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Industrial Policy, Multinational Strategy and Domestic Capability: A Comparative Analysis of the Development of South Africa’s and Thailand’s Automotive Industries

Author

Listed:
  • Justin Barnes

    (University of KwaZulu-Natal
    B&M Analysts)

  • Anthony Black

    (School of Economics, University of Cape Town)

  • Kriengkrai Techakanont

    (School of Economics, Thammasat University)

Abstract

For developing countries seeking to promote the automotive industry, it has been essential to attract foreign investment, and the terms under which this takes place are key determinants of the resulting development impact. This article examines the development of the sector in South Africa (SA) and Thailand. Both industries have been driven by growing domestic demand, government support and rapid international integration, but the Thai industry has grown at a significantly faster pace. The article demonstrates that the Thai automotive industry has major firm-level cost and market advantages. The combination of a favourable location, supportive trade and industrial policy and supply-side strengths has led to large-scale investment and Thailand’s development as a major regional hub. Foreign investment in SA on the other hand has been at a lower level, aimed primarily at accessing the domestic market. The consequence has been more limited development of the automotive cluster.

Suggested Citation

  • Justin Barnes & Anthony Black & Kriengkrai Techakanont, 2017. "Industrial Policy, Multinational Strategy and Domestic Capability: A Comparative Analysis of the Development of South Africa’s and Thailand’s Automotive Industries," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 29(1), pages 37-53, January.
    • Handle: RePEc:pal:eurjdr:v:29:y:2017:i:1:d:10.1057_ejdr.2015.63
    DOI: 10.1057/ejdr.2015.63
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    References listed on IDEAS

    as
    1. Anthony Black, 2009. "Location, Automotive Policy, and Multinational Strategy: The Position of South Africa in the Global Industry since 1995," Growth and Change, Wiley Blackwell, vol. 40(3), pages 483-512, September.
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    10. Justin Barnes & Raphael Kaplinsky, 2000. "Globalization and the Death of the Local Firm? The Automobile Components Sector in South Africa," Regional Studies, Taylor & Francis Journals, vol. 34(9), pages 797-812.
    11. Archanun Kohpaiboon & Juthathip Jongwanich, 2013. "International Production Networks, Clusters, and Industrial Upgrading: Evidence from Automotive and Hard Disk Drive Industries in Thailand," Review of Policy Research, Policy Studies Organization, vol. 30(2), pages 211-239, March.
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    Cited by:

    1. Zon-Yau Lee & Mei-Tai Chu & Shiuann-Shuoh Chen & Chih-Hung Tsai, 2018. "Identifying Comprehensive Key Criteria of Sustainable Development for Traditional Manufacturing in Taiwan," Sustainability, MDPI, vol. 10(9), pages 1-19, September.
    2. Black Anthony & McLennan Thomas & Makundi Brian, 2017. "Working Paper 282 - Africa’s Automotive Industry Potential and Challenges," Working Paper Series 2412, African Development Bank.
    3. Anzolin, Guendalina & Andreoni, Antonio & Zanfei, Antonello, 2022. "What is driving robotisation in the automotive value chain? Empirical evidence on the role of FDIs and domestic capabilities in technology adoption," Technovation, Elsevier, vol. 115(C).
    4. Karishma Banga & Neil Balchin, 2023. "Linking Southern Africa to South Africa's exports: New opportunities for regional value chains," The World Economy, Wiley Blackwell, vol. 46(2), pages 346-362, February.

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