Explaining Thailand's automotive manufacturing success

Abstract

We argue that the success of Thailand's export-oriented automotive industry was based on three factors. First was the substantial public investment in productivity-raising port facilities and related infrastructure, beginning in the 1990s, that constituted the Eastern Seaboard economic corridor. The second was the exchange rate depreciation that accompanied the 1997-99 Asian Financial Crisis. Jointly, these two factors made manufacturing production for export more profitable. The third was two key policy changes adopted by the Thai government shortly after the crisis, and partly in response to it: (a) abolition of restrictions on foreign ownership, and (b) abolition of local content requirements.