Industrial development and productivity change in Thailan

This thesis employs the economic theory of production to examine efficiency aspects of Thailand's industrialization. The analysis employs a two-pronged approach: combining quantitative analysis of extensive firm-level data with qualitative analysis of in-depth firm interviews.;Data from 1975 to 1983 were collected on 139 manufacturing firms spanning seven sectors: spinning, weaving and knitting; synthetic fiber; garments; electrical goods; paper and pulp; rubber products; and automotive parts.;Technical efficiency levels and total factor productivity (TFP) growth rates are calculated from sectoral translog production frontiers estimated with linear programming methods. Overall, TFP growth accounted for about 40 percent of the sample firms' output growth, while technical efficiency levels varied greatly between firms within each sector. In a decomposition of TFP growth, technological progress was primarily a sector-level phenomenon while changes in technical efficiency levels were firm-specific.;A regression analysis of technical efficiency and TFP growth revealed that simple descriptive variables such as firm size, export performance, foreign ownership, and age of firm did not perform well. In contrast, variables closely reflecting firm-level activities--factor usage ratios, profit rates, and inventory ratios--had more explanatory power. The need to move beyond mechanistic regression analysis was clearly demonstrated.;Accordingly, the thesis develops a stimulus-response framework to examine firm-level attempts to improve productivity. While many factors influenced Thai firms, competition was seen to be the key stimulus: competition from imports, in export markets, from domestic producers, and from within the production group.;On the response side, two features characterized successful efforts to improve productivity: careful assimilation and use of information and technology resources; and strong management backed up by well-trained, motivated employees.;The results indicate considerable scope for enhancing firm-level productivity by improving the use of existing technology; perhaps more than by encouraging adoption of new technologies.;Government is recommended: to reform policies distorting product or factor prices or inhibiting competition; to encourage subcontracting activities; to improve the quality of manpower training; to remove barriers to exports; to develop technology infrastructure; and to continue to encourage foreign involvement in the Thai economy.