The Empirical Analysis Of Push-Pull Factors Of China's Direct Investment In Thailand

This research aims to study the factors that contribute to China's outward direct investment in Thailand.The factor can be divided into push and pull factors by applying both qualitative and quantitative methods.Qualitative studies include the analysis of China's policies that encourage direct investment in foreign countries and also Thailand's investment policies that help attract direct investment in Thailand.Furthermore,this study emphasizes the comparative analysis of tax and non-tax investment incentives in ASEAN countries in order to study the competitiveness of Thailand.The quantitative analysis,studies factors that pushed and pulled China's outward direct investment in Thailand.We applied the VAR model and using annual data range of 36 years,starting from 1982 to 2017,for push factors analysis and using quarterly data range of 51 quarters,starting from 2005 to 2017 for pull factors analysis.The IRF analysis has been used along with the VAR analysis to find the reaction of the response to a variance of the variables.We found that China's outward direct investment goal is focusing on investment in target industries which the government would like to support,such as industries that utilize modern or high technology.The reduction of procedures,time for investment permission and easing financial policies are implemented in order to facilitate Chinese investors.In part of Thailand,the focus is to promote valuable investment in the country and give investment benefits according to the type of business.Moreover,the result of comparative tax and non-tax investment incentives in ASEAN countries found that Thailand is a strong competitor among ASEAN members.However,Thailand's investment tax benefits still ranked second after Malaysia.In terms of readiness,it is also a subordinate to Singapore which having more structural readiness and a full range of investment support.In addition,the result of VAR analysis shows that the factors pushing China's outward direct investment are the gross domestic product(GDP),staff's average wage and trade openness.When the shock of China's gross domestic product,trade openness and exchange rate happen,China's outward direct investment will increase before entering to the equilibrium.While for China's average wage of staff,the shock will reduce an investment before increasing and entering to equilibrium.We also found that Thailand's gross domestic product and Thailand's export value have significant signs to China's foreign investment in Thailand.Besides,when the shock of China's foreign direct investment in Thailand,Thailand's gross domestic product,and Thailand's average wage of labor happens,the movement of China's direct investment in Thailand will become slightly volatile and decrease at first,before adjusting to the equilibrium.On the other hand,the shock of Thailand's export value will gradually increase China's direct investment in Thailand at first before falling in the latter period and entering to the equilibrium at the end.