Export and investment promotion in Thailand

The project focused on helping the Thai Board of Investment to mount a campaign to attract U.S. investors to Thai industries; it also established a mechanism for the private sector to undertake policy studies and dialogue, and promoted technical cooperation between U.S. and Thai agroindustry. This report describes the economic context of the project and the services it provided, and assesses the effectiveness of these services. The report reaches three main conclusions. (1) A stable macroeconomic policy regime, a realistic exchange rate, and an efficient manufacturing sector were critical to Thailand's outstanding export growth. This export growth led to the emergence of a dynamic and diverse market for export and investment services. (2) Links between buyers and export firms are critical to stimulating export growth. An export promotion agency that facilitates ties between buyers and exporters in a favorable policy environment can help overcome entry barriers facing firms new to exporting. The Thai Department of Export (DEP) complemented the private market for export promotion services because of its service oriented mission, outstanding staff, well-run overseas trade centers, and high quality services. (3) Government institutions are not effective providers of investment promotion if delivery of promotion services is not a primary institutional objective. The Thai Board of Investment's (BOI) technical and bureaucratic limitations, uncertain commitment to investment promotion, and focus on tax-based investment incentives have undermined its capacity to attract and generate investment. Contracting out promotion services to others did not lead to investment deals; promotion institutions must instead develop a clear vision of their promotional mandate and sufficient staff motivation to follow through.