Analysis of the Potential Determinants of Foreign Direct Investment: Empirical Evidence from Thailand

Abstract

This study analyze the main determinants of FDI in Thailand by applying the ordinary least square (OLS) technique to analyze the secondary time series data for a period of study which starts from the year 1988 to 2015 chosen basing on the data availability. The results obtained showed that the main determinants of FDI in Thailand are infrastructure development (lnINFRAR), Market size (lnRGDP), Corruption (lnCORUP) and GDP growth (lnGDPGR) which were all significant at 1 percent level and had the sign as expected basing on economic theories. These findings are in line with many other previous studies on the related subject. Therefore the Thai government is recommended to expand its market size, improve its infrastructure level, boost its economic growth and curb its level of corruption so that more FDI can enter in its economy. However it is also recommended that the results of this study should be interpreted with care until further studies are conducted with more variables and apply other reliable econometric techniques.

Keywords: Foreign direct investment (FDI), Ordinary Least Square (OLS), unit root, Thailand.