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Export Performance, Foreign Ownership, and Trade Policy Regime: Evidence from Thai Manufacturing

Author

Listed:
  • Jongwanich, Juthathip

    (Asian Development Bank)

  • Kohpaiboon, Archanun

    (Thammasat University)

Abstract

This paper examines the determinants of a firm’s export decision and the role of multinational corporations (MNCs) in generating export spillovers to domestically owned firms based on cross-sectional econometric analysis of the manufacturing sector in Thailand. The role of market structure in determining firms’ export decisions is also emphasized in the study. The key finding is that MNCs tend to be more export-oriented than indigenous firms and the entry of the former stimulates the latter to become involved in the production of exports, i.e., the presence of MNCs export spillovers. However, the impact of MNCs on export activity/spillovers is not automatic, but depends on the trade policy regime. A restricted trade policy, especially tariff protection, could retard the process of MNCs enhancing export spillovers and overall export activity. Competition fostered by open trade policies tend to be required if a high level of MNC participation is to be translated into higher export activity/spillovers. In addition, the negative direct effect of high tariff rates on export activity/spillovers highlights the relative importance of trade policy neutrality on firms’ export decisions and export spillovers.

Suggested Citation

  • Jongwanich, Juthathip & Kohpaiboon, Archanun, 2008. "Export Performance, Foreign Ownership, and Trade Policy Regime: Evidence from Thai Manufacturing," ADB Economics Working Paper Series 140, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0140
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    References listed on IDEAS

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    1. Athukorala, Premachandra & Jayasuriya, Sisira & Oczkowski, Edward, 1995. "Multinational firms and export performance in developing countries: Some analytical issues and new empirical evidence," Journal of Development Economics, Elsevier, vol. 46(1), pages 109-122, February.
    2. Ramstetter, Eric D., 2004. "Labor productivity, wages, nationality, and foreign ownership shares in Thai manufacturing, 1996-2000," Journal of Asian Economics, Elsevier, vol. 14(6), pages 861-884, January.
    3. Paul Krugman, 1995. "Growing World Trade: Causes and Consequences," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 327-377.
    4. Greenaway, David & Sousa, Nuno & Wakelin, Katharine, 2004. "Do domestic firms learn to export from multinationals?," European Journal of Political Economy, Elsevier, vol. 20(4), pages 1027-1043, November.
    5. Frances Ruane & Julie Sutherland, 2005. "Foreign Direct Investment and Export Spillovers: How Do Export Platforms Fare?," The Institute for International Integration Studies Discussion Paper Series iiisdp058, IIIS.
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    Cited by:

    1. Teerawat Charoenrat & Yot Amornkitvikai, 2024. "Factors Affecting the Export Intensity of Chinese Manufacturing Firms," Global Business Review, International Management Institute, vol. 25(4), pages 957-980, August.

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    More about this item

    Keywords

    competition; export decision; market structure; multinational corporations; trade policy;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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