Foreign direct investment and wage spillover in Thailand

Foreign direct investment and wage spillover in Thailand PurposeThe purpose of this paper is to investigate whether foreign direct investment (FDI) benefitted Thai workers in domestic firms.Design/methodology/approachBy utilizing existing firm-level unbalanced panel data from the survey of the Office of Industrial Economics, Ministry of Industry, Thailand, between 2004 and 2013, this study applies dynamic panel data analysis, using the generalized method of moments proposed by Arellano and Bond (1991), to estimate the wage spillover from multinational enterprises (MNEs) to domestic firms in Thailand.FindingsThe study reveals that there is a positive wage spillover from the presence of MNEs in the industry to domestic firms. Furthermore, a wage spillover also exists in the low-technology industry, as well as in firms located in the Metropolitan and Northern regions. These findings confirmed that FDI offers a significant advantage in Thailand’s labor market.Originality/valueThis study is the empirical research to utilize existing firm-level unbalanced panel data in Thailand, applying dynamic panel data analysis to data from 2004 to 2013 to estimate the wage spillover from MNEs to domestic firms. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Social Economics Emerald Publishing

Foreign direct investment and wage spillover in Thailand

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0306-8293
DOI
10.1108/IJSE-01-2019-0055
Publisher site
See Article on Publisher Site

Abstract

PurposeThe purpose of this paper is to investigate whether foreign direct investment (FDI) benefitted Thai workers in domestic firms.Design/methodology/approachBy utilizing existing firm-level unbalanced panel data from the survey of the Office of Industrial Economics, Ministry of Industry, Thailand, between 2004 and 2013, this study applies dynamic panel data analysis, using the generalized method of moments proposed by Arellano and Bond (1991), to estimate the wage spillover from multinational enterprises (MNEs) to domestic firms in Thailand.FindingsThe study reveals that there is a positive wage spillover from the presence of MNEs in the industry to domestic firms. Furthermore, a wage spillover also exists in the low-technology industry, as well as in firms located in the Metropolitan and Northern regions. These findings confirmed that FDI offers a significant advantage in Thailand’s labor market.Originality/valueThis study is the empirical research to utilize existing firm-level unbalanced panel data in Thailand, applying dynamic panel data analysis to data from 2004 to 2013 to estimate the wage spillover from MNEs to domestic firms.

Journal

International Journal of Social EconomicsEmerald Publishing

Published: Oct 20, 2019

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