TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

Students are entitled to tuition fees, textbooks,
learning materials, school uniforms, as well as
other pertinent educational activities (free of
charge). The reforms do not only focus on the
quantity of education made available, but also on
improving the quality. However, the government
has not achieved much progress to date due
to insufficient infrastructure (e.g. ICT systems),
coordination and centralization issues arising
from various agencies (e.g. Ministry of Education,
Ministry of Science and Technology and Ministry
of Agriculture and Cooperatives) involved in the
human resource development as well as research
and development programmes.
Investment policy climate
Macro-level policies
Export-led industrialization policy
Thailand is one of the most popular destinations
in ASEAN (Association of South East Asian
Nations) in which foreign investors choose to
locate their operations since it is among the
fastest growing economies in the Southeast
Asian region. Obviously, many countries and their
respective firms would want to enjoy and take
advantage of its high rates of growth. Thailand
has achieved remarkable economic growth since
1981, reaching a two-digit growth rate in late
1980s. Thailand’s economic growth maintained a
positive rate while that of Malaysia and Singapore
declined in 1985. However, after the 1997 Asian
financial crisis Thailand and Malaysia experienced
the lowest economic growth in 1998, at -10.5
and -7.4 respectively, while Singapore’s growth
rate was -0.9 (Statistics Division of the United
Nations, http://unstats.un.org). In the 2000s,
Thailand’s growth rate rebounded and reached
4.07 percent in 2006, in spite of political
upheavals.
Thailand’s development strategies have played
important roles in accelerating economic growth.
The development of Thailand’s industrialization
policy began with the formulation and
implementation of an import substitution
policy, initiated in 1958. The policy had been
incorporated in Thailand’s National Economic and
Social Development Plan as well as the Thai Board
Part 3: Policies for attracting FDI and impacts
on national economic development
of Investment’s policy. The Thai Government
selected certain industries to be entitled for
benefits of such a shelter policy based on their
direct linkages to domestic industries, as well as
usage of domestic raw materials and contribution
to Thailand’s aggregate foreign exchange saving.
This was achieved via tariffs, import restrictions
and preferential treatment including special
taxation for investment in the priority sectors.
In the 1970s, the Thai Government started
employing an export promotion policy. However,
import substitution measures were used at the
same time as protection tools for intermediate
and capital goods producers as well as exporters.
This is supported by evidence from food
processing statistics with a very high effective
tariff rate in 1975, estimated at 65.8 percent, and
a nominal tariff rate of 22.6 percent (Urata and
Yokota, 1994).
During the 1980s-1990s, Thailand progressed
towards a more open and liberal economy
by implementing its openness policy. In the
early 1980s, the use of import substitution
industrialization tools was minimized, as shown
by a considerable decrease in tariff rates and
other non-tariff barriers. Since 1987 (the Sixth
National Economic and Social Development
Plan), the Thai Government has implemented
a full-scale, export-led industrialization policy
focusing more on technology intensive sectors.
This includes preferential measures through
taxation and the provision of low cost funds, as
well as the development of export processing
zones. The success of the policy was marked by
high economic growth rates from 1988 (13.29
percent) until the mid-1990s (9.24 percent).
The changes made contributed to increased
FDI much more than relying on the obsolete
import-substitution policy, and resulted in an
increase of Thailand’s inward FDI to GDP ratio
from 1.03 percent in the 1970s to 3.38 percent
in the 1990s (see also Section 4). Additionally,
Kohpaiboon (2003) found an empirical result of
the increase in FDI generating higher economic
growth in favour of an export promotion trade
regime in the period of 1970-1999. This is not
surprising as the nature of most FDI is export
oriented. For example, Japanese MNEs and firms
from the newly industrialized countries (NICs) like
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THAILAND