Developing countries like Thailand, we rely export as an engine of growth for the country with export accounts more than two thirds of GDP growth (Economy of Thailand, Wikipedia-2010). The main industry in Thailand is automobiles and automotive parts with the size of 11% in total industry (Economy of Thailand, Wikipedia-2010). Not just the largest size that automobiles and automotive parts industry has better than other industries but Thailand has a strong automotive industry as well. In 2010 automobiles and automotive parts has grown more than 63% (Thai Automotive Industry Association). With more than 1.6 million cars are produced in this year and this figure rank Thailand as 13th in the automobile production country in the world (Thai Automotive Industry Association) Experts in automotive industry predicts that in 5 years Thailand will be rank top 10 in automobile production. However the automobile and automotive parts are not able to grow this fast if the industry does not have Foreign Direct Investment (FDI) from overseas. We all know from economics text book that FDI can increase production through A and K which stands for technology and capital.
Caves (1974) suggested that there are 2 productivity effects from FDI. First effect is called direct technology transfer and second effect is called competitive pressure. He also argued that FDI improve host country productivity through technology transfer can occur when there is economic contact between foreign and local firms. Empirical evidence for increase in productivity due to FDI will be discussed further in Literature Review section. In this paper I will be concentrate on Japanese automotive brands since Japanese automotive brands dominates the market with market share of more than 91%. Figure 1 shows share of market in automotive brands in year 2009 and 2010. This market share is calculated by using only sales figures of passenger cars. In the automotive industry, there are 2 main types of vehicles are produced which are passenger cars and commercial cars. Types of vehicle production will be discussed later in this paper.
With the largest industry in the country, high volume of productions and exports and huge market shares of Japanese automotive brands in Thailand, I really think that Japanese FDI flow into Thai automotive industry has some degree of significant to Thai economy in the futures
There are 2 objectives and expected benefits from this senior research.
Firstly, to explore the situation of Japanese FDI in Thai automotive industry in present and trends in the future. As I have mention above Japanese automotive firms have significant impact to Thai automotive industry by massive flow of FDI which increase technology level and productivity as caves (1974) have suggested. Understanding the current situations and have an idea of how future of the industry will be like is important and this leads to second objectives and expected benefits of this paper. Thus second objectives and expected benefit is to suggest policies to enhance the competitiveness, productivity and increase in technology to Thai automotive industry. Basically suggest policies to improve Thai automotive industry to benefit the country.
Scope of my study will concentrate on analyzing domestic and international market and show what the future will be for these markets. International market will include ASEAN, CLMV and Japan. The reason to include international market is that Japanese automotive firms see Thailand as vehicle production hubs for south-east Asia. For domestic market, my analysis of the market will start from year 1961 to current year that is 2011. The reason to start analyzes in year 1961 is that Thailand start production of vehicles on that year with only 525 vehicles are produced (Thai Automotive Industry Association). However the main analysis of Thai automotive industry will start after year 1997 that is the year that Thailand faced with financial crisis. In addition, analyze of future period will end at year 2015 that’s the year that ASEAN Economics Community will be integrated. Analyze of future periods will apply in all domestic, Japan and international market. For both Japan and international market, analyze of automotive market will start from year 2001 to present time plus future which is until year 2015.
Developing countries like Thailand, we rely export as an engine of growth for the country with export accounts more than two thirds of GDP growth (Economy of Thailand, Wikipedia-2010). The main industry in Thailand is automobiles and automotive parts with the size of 11% in total industry (Economy of Thailand, Wikipedia-2010). Not just the largest size that automobiles and automotive parts industry has better than other industries but Thailand has a strong automotive industry as well. In 2010 automobiles and automotive parts has grown more than 63% (Thai Automotive Industry Association). With more than 1.6 million cars are produced in this year and this figure rank Thailand as 13th in the automobile production country in the world (Thai Automotive Industry Association) Experts in automotive industry predicts that in 5 years Thailand will be rank top 10 in automobile production. However the automobile and automotive parts are not able to grow this fast if the industry does not have Foreign Direct Investment (FDI) from overseas. We all know from economics text book that FDI can increase production through A and K which stands for technology and capital.
Caves (1974) suggested that there are 2 productivity effects from FDI. First effect is called direct technology transfer and second effect is called competitive pressure. He also argued that FDI improve host country productivity through technology transfer can occur when there is economic contact between foreign and local firms. Empirical evidence for increase in productivity due to FDI will be discussed further in Literature Review section. In this paper I will be concentrate on Japanese automotive brands since Japanese automotive brands dominates the market with market share of more than 91%. Figure 1 shows share of market in automotive brands in year 2009 and 2010. This market share is calculated by using only sales figures of passenger cars. In the automotive industry, there are 2 main types of vehicles are produced which are passenger cars and commercial cars. Types of vehicle production will be discussed later in this paper.
With the largest industry in the country, high volume of productions and exports and huge market shares of Japanese automotive brands in Thailand, I really think that Japanese FDI flow into Thai automotive industry has some degree of significant to Thai economy in the futures
There are 2 objectives and expected benefits from this senior research.
Firstly, to explore the situation of Japanese FDI in Thai automotive industry in present and trends in the future. As I have mention above Japanese automotive firms have significant impact to Thai automotive industry by massive flow of FDI which increase technology level and productivity as caves (1974) have suggested. Understanding the current situations and have an idea of how future of the industry will be like is important and this leads to second objectives and expected benefits of this paper. Thus second objectives and expected benefit is to suggest policies to enhance the competitiveness, productivity and increase in technology to Thai automotive industry. Basically suggest policies to improve Thai automotive industry to benefit the country.
Scope of my study will concentrate on analyzing domestic and international market and show what the future will be for these markets. International market will include ASEAN, CLMV and Japan. The reason to include international market is that Japanese automotive firms see Thailand as vehicle production hubs for south-east Asia. For domestic market, my analysis of the market will start from year 1961 to current year that is 2011. The reason to start analyzes in year 1961 is that Thailand start production of vehicles on that year with only 525 vehicles are produced (Thai Automotive Industry Association). However the main analysis of Thai automotive industry will start after year 1997 that is the year that Thailand faced with financial crisis. In addition, analyze of future period will end at year 2015 that’s the year that ASEAN Economics Community will be integrated. Analyze of future periods will apply in all domestic, Japan and international market. For both Japan and international market, analyze of automotive market will start from year 2001 to present time plus future which is until year 2015.
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Developing countries like Thailand, we rely export as an engine of growth for the country with export accounts more than two thirds of GDP growth (Economy of Thailand, Wikipedia-2010). The main industry in Thailand is automobiles and automotive parts with the size of 11% in total industry (Economy of Thailand, Wikipedia-2010). Not just the largest size that automobiles and automotive parts industry has better than other industries but Thailand has a strong automotive industry as well. In 2010 automobiles and automotive parts has grown more than 63% (Thai Automotive Industry Association). With more than 1.6 million cars are produced in this year and this figure rank Thailand as 13th in the automobile production country in the world (Thai Automotive Industry Association) Experts in automotive industry predicts that in 5 years Thailand will be rank top 10 in automobile production. However the automobile and automotive parts are not able to grow this fast if the industry does not have Foreign Direct Investment (FDI) from overseas. We all know from economics text book that FDI can increase production through A and K which stands for technology and capital.
Caves (1974) suggested that there are 2 productivity effects from FDI. First effect is called direct technology transfer and second effect is called competitive pressure. He also argued that FDI improve host country productivity through technology transfer can occur when there is economic contact between foreign and local firms. Empirical evidence for increase in productivity due to FDI will be discussed further in Literature Review section. In this paper I will be concentrate on Japanese automotive brands since Japanese automotive brands dominates the market with market share of more than 91%. Figure 1 shows share of market in automotive brands in year 2009 and 2010. This market share is calculated by using only sales figures of passenger cars. In the automotive industry, there are 2 main types of vehicles are produced which are passenger cars and commercial cars. Types of vehicle production will be discussed later in this paper.
With the largest industry in the country, high volume of productions and exports and huge market shares of Japanese automotive brands in Thailand, I really think that Japanese FDI flow into Thai automotive industry has some degree of significant to Thai economy in the futures
There are 2 objectives and expected benefits from this senior research.
Firstly, to explore the situation of Japanese FDI in Thai automotive industry in present and trends in the future. As I have mention above Japanese automotive firms have significant impact to Thai automotive industry by massive flow of FDI which increase technology level and productivity as caves (1974) have suggested. Understanding the current situations and have an idea of how future of the industry will be like is important and this leads to second objectives and expected benefits of this paper. Thus second objectives and expected benefit is to suggest policies to enhance the competitiveness, productivity and increase in technology to Thai automotive industry. Basically suggest policies to improve Thai automotive industry to benefit the country.
Scope of my study will concentrate on analyzing domestic and international market and show what the future will be for these markets. International market will include ASEAN, CLMV and Japan. The reason to include international market is that Japanese automotive firms see Thailand as vehicle production hubs for south-east Asia. For domestic market, my analysis of the market will start from year 1961 to current year that is 2011. The reason to start analyzes in year 1961 is that Thailand start production of vehicles on that year with only 525 vehicles are produced (Thai Automotive Industry Association). However the main analysis of Thai automotive industry will start after year 1997 that is the year that Thailand faced with financial crisis. In addition, analyze of future period will end at year 2015 that’s the year that ASEAN Economics Community will be integrated. Analyze of future periods will apply in all domestic, Japan and international market. For both Japan and international market, analyze of automotive market will start from year 2001 to present time plus future which is until year 2015.
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