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e produced which are passenger cars and commercial cars. Types of vehicle production will be discussed later in this paper.

With the largest industry in the country, high volume of productions and exports and huge market shares of Japanese automotive brands in Thailand, I really think that Japanese FDI flow into Thai automotive industry has some degree of significant to Thai economy in the futures

There are 2 objectives and expected benefits from this senior research.

Firstly, to explore the situation of Japanese FDI in Thai automotive industry in present and trends in the future. As I have mention above Japanese automotive firms have significant impact to Thai automotive industry by massive flow of FDI which increase technology level and productivity as caves (1974) have suggested. Understanding the current situations and have an idea of how future of the industry will be like is important and this leads to second objectives and expected benefits of this paper. Thus second objectives and expected benefit is to suggest policies to enhance the competitiveness, productivity and increase in technology to Thai automotive industry. Basically suggest policies to improve Thai automotive industry to benefit the country.

Scope of my study will concentrate on analyzing domestic and international market and show what the future will be for these markets. International market will include ASEAN, CLMV and Japan. The reason to include international market is that Japanese automotive firms see Thailand as vehicle production hubs for south-east Asia. For domestic market, my analysis of the market will start from year 1961 to current year that is 2011. The reason to start analyzes in year 1961 is that Thailand start production of vehicles on that year with only 525 vehicles are produced (Thai Automotive Industry Association). However the main analysis of Thai automotive industry will start after year 1997 that is the year that Thailand faced with financial crisis. In addition, analyze of future period will end at year 2015 that’s the year that ASEAN Economics Community will be integrated. Analyze of future periods will apply in all domestic, Japan and international market. For both Japan and international market, analyze of automotive market will start from year 2001 to present time plus future which is until year 2015.

Chapter 2: Literature Review

There are large number of investigation and studies about FDI and automotive industry. This paper uses qualitative method to analyze Japanese FDI in Thai automotive industry.

The study conducted by Caves (1974) suggested that there are 2 productivity effect direct technology transfer and increase in competitive pressure. He concluded that FDI improve host country’s productivity through technology transfer. Transfer of technology happened when there is contact between local and foreign firms.

The study conducted by Wilbur et al (2003) (Foreign Investment and Productivity) said that inflow of FDI by Japanese firms increased competition pressure in automobile assemblers and automotive parts. Productivity is improved by competition pressure by Japanese firms.

The study conducted by Nickell (1996) concluded that competition tends to increase total factor productivity growth.

Most of the study concluded that transfer of technology and competitive pressur