Foreign direct investment and emerging markets: A study of direct investment in Thailand with a focus on Australian investment

Abstract

Thailand has experienced significant economic improvement and has become one of the key economic centres of Southeast Asia. Foreign direct investment (FDI) is one of the most obvious contributors to this performance as it is generally agreed that it has contributed to Thailand's development significantly. The purpose of this study is to provide an introduction to and demonstrate the feasibility of FDI in Thailand. Early studies are discussed in an introduction leading to the motivation and research question of this study. The literature review related to Foreign Direct Investment provides the theoretical framework for the study. This plus the context of the study in Thailand as outlined lead to the methodology of this study, then consideration of the empirical results. And finally, to the implications of the research are highlighted. This thesis focuses on the determinants of FDI in Thailand applying the Autoregressive Distributed Lag (ARDL) bounds test to analyse quarterly data over two and a half decades during the period 1991-2015, to consider the major problems relating to the current endeavour to study "the influences on investors to investment in Thailand with reference to the effective factors for decision-making and with suggestions for development of FDI." In addition, the study also develops this finding to the top ten main countries, including Australia, that invest in Thailand. The primary findings show cost, production efficiency seekers, and political instability, affect the investors' decisions in investing in Thailand. However, GDP and trade openness did not affect in this study. For Australia, as the country of interest, trade openness and cost affect the Australian investors’ decisions in investing in Thailand. Importantly, Japan as the biggest investor to invest in Thailand had a similar result.