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The Relative Importance of Trade vs. FDI-Led Economic Growth in Thailand

The Relative Importance of Trade vs. FDI-Led Economic Growth in Thailand

Sailesh Tanna, Kitja Topaiboul, Chengchun Li
Copyright: © 2018 |Pages: 18
ISBN13: 9781522530268|ISBN10: 1522530266|EISBN13: 9781522530275
DOI: 10.4018/978-1-5225-3026-8.ch006
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MLA

Tanna, Sailesh, et al. "The Relative Importance of Trade vs. FDI-Led Economic Growth in Thailand." Foreign Direct Investments (FDIs) and Opportunities for Developing Economies in the World Market, edited by Venkataramanaiah Malepati and C. Mangala Gowri, IGI Global, 2018, pp. 105-122. https://doi.org/10.4018/978-1-5225-3026-8.ch006

APA

Tanna, S., Topaiboul, K., & Li, C. (2018). The Relative Importance of Trade vs. FDI-Led Economic Growth in Thailand. In V. Malepati & C. Gowri (Eds.), Foreign Direct Investments (FDIs) and Opportunities for Developing Economies in the World Market (pp. 105-122). IGI Global. https://doi.org/10.4018/978-1-5225-3026-8.ch006

Chicago

Tanna, Sailesh, Kitja Topaiboul, and Chengchun Li. "The Relative Importance of Trade vs. FDI-Led Economic Growth in Thailand." In Foreign Direct Investments (FDIs) and Opportunities for Developing Economies in the World Market, edited by Venkataramanaiah Malepati and C. Mangala Gowri, 105-122. Hershey, PA: IGI Global, 2018. https://doi.org/10.4018/978-1-5225-3026-8.ch006

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Abstract

This chapter investigates the relative strength of the contributions of trade openness and FDI inflows towards economic growth of Thailand, taking account of the importance of human capital and other conditioning factors as a source of technology transfer in facilitating growth. Using Granger causality tests conducted within a vector-error-correction framework, the authors find significant evidence of the complementarities between domestic investment and trade openness, providing support for import-led growth. In contrast, direct support for FDI-led growth is relatively weak, which implies that trade openness has played a more significant role than FDI in influencing Thai economic growth. However, the results reveal a subtle role for technology transfer through the complementary effect of trade on FDI, and FDI on government expenditure, which henceforth influences human capital development with spillovers into domestic investment and growth. This leads us to argue that there is a potential role for FDI interacting with human capital in influencing the future development of the Thai economy, given its active policy of FDI promotion over the past decade.

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