REVISITING THE IMPACT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH IN THAILAND

Main Article Content

Yi- Syen Chong
Mui-Yin Chin

Abstract

Past studies have researched how foreign direct investment has played a pivotal role in stimulating Thailand’s economic growth. However, Thailand’s foreign direct investment inflows have exhibited huge fluctuations from
1979 until now. Empirical studies have revealed that foreign direct investment worsens and weakens current accounts, raising foreign debt. In addition, foreign firms with large influence on market shares might crowd out domestic investment. Hence, this study aimed to re-examine the impact of foreign direct investment on Thailand’s economic growth in both the short and long run by employing yearly data from 1980 to 2019
using the Vector Error Correction Model and Granger Causality test. Besides, this study also investigated the impact of other determinants of economic growth, namely real effective exchange rate and trade. The empirical results revealed that foreign direct investment has positively impacted Thailand’s economy in the long run. In
addition, foreign direct investment emerged as the most influential variable on economic growth. Given the importance of foreign direct investment for Thailand, The Board of Investment of Thailand should implement effective policies and provide incentives that benefit foreign investors to invest in the country. In addition, the government should implement further intervention measures to improve the positive spillover effects from
foreign direct investment.  

Downloads

Download data is not yet available.

Article Details

How to Cite
1.
Chong Y- S, Chin M-Y. REVISITING THE IMPACT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH IN THAILAND. journal [Internet]. 24Sep.2022 [cited 28Mar.2024];12(48):1-0. Available from: https://journal.tvu.edu.vn/index.php/journal/article/view/1104
Section
Articles

References

[1] Robinson D, Teja RS, Byeon YH, Tseng W. Thailand:
Adjusting to Success: Current Policy Issues. International Monetary Fund. Occasional.1991: p.85.
[2] World Bank. World Bank Open Data. 2020.
https://data.worldbank.org/ [Accessed 7th July 2020].
[3] Mencinger J. Does foreign direct investment
always enhance economic growth? Kyklos.
2003;56(4): 491–508. https://doi.org/10.1046/j.0023-
5962.2003.00235.x.2020.08.009.
[4] Omran M, Bolbol A. Foreign direct investment,
financial development, and economic growth:
evidence from the Arab countries. Rev Middle
East Econ Finance. 2003;1(3): 231–249.
http://dx.doi.org/10.1080/1475368032000158232.2020.
08.009.
[5] GShaari M, Hong TH, Shukeri SN. Foreign
Direct Investment and Economic Growth:
Evidence from Malaysia. International
Business Research. 2012;5(10): 100–106.
http://dx.doi.org/10.5539/ibr.v5n10p100.2020.08.009.
[6] Sarbapriya R. Impact of foreign direct investment on
economic growth in India: a co-integration analysis.
Advances in Information Technology and Management. 2012;2(1): 2167–6372.
[7] Blomstrom M, Lipsey RE, Zejan M. What explains
developing countries growth? National Bureau of
Economic Research. 1992; p.41–32.
[8] Maheswari J. Macro-economic determinants of foreign direct investment in India. International Journal
of Economic and Business Review. 2015;3(2): 59–65.
[9] Borensztein E, De Gregorio J, Lee JW.
How does foreign direct investment affect
economic growth?. Journal of International Economics. 1998;45(1): 115–135.
https://olemiss.edu/courses/inst310/BorenszteinDeGLee
98.pdf [Accessed 9th August 2020].
[10] Marwah K, Tavakoli A. The Effect of foreign
capital and imports on economic growth: Evidence from four Asian countries (1970-1998). Journal of Asian Economics. 2004;15(2): 399–413.
https://doi.org/10.1016/j.asieco.2004.02.008.2020.08
.009.
[11] Haller AP. Concepts of Economic Growth
and Development, Challenges of Crisis and
Knowledge. Economy Transdisciplinarity
Cognition Journal. 2012;15(1): 66–71.
https://www.ugb.ro/etc/etc2012no1/09fa.pdf
[Accessed 9th August 2020].
[12] Sumner A. Is foreign direct investment good
for the poor?. A review and stocktake. Development in Practise. 2005;15(3-4): 269–285.
https://doi.org/10.1080/09614520500076183.2020.
08.009.
[13] Aghion P, Bacchetta P, Ranciare R, Rogoff K. Exchange rate volatility and productivity growth: The
role of financial development. Journal of Monetary
Economics. 2009; 56(4): 494–513.
[14] Miles W. To float or not to float? Currency regimes
and growth. Journal of Economic Development.
2006;31(2): 91–105.
[15] Seyoum B. Export-Import Theory, Practices
and Procedures. 2nd ed. Routledge; 2000.
http://rafael.glendale.edu/poorna/ib/seyoum%20book.pdf
[Accessed 3rd April 2021].
[16] Abu Dalu A, Ahmed EM, Almasaied SW, Elgazoli
AI. The real effective exchange rate impact
on ASEAN-5 economic growth. International
Journal of Economics and Management Sciences.
2014;3(2): 1–11. http://dx.doi.org/10.4172/2162-
6359.1000174.2020.08.009.
[17] Levy-Yeyati E, Sturzenegger F. To Float
or to Trail: Evidence on the Impact of
Exchange Rate Regimes on Growth. American
Economic Review. 2003;93(4): 1173–1193.
https://www.aeaweb.org/articles?id=10.1257/0002828
03769206250 [Accessed 9th August 2020].
[18] Bouoiyour J. Trade and GDP Growth in Morocco: Short-run or Long-run Causality? Brazillian Journal of Business and Economics. 2003;3(2):
14–21. https://mpra.ub.uni-muenchen.de/28859/ [Accessed 9th August 2020].
[19] Sarkar P. Trade Openness and Growth: Is There
Any Link? Munich Personal RePEc Archive. 2007:
p. 4997.
[20] Romer PM. Increasing returns and long run growth.
Journal of Political Economy. 1986;94(50): 1002–
1037. https://www.jstor.org/stable/1833190 [Accessed
9th August 2020].
[21] Corporate Finance Institute.
Theories of Growth. 2020.
https://corporatefinanceinstitute.com/resources/knowle
dge/economics/theories-of-growth/. [Accessed 20th
August 2020].
[22] Solow RM. A contribution to the theory of economic
growth. Quarterly Journal of Economics. 1956;70(1):
65–94. https://doi.org/10.2307/1884513.2020.08.009.
[23] Wall Street Mojo. Endogenous Growth Theory. 2020.
https://www.wallstreetmojo.com/endogenous-growththeory/ [Accessed 20th August 2020].
[24] Nguyen TC, Dinh TTH, Vo DH, Vo AT. Foreign Direct Investment and Economic Growth in
the Short Run and Long Run: Empirical Evidence from Developing Countries. Journal of Risk
and Financial Management. 2019;12(176): 1–11.
https://doi.org/10.3390/jrfm12040176.2020.08.009.