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Productive Integration

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Historical of Industrial and Development Policy ... Economic crisis aftermath. Reasons for rapid growth in HDD in Thailand. Industry dynamics ... – PowerPoint PPT presentation

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Title: Productive Integration


1
Productive Integration
  • Lessons from Asia and Europe for MERCOSUR
    Thailand Perspective

2
Organization
  • General background Economic indicator
  • Historical of Industrial and Development Policy
  • Productive integration in Asia Thailands
    perspective
  • Lessons from Thailand

3
Thailand 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

4
Main export sectors
Source Ministry of Commerce
5
Degree of trade openness and average trade tariff
6
National Economic Plans
7
Trade 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)

8
Thailands FTA
9
FDI net inflow Intra- and Extra-ASEAN
Source ASEAN Secretariat
10
FDI net inflow by countries
Text
Source ASEAN Secretariat
11
Thailands Asian Integration through exportation
12
Thailands Asian Integration through importation
13
World Trade in Parts and Components (1996-2007)
14
(No Transcript)
15
(No Transcript)
16
Intra-regional trade share
17
Two examples
  • HDD and Automotive sectors
  • Export value gt 10000 mil.USD.
  • Export-oriented industries

18
Productive 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

19
Thailand 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

20
Production, Sales, Export (1961-2007)
21
Why 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

22
Reasons 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

23
Automotive and HDD Clusters in Thailand
24
Process 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)

25
Production and International Trade Network in
Southeast Asia
26
Toyotas Production and Supply Network (IMV
project)
27
Lessons 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

28
Lessons 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
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