Economic Growth and Technology Transfer to Thailand

  • Kitja Topaiboul

Student thesis: Doctoral ThesisDoctor of Philosophy


This thesis explores the role of trade and FDI as channels of technology transfer, and empirically assesses their relative contribution to economic growth in Thailand. Traditional neoclassical theories of growth view openness to trade and FDI as beneficial to the economy through capital accumulation and reallocation of resources, while new endogenous growth theories regard FDI and trade as vehicles for international technology transfer by increasing the variety of new inputs in the country to compete with those produced by domestic firms. In this context, investment in human capital through education is seen as important in facilitating growth through the process of technology adoption. It is argued that developing countries need to have attained a certain threshold of human capital development to benefit through spillovers from trade and FDI.

Against this theoretical background, this thesis empirically investigates the significance of the interaction of human capital, FDI and trade openness on the productivity growth of the Thai economy over the period 1972-2000. First, using growth accounting, we investigate the sources of Thai growth by incorporating human capital and assessing its impact on total factor productivity. We find that total factor productivity growth is still positive and significant especially in the pre-crisis period, 1972-1996, although attribute a major part of output growth during this period to factor accumulation. Second, we estimate by regression an error-correction model to examine the short run and long run effects of trade and FDI on productivity growth, using quarterly data for Thailand over the period 1973:2-2000:4. We find that, after controlling for domestic investment, the effect of trade is significant while that of FDI is not, although allowing for the joint interaction of FDI and human capital reveals a positive FDI effect above a minimum threshold of human capital, estimated to be around 4.5 years of secondary schooling attainment. Finally, we investigate a number of hypotheses, including export-led growth and FDI-led growth, as well as the reverse linkages from growth to FDI and exports, using multivariate Granger causality tests conducted within a vector error-correction framework. We find that support for FDI-led growth is not as strong as export-led growth for Thailand. We also find that domestic growth in Thailand has influenced domestic investment and trade openness, but support for growth-led FDI is also weak. Allowing for human capital interaction does not much difference to the role of FDI, although we argue that this finding does not undermine the importance of Thailand’s policy towards education and the accumulation of human capital.
Date of Award19 Oct 2003
Original languageEnglish
Awarding Institution
  • Coventry University
SupervisorSailesh Tanna (Supervisor), Debapriya Ghosh (Supervisor) & David Noon (Supervisor)


  • Economic Growth
  • Technology transfer
  • Thailand
  • Trade Openness
  • FDI
  • Growth Accounting
  • VECM

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