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1999 one year after huge drop in domestic production and sales figure, Thai automotive industry was managed to maintain high growth rate with more than 100% in domestic production, 50% increase in domestic sales and export grow more than 80%. Recovery of Thai automotive industry was miracle.

Another important financial crisis that slowed down the growth of Thai automotive industry occurred in year 2008. This financial crisis is caused by liquidity shortfall in the United States banking system and leaded to severe global economics recession. Due to 2008 financial crisis, domestic production had shrank by more than 28% and sales dropped by 10%. Since the crisis lead to global economics recession, exports of automobiles have damaged a lot with number of vehicles decreased by more than 30%. Drop in domestic production, domestic sales and exports are shown in point C in figure 3.

In figure 3 we can notice that the industry rebound in year 2010 especially domestic production and export have grown more than 60%. Domestic sales also grow more than 45%. There must be some reasons that Thai automotive industry has recovered this fast. Financial crisis in 2008 was much bigger than 1997 Asia financial crisis and have effect globally not just Asia and ASEAN. One of the reasons behind this fast recovery of Thai automotive industry is the shifting of production base of Nissan, March. Nissan has announced that the company will shift their Nissan, March production base to Thailand. The reason behind shifting of production base is to minimize the production cost said by Nissan. The shift in production base means that Nissan, March is no longer produce in Japan and all the production will be done in Thailand. Thus increase in domestic production must be demand for Nissan, March in Japan. Sharp increase in export should also be result from shift in production base by Nissan, March since we need to export Nissan, March back to Japan. Producing own product outside the country and import back to the country is called “re-import”. Nissan uses “re-import” strategy to reduce their production cost.

Shifting of Nissan production base benefit more than just increase in domestic production and export of vehicles but also increase technological level to each plant associate with production of Nissan, March. This will increase productivity and hopefully the technological knowledge will be transfer to other assembly plant in Thailand and hopefully increase productivity of Thai automotive industry.

FDI plays an important role in production of vehicle in Thailand especially to technological level and capital level in the country

Figure 4: Flow of FDI to Automotive sector by Japan and USA

(Source: Board of Investment, BOI)

We can clearly see that Japan have invested more money in automotive sector than USA. This is not surprising figure since Japan has larger market share in automotive market in Thailand. With the largest market share that Japanese assemblers have, can FDI from Japan increase production of Thai automotive industry? The relationship between domestic production and Japanese FDI are shown in the figure below. To see weather flow of Japanese FDI has any positive effect on domestic production, flow of Japanese FDI is shown in horizontal axis (unit in thousands of millions of baht) and domestic production is shown in vertical axis. Method of calculating correl本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。