Article History JEL Classification:F14; F23; F43.Foreign direct investment (FDI) has played an important role in Thailand's economic growth and development. Since 1988Since -1990, Thailand has been a major destination for FDI. The aim of this study is to investigate the main determinants of Thailand's inward foreign direct investment (IFDI) and apply a panel data model to identify which determinants have significantly affected Thailand's inward FDI. We consider FDI inflows into Thailand in relation to its five most impacting partner countries throughout the periods 1997-2014. Our empirical results have shown that market size, Thailand's openness, geographical distance, bilateral trade agreements and R&D intensity have positive and statistically significant effects on Thailand's inward FDI. On the other hand, exchange rate, global financial crisis and relative wages have a negative effect, while Asian financial crisis and Thailand's political risk are insignificant effect on Thailand's IFDI. We hope that our empirical results may provide investors and policymakers with guidance for making appropriate investment decisions. Contribution/ Originality:This study contributes in the existing literature about investigating the main determinants of Thailand's inward foreign direct investment (IFDI) and apply a panel data model to identify which determinants have significantly affected Thailand's inward FDI. We consider FDI inflows into Thailand in relation to its five most impacting partner countries throughout the periods 1997-2014. Our empirical results have shown that market size, Thailand's openness, geographical distance, bilateral trade agreements and R&D intensity have positive and statistically significant effects on Thailand's inward FDI.
Foreign direct investment (FDI) has played an important role in the evolution of globalization and is the cornerstone of industrial expansion and economic development. From 1988 to 1990 till now, Thailand has been one of the main destinations of FDI, namely inward FDI (IFDI). However, outward foreign direct investment (OFDI) increased rapidly from 2003 to 2011, and it continues to grow. Although initially a net importer, Thailand has transformed into a net exporter of direct investment in 2011. Since 2003, Thailand has entered a stage of re-emergence of OFDI, and this growth trend of OFDI will continue in the future. The purpose of this study is to investigate the main determinants of Thailand's IFDI and OFDI, and apply a panel data model to determine which determinants have a significant impact on Thailand's IFDI and OFDI. We considered the FDI flows between Thailand and its five FDI partners (Japan, Hong Kong, the Netherlands, Singapore and the United States) from 1997 to 2014, where IFDI was 1997-2014, and 2004-2014 was OFDI. Regarding the determinants of Thailand's IFDI and OFDI, the market size (relative per capita GDP), Thailand's openness, relative R&D intensity and bilateral trade agreements have a positive impact on FDI decisions for both IFDI and OFDI. Relative wages and geographic distance have opposite effects on Thailand's IFDI and OFDI. Specifically, our empirical results show that market size is the most important determinant of IFDI inflows into Thailand, while the most important determinant of Thai OFDI is bilateral trade agreements. JEL classification numbers: F14, F23, F43. Keywords: Foreign Direct Investment, Panel Data Model, Fixed Effects, Generalized Least Squares (GLS).
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