Title: Productive Integration
1Productive Integration
- Lessons from Asia and Europe for MERCOSUR
Thailand Perspective
2Organization
- General background Economic indicator
- Historical of Industrial and Development Policy
- Productive integration in Asia Thailands
perspective - Lessons from Thailand
3Thailand Economic Indicators (2007)
- GDP 249 billion USD. (current price)
- Population 63 million
- Inflation 2.3
- Trade export 150 billion USD. , import 138.4
billion USD. - Degree of openness 115
- Export structure 78.1 from manufacturing sector
4Main export sectors
Source Ministry of Commerce
5Degree of trade openness and average trade tariff
6National Economic Plans
7Trade Policies
- ISI --gt Export oriented (1960s-1980s)
- Thai government committed to liberalize the
economy trade and financial liberalization
(1990s) - Thailand began to negotiate FTAs with many
countries because of competitive regionalism by
other Asian countries (to formulate FTAs with
Japan and the US, Thailands major trading
partners) - Thailand tries to integrate with regional trade
blocs in order to improve competitive advantage - Private (stakeholders) and public sectors were
active in the negotiation process of FTA
(Terdudomtham 2008)
8Thailands FTA
9FDI net inflow Intra- and Extra-ASEAN
Source ASEAN Secretariat
10FDI net inflow by countries
Text
Source ASEAN Secretariat
11Thailands Asian Integration through exportation
12Thailands Asian Integration through importation
13World Trade in Parts and Components (1996-2007)
14(No Transcript)
15(No Transcript)
16Intra-regional trade share
17Two examples
- HDD and Automotive sectors
- Export value gt 10000 mil.USD.
- Export-oriented industries
18Productive integration
- Industrial policies
- Investment promotion
- Develop infrastructure
- HRD
- Create domestic integration (agglomeration)
- Roles of MNEs
- Product fragmentation (trade of parts and
components) - Global Production Network or Global Value Chain
- Trade policies
19Thailand Industrial Policies
- The government had specific and clear goal to
promote - Reliance on foreign firms to promote supporting
industries - Non-discrimination
- Export orientation industry
- Integrated into part of global production network
of many firms
20Production, Sales, Export (1961-2007)
21Why was Thailands Automotive Industry integrated?
- Government Policies
- Local content requirement (LCR) regulation
- Industrial Estate (from 1972)
- BOI promotion scheme
- Sound macroeconomics policies (outward-oriented
policies, and trade liberalization) - Commitment to liberalization abolishment of LCR
- Large market (pickup trucks)
- Economic crisis aftermath
22Reasons for rapid growth in HDD in Thailand
- Industry dynamics
- critical mass of the industry base
- growth of trained engineers/technicians
- cost-effective trained labor pool
- some development of supplier industries
- Policy/environmental factors
- macroeconomic stability
- investment incentives
- reasonable infrastructure
- cheap (or perhaps cost-effective) labor
23Automotive and HDD Clusters in Thailand
24Process of Global Supply Chain Integration
Automotive Sector
- Integration in Thailand (agglomeration) sinces
1980s - Integration with ASEAN 3 (vehicles and parts)
(late 1990s onwards) - Final products for the rest of the world (2000
onwards)
25Production and International Trade Network in
Southeast Asia
26Toyotas Production and Supply Network (IMV
project)
27Lessons from Thailand
- The integration process was induced by the
rationalized industrial policy in 1980s - Roles of technocrats in designing industrial
policies (strategic, feasible, fair) - FDI and MNEs are important players in the process
- Roles of institutions and public-private
cooperation committee (PPCC) in 1980s - Macroeconomics stabilization
- Infrastructure and regional development Road
network, Seaport (Japanese ODA was important),
and HRD
28Lessons from Thailand
- Investment incentive to promote regional
development and human resource development - Problems in the development process
- Only large business firms or associations could
lobby the government in the negotiation process
of FTAs or EPAs - Small firms tend to face difficulty in improving
their competitiveness - Supports should be provided to the group that
received adverse effect from the FTA and
globalization