Weighing Up Thailand’s Benefits from Global Value Chains

10 Pages Posted: 13 Feb 2019

Date Written: December 21, 2018

Abstract

As an export-oriented economy, Thailand is often faced with the question whether international trade yields real and sustainable benefits to its citizens, over and beyond what is reflected in its GDP figures. This paper attempts to answer that question, using the trade in value added (TiVA) approach to overcome the shortcomings of trade statistics. From a global perspective, we find that, since the early 2000s, the centre of global value chains (GVCs) has shifted from the G3 to China. From 2005 onwards, China emerged as a key player in GVCs, effectively replacing Japan as one of the top three centres for GVCs and even surpassing the United States in this ranking by 2011. Nevertheless, in terms of value added flows, China remains on the receiving end, while the United States maintains its status as the dominant exporter of value added.

In Thailand’s case, we find that most manufacturing sectors lie towards the end of GVCs, and therefore export figures are likely to be large, even on a net basis. This is an ongoing concern for Thailand, given that the growing bilateral trade surplus continues to put upward pressure on the domestic currency. On the domestic front, we also document the diminishing benefit from backward participation, as labourreplacement automation penetrates into more sectors, not least in the electronics sector, where its impact is already apparent.

Full Publication: Globalisation and Deglobalisation

Keywords: International trade, global value chain, forward participation, backward participation, value added

JEL Classification: F100

Suggested Citation

Thailand, Bank of, Weighing Up Thailand’s Benefits from Global Value Chains (December 21, 2018). BIS Paper No. 100w, Available at SSRN: https://ssrn.com/abstract=3332120

Bank of Thailand (Contact Author)

Bank of Thailand

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Bangkhunprom, Bangkok 10200
United States

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