Dynamics in the Thai Automotive Industry: State Allocation During GVC Transition

Dom Kandpinijsha ()
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Dom Kandpinijsha: Chulalongkorn University, Bangkok, Thailand

RAIS Conference Proceedings 2022-2024 from Research Association for Interdisciplinary Studies

Abstract: Within the global value chain, firms' ability to generate economic rents—additional profits above baseline returns—is crucial to their competitiveness, with state-allocated exogenous rents also shaping industry structure. This research examines rent dynamics in the Thai automotive industry, focusing on the interplay between policy rents and GVC rents. It traces these dynamics along the evolving path from the inception of the automotive industry in Thailand to the ongoing disruptive transition to new energy vehicles (NEVs), which accentuates the established configuration of power and interests across the industry. Findings indicate that: 1) local firms occupy subordinate roles throughout the development trajectory due to a lack of policy rents specifically targeting the effective enhancement of indigenous productive competencies; 2) when an industry has matured with established positions within the value chain, stakeholders endowed with significant rents stand to capture more benefits from policy rents, especially during transitional phases; 3) as local firms are not encouraged to proactively accumulate technological rents, they resort to seeking non-productive rents as opportunities permit. This research underscores how the interaction between state policy and foreign investment influences the architecture of the Thai automotive industry, offering insights into broader economic effects in emerging economies.

Keywords: economic rents; industrial policy; global value chain (GVC); foreign direct investment (FDI); automotive industry; NEV transition (search for similar items in EconPapers)
Pages: 10 pages
Date: 2024-08
New Economics Papers: this item is included in nep-ene, nep-int, nep-inv, nep-mac and nep-sea
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Published in Proceedings of the 38th International RAIS Conference on Social Sciences and Humanities, November 21-22, 2024, pages 211-220

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