The auto industry in Thailand: value transfer, technological dependence and relations between local and foreign capital

Chiara Pollio ()

No 1202, Working Papers from c.MET-05 - Centro Interuniversitario di Economia Applicata alle Politiche per L'industria, lo Sviluppo locale e l'Internazionalizzazione

Abstract: The paper analyzes the features of Thai auto industry from the late 1980s to the present. It uses an approach consistent with the Global Value Chain analyses, and focuses on three aspects: the relation between local and foreign capital; the role of the local supply base in the process of value creation; value capture and transfer dynamics among countries. The country is a relevant case as it is the largest ASEAN market and a main regional and global export hub. Thailand represents the centre of the regional production networks of all Japanese automakers and, from the Asian crisis (1997-1998), of the biggest western too. It has also a fundamental role for automakers regional market access strategies. The paper places Thai auto industry origins and development in the context of the expansion of Japanese industrialcapital in Southeast Asia. Hence, it assumes that Japanese production organization has bothshaped the local automotive manufacturing sector and determined its structural weaknesses.Data from the United Nations Commodity Trade Statistics Database from 1989 to 2010 are processed in the paper, in order to analyze trade relations between Thailand on one hand and ASEAN selected countries and “Triad” countries on the other and, hence, to assess value transfer dynamics. In sum, the paper underlines two main problems for local auto industry: the first is a substantial technological dependence from foreign assets and the existence of captive linkages between foreign assemblers or first tier suppliers and Thai suppliers; the second is a partial transfer towards the Triad - mainly Japan - of the value created in the country, which happens through technological dependence and trade deficit mechanisms.

Keywords: auto industry; Thailand; global value chain (search for similar items in EconPapers)
Pages: 31 pages
Date: 2012-07
New Economics Papers: this item is included in nep-sea
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Citations: View citations in EconPapers (1)

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