The Impacts of Japanese MNCs and Foreign Direct Investment on Thailand Automotive Industry

Abstract

Since the 1960’s, Thailand’s automotive industry has progressed from simple production of small components and parts manufacturing industry to a vibrant automotive assembling industry, and presently major as  production and export hub of Japanese auto MNCs and regional R&D center for major automotive manufacturers.  During the 1970’s through 1990’s, the sector has significantly contributed to the growth of Thailand’s economy as the country shifted its economic base and labor force skills by evolving from labor-intensive agrarian economy to the early stage of technology-based manufacturing and export-led economy. This study discussed impacts and key contributing factors of Japanese auto MNCs, Thailand’s industrial transformation process in parallel with robust foreign direct investment (FDI), Thai government’s proactive industrial and trade policies, host-country comparative advantage in skilled workforces, automotive manufacturers’ investment strategy to relocate their manufacturing bases, and technology transfer from automotive manufacturers which played major roles in describing factors and impacts of Japanese auto MNCs in development process of Thai automotive industry.