Political economy of direct foreign investment in Thailand: A case study of the automobile industry

This dissertation argues that the new wave dependency theory remains weak in its analysis of domestic politics and, thus, fails to theorize coherently about the way that domestic political forces shape public policy toward foreign firms. This study hypothesizes that the interplay and interaction among state, local, and foreign capital will be regulated by domestic as well as international factors. An alternative approach to the study of foreign investment is therefore to situate it more squarely within the domestic political and economic elements of the host country. Foreign investment is then viewed as a response to changing international politics, economic conditions, and comparative advantage. This approach will help to isolate the effects of national strategy from those of foreign investment per se and bring state and domestic politics back into the analysis.;The automobile industry is selected to test the new wave dependency and the suggested approach. More specifically, the politics of the Thai auto industry policies are analyzed under three regimes: authoritarian; democratic; and semi-democratic, beginning in 1962 when the Thai state promoted the auto industry. Two questions are answered: what factors determine state-TNC bargaining positions? and what variables affect local capital's behavior toward its foreign counterpart?;The findings confirm the thesis of this study that domestic as well as international political and economic factors are equally important to the study of foreign investment. The host's and TNCs' bargaining power are not a given but contingent on those factors. To understand the behavior of local capital toward its foreign counterparts, one must, first, develop a differentiated view of local capital. Then the relationship of local and foreign capital must be studied through the framework of domestic politics and economics and analyzed from a cost/benefit viewpoint.