The political economy of FDI in Thailand and its implications for sustainable economic development

Abstract

This thesis analyses the determinants and consequences of foreign direct investment (FDI) in Thailand, with particular emphasis on reviewing the Thai government's FDI policies, and these policies' effectiveness for enabling the country's sustainable development. Past research has indicated that, despite developing countries' various attempts to improve their economic growth and increase their standard of living via internationalisation, many of these attempts have proven unsuccessful. In the case of Thailand, there is debate regarding how the government can influence and regulate FDI in a manner that is most beneficial to the country's long-term growth and development. It has long been recognised that Thailand's economic policies are determined in a political environment that is driven mainly by individuals' and groups' personal interest. Thus, research on the political process of policy formation is essential to predict future policy directions. This thesis takes a more concentrated approach by examining the effects of FDI on Thailand's economic growth in the context of the political economy. The main areas examined are: (i) whether FDI has had a positive effect on the Thai economy; (ii) in which sector FDI has been most productive; (iii) whether the Thai government has been successful in achieving improved economic growth through implementing its FDI policies; and (4) if not, which areas have reported failure, what possible alternative policies exist, and what the expectations are for Thailand's future. In assessing Thailand's performance, this study found that the contribution of FDI to gross domestic product and employment growth varies across sectors. Generally, there is room for improvement in all sectors, which can be achieved by addressing the structural weaknesses in Thailand's financial system and improving the country's infrastructure, education and health. Appropriate measures will improve human capital, increase absorptive capacity, and thereby enhance the overall spillover effects of FDI.

Date of Award	2015
Original language	English