scholarly journals Foreign Direct Investment and Regional Trade Agreements: The Market Size Effect Revisited

2004 ◽  
Author(s):  
Florence Jaumotte
Keyword(s):  
Foreign Direct Investment ◽  
Size Effect ◽  
Direct Investment ◽  
Trade Agreements ◽  
Regional Trade Agreements ◽  
Market Size ◽  
Regional Trade ◽  
Market Size Effect

scholarly journals Main Determinants Influencing Inward and Outward Foreign Direct Investments in Thailand: Comparisons and Vital Implications

2021 ◽  
pp. 1-25
Author(s):  
Hsiang-Hsi Liu ◽  
Pitprapha Dejphanomporn
Keyword(s):  
Foreign Direct Investment ◽  
Panel Data ◽  
Data Model ◽  
Direct Investment ◽  
Bilateral Trade ◽  
Important Determinant ◽  
Trade Agreements ◽  
Panel Data Model ◽  
Market Size ◽  
Main Determinants

Abstract 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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