INFORMATION TO U SERS

This manuscript has been reproduced from the microfilm master. UMI films
the text directly from the original or copy submitted. Thus, some thesis and
dissertation copies are in typewriter face, while others may be from any type of
computer printer.
The quality of this reproduction is dependent upon the quality of the
copy submitted. Broken or indistinct print, colored or poor quality illustrations
and photographs, print bleedthrough, substandard margins, and improper

EV
IE
W

alignment can adversely affect reproduction.

In the unlikely event that the author did not send UMI a complete manuscript
and there are missing pages, these will be noted.

Also, if unauthorized

copyright material had to be removed, a note will indicate the deletion.

Oversize materials (e.g., maps, drawings, charts) are reproduced by
sectioning the original, beginning at the upper left-hand comer and continuing

PR

from left to right in equal sections with small overlaps.

ProQuest Information and Learning

300 North Zeeb Road, Ann Arbor, Ml 48106-1346 USA
800-521-0600

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

W
IE
PR
EV
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

A National Innovation System Model

Industrial Development in Thailand

PR

EV
IE
W

A Thesis
Presented to the Faculty
Of
The Fletcher School of Law and Diplomacy

By

PRATANA VONGPIVAT

In Partial Fulfillment o f the Requirements for the

Degree of Doctor o f Philosophy
May 2002

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

PR

EV
IE

UMI Number: 3060313

UMI*

UMI Microform 3060313

Copyright 2002 by ProQuest Information and Learning Company.
All rights reserved. This microform edition is protected against
unauthorized copying under Title 17, United States Code.

ProQuest Information and Learning Company

300 North Zeeb Road
P.O. Box 1346
Ann Arbor, Ml 48106-1346

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

PRATANA VONGPIVAT

435 Washington St. Apt. 306

Somerville, MA 02143
(617) 547-2055

e-mail: pvongpivat@fletcher.alumlink.com

45 Ramkamhang 14 Rd.
Bangkok 10240, Thailand
(662) 718-6173

Education
THE FLETCH ER SCHOOL OF LAW AND DIPLOMACY, TUFTS MEDFORD, MA
Ph.D. in Law and Diplomacy Degree, May 2002
Field o f study: Technology Policy and Management and International Business Relations
Co-president o f East Asian Club

1996-1998

THE FLETCH ER SCHOOL OF LAW AND DIPLOMACY, TUFTS MEDFORD, MA

Master o f Arts in Law and Diplomacy degree
Field o f study: International Communications and Development Economics
Additional credited coursework at John F. Kennedy School o f Government and
Harvard Business School, Harvard University
Active member o f International Communication Club

1991-1995

CHULALONGKORN UNIVERSITY
BANGKOK, THAILAND
Bachelor o f Arts in Political Science
First Class Honors with Gold Medal, the first Rank o f 264
Major in International relations, East and Southeast Asian studies
Awarded King Bhumipol Scholarship, the highest academic achievement

EV
IE

Experience

1998-2002

1995-1996

PR

Summer 1998 MINISTRY O F SCIENCE

BANGKOK, THAILAND
Summer Consultant
Joined the business consulting department in identifying and solving technology
development problems among small and medium enterprises fSME) o f Thailand
Assisted online Internet database and homepage incubator unaer the new joint-project
o f the Canada Thailand Technology Network (CTTN) to match demand and supply
for technology within Thai industries and the world
PHATRA TH A N A M T FINANCE AND SECURITIES PLC BANGKOK, THAILAND
Political Analyst
Monitored international and local politics as well as forecasted their subsequent
effects on the stock market o f Thailand for morning presentation to investors
Evaluated and recommended investors decisions on stocks listed on the Stock
Exchange o f Thailand in sector o f commerce and building materials
Published investment recommendations on Thai stock market for distributions to
customers

Personal
Citizenship o f Thailand, J-l visa
Lived and traveled extensively in many parts of United Kingdom and North America
Enjoy traveling and foreign cultures, horseback riding, golfing, scuba diving, and Yoga

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

A National Innovation System Model:

Industrial Development in Thailand

Abstract

This dissertation addresses a gap in prior research, which does not fully specify

the key processes essential to innovation in developing countries and long-term industrial
growth. This research is an extension o f the national innovation system concept, which is

IE

employed to identify and compare the keys to industrial technology development in

developing countries over time. The dissertation develops two unique research findings

PR
EV

to fill gaps in academic and policy literature. First, a structured framework o f analysis
for the National Innovation System (NIS) model is developed. The NIS model specifies
the flow process and interactions between components in the national innovation system,
building upon the theoretical foundations identified in previous research. Second,
empirical evidence o f the processes and problems o f innovation o f the Thai automobile,
textile, and electronics industry is analyzed to validate or challenge the assumptions
implicit in the NIS model. This dissertation employs pattern analysis methodology, using
the NIS model and multiple case studies as tools to test the propositions that national
idiosyncrasy matters in industrial innovation and that within a national concept two major
variables in the macro environment, government policy and international conditions, are
the biggest contributors to technology development. The hypotheses prove correct for
the case studies o f specific Thai industries. Positive impacts from a favorable local

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

content requirement policy and liberalization pressure from macro factors drove positive
interactions o f the national variables in industry structure and suppliers network that
resulted in better technology outcomes in the Thai auto industry. Unbalanced and
inconsistent policies triggered a chain o f negative impacts on system linkages and a
subsequent dearth of innovative supply, which turned the liberalization trend into a threat
to the Thai textile and electronics industry. The detailed description o f the three
industries innovation processes and component interactions provides a foundation for
future policy remedy and prescriptions. This dissertation shows that industrial innovation

results from macro variables, specifically domestic government policy and international
conditions, which obviously affect the microenvironment, shape competitive conditions,

EV
IE

and eventually drive the demand that triggers technology supply. The interactive
influences o f the system components on flow o f innovation processes validate the

PR

importance o f national characteristics for Thai technology development.

A Thesis by
Pratana Vongpivat
Presented to

Faculty o f the Fletcher School o f Law and Diplomacy:

Lee McKnight, Associate Professor o f International Communication

William Moomaw, Professor o f International Environmental Policy
Paul Vaaler, Associate Professor o f International Business
March 2002

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

Input Box -U se rs of Econom y

F eedback loop
New ingredients,
pressure and incentives,
structure and competition
for the enviomment

Macro (mimmo

Demand
II

ir
II

PR

Technology
stocks

EV

Supply
||

IE

Technology
Behaviors

Technology
choices and
behaviors

O utput Box - S u p p liT of E conom y

P ratan a Vongpivat
May 2000

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

For my parents and my brother..

IE

With the deepest gratitude and the sincerest appreciation

PR

EV

for their never-ending support

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

Acknowledgements

This dissertation would not have been completed without the intellectual
guidance, constructive criticism, and encouragement from my family, my three advisors:
Lee McKnight, Bill Moomaw, and Paul Vaaler, colleagues from the National Science and
Technology Development Agency o f Thailand, especially Dr. Chachanat Theptaranonth,

Ms. Ake-anong Jangbua, Dr. Chatri Sripaipan, and Dr. Yongyuth Yuthavong, and all my

PR

EV
IE

friends, to whom I owe a great debt o f gratitude for this success.

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

Vongpivat

Table of Contents

Chapter 1: Introduction.................................................................................. 1
OVERVIEW ...........................................................................................................................2
STRUCTURE OF THE THESIS........................................................................................ 8

Chapter 2: Thailands Eroding Comparative Advantage: In search for

New Assets....................................................................................................... 11

IE

BACKGROUND.................................................................................................................. 15
2.1 SHIFT IN PRODUCTION STRUCTURE................................................................ 18

2.2

F rom pr im a r y t o l abor - in ten siv e pr o d u c t io n a n d e x p o r t ...................... 21

F r o m la b o r - in ten siv e t o h ig h er - t ec h m a n u f a c t u r in g .............................. 27

PR
EV

2.1.1
2.1.2

CHANGES IN COMPARATIVE ADVANTAGES: SIGNALS FOR

UPGRADING.......................................................................................................................29
2.2.1
P r essu r es t o s h if t a w a y fro m pr im a r y p r o d u c t io n .....................................29
2.2.2
P r e ssu r e s t o sh ift a w a y fro m l a b o r - in t e n siv e p r o d u c t io n ....................34
Internal Factors o f Success and Failure....................................................................... 35
External Factors o f Success and Failure...................................................................... 37
In Summary................................................................................................................... 41
2.3

NEW ADVANTAGE FOR NEXT STRUCTURAL TRANSFORMATION. 42

CONCLUSION.................................................................................................................... 54

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

Vongpivat

ii

Chapter 3: Literature Review..................................................................57

INTRODUCTION............................................................................................................... 58
3.1

TECHNOLOGY CAPABILITY CONCEPTS.....................................................59

3.2

SUCCESS AND FAILURE OF FIRMS AND INDUSTRIES............................65

3.2.1
In d u st r ia l e c o n o m ic s a n d c o r p o r a t e v i e w ......................................................65
3.2.2
S tr a teg ic m a n a g em en t a n d d y n a m ic ex pla n a tio n s o f f ir m s
PERFORMANCE..................................................................................................................................... 66
3.2.3
S y ste m an d h o listic v ie w ...........................................................................................69

3.3

EXISTENCE OF THE NATIONAL INNOVATION SYSTEM....................... 74

3.3.1
3.3.2

L ev els o f a n a l y s is ........................................................................................................ 78
In n o v a tio n pr o c e s s : d e m a n d a n d s u p p l y ...........................................................83

EXISTING INNOVATION M ODELS.................................................................. 88

3.5

APPLICATIONS TO DEVELOPING COUNTRIES AND THAILAND

3.4

91

IE

CONCLUSION.................................................................................................................... 99

EV

Chapter 4: Research Design........................................................................100

RESEARCH OBJECTIVES.................................................................................. 102

4.2

HYPOTHESES........................................................................................................ 105

4.3

EXPLORATORY SURVEY.................................................................................. 106

4.4

METHODOLOGY.................................................................................................. 108

4.4.1
4.4.2
4.4.3

PR

4.1

T h e m o d e l fr a m e w o r k o f A n a l y s is .....................................................................114
P ar a m eter s a n d d a t a so u r c e s o f t h e s t u d y ................................................... 123
C o m pl et io n o f t h e M o d e l ........................................................................................ 132

4.5

TERM S AND SCOPE.............................................................................................133

4.6

UNIT OF ANALYSIS..............................................................................................135

4.7

EXPECTED CONTRIBUTIONS..........................................................................137

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

Vongpivat

iii

Chapter 5: Automobile Industry...........................................................139

P R O L O G U E ......................................................................................................................................... 142
5.1

M A C R O E N V IR O N M E N T ...............................................................................................144

5.2

5.1.1
M a c r o ec o n o m ic c o n d it io n s ................................................................................. 145
5.1.2
T rad e , in v estm en t , a n d in d u st r ia l p o l ic y ..................................................149
Investm ent P ro m o tio n ................................................................................................................ 150
Local C ontent R eq u irem en t....................................................................................................151
M odel L im itatio n .........................................................................................................................152
Factory E xpansion C o n tro l.......................................................................................................152
Im port D uty and B a n ..................................................................................................................153
Tariffs o n O th er R aw M a te ria ls.............................................................................................. 155
Export P ro m o tio n.........................................................................................................................156
T echnology D ev elo p m en t......................................................................................................... 156
Environm ental P ro te c tio n ......................................................................................................... 157
5 .1.3
In t e r n a t io n a l C o n d it io n s ...................................................................................... 159
M IC R O E N V IR O N M E N T ................................................................................................ 162

5.3

IN P U T /D E M A N D F L O W S ............................................................................................... 174

5.3.1
5.3.2
5.4

F a c t o r m a r k e t c o n d it io n s o f T h a il a n d ........................................................... 178
C a p it a l m a r k e t c o n d it io n s .................................................................................... 185
N e tw o r k o f su pplie r s a n d su ppo r tin g in d u s t r ie s ........................................187

C O M P O N E N T S A N A L Y S IS ............................................................................................190

5.5.1
5.5.2
5.5.3
5.6

D em a n d v a r ia b l e s ...................................................................................................... 174
C o m petitiv e c o n d it io n s fo r t ec h n o lo g y d e v e l o pm e n t .......................... 176

N E T W O R K E X T E R N A L IT IE S ......................................................................................178

5.4.1
5.4.2
5.4.3
5.5

PR
EV

IE

5 .2 .1
T ypes a n d C h a r a c t er istic s o f t e c h n o l o g y ....................................................162
5.2.2
M a r k e t a n d in d u st r y s t r u c t u r e ......................................................................... 165
A utom obile M a rk e t..................................................................................................................... 165
P arts and C om ponents M a rk e t.................................................................................................170

P u b l ic .................................................................................................................................191
P r iv a t e .............................................................................................................................. 195
A c a d em ic a r e n a ........................................................................................................... 198

O U T P U T /S U P P L Y F L O W ................................................................................................ 199

5.6.1
5.6.2
5.6.3

P r o x y in d ex es fo r t e c h n o l o g y c a pa b il ity d e v e l o p m e n t ........................ 199

T e c h n o l o g y pe r fo r m a n c e o u t c o m e ................................................................... 207
E c o n o m ic st a t u s fo r t e c h n o l o g y p e r f o r m a n c e .......................................... 215

R E T R O S P E C T .................................................................................................................................... 219

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

Vongpivat

iv

Chapter 6: Textile Industry.................................................................. 222

B A C K G R O U N D ................................................................................................................................ 225
6.1

M A C R O E N V IR O N M E N T ..............................................................................................229

6.2

EV
IE
W

6.1.1
M a c r o e c o n o m ic c o n d it io n s
................................................................ 229
6 .1.2
T r a d e , in v estm en t , a n d in d u str ia l p o l ic ie s ..................................................230
T rade P ro tectio n ism ................................................................................................................... 2 3 1
E xport A llocation S y ste m ........................................................................................................ 233
Investm ent an d E x p o rt P ro m o tio n ........................................................................................234
C ap acity E xpansion C o n tro l.................................................................................................. 235
E nvironm ental P ro tectio n and T echnology D ev elo p m en t.............................................236
6.1.3
In t e r n a t io n a l c o n d it io n s ......................................................................................237
N A F T A : N o rth A m erican Free T rade A rea ....................................................................... 238
M FA : M ulti-F ib er A rran g em en t............................................................................................ 239
G A T T an d A T C : A greem ent o n T extile and C lo th in g .................................................... 242
A FT A : A S E A N F ree T rade A r e a .......................................................................................... 244
M IC R O E N V IR O N M E N T ................................................................................................245

6.2.1
T y pes a n d c h a r a c t er istic s o f t e c h n o l o g y .....................................................246
K ey T ech n o lo g y in T ex tile In d u stry ....................................................................................246
F ib er M ak in g ............................................................................................................................... 248
S p in n in g ....................................................................................................................................... 248
W e a v in g ....................................................................................................................................... 249
F in is h in g ......................................................................................................................................249
G arm ent and C lo th in g ..............................................................................................................250
6.2.2
M a r k e t a n d in d u str y st r u c t u r e ......................................................................... 252
IN P U T /D E M A N D F L O W S .............................................................................................. 255

6.3.1
6.3.2
6.4

...............................................................................259

F a c t o r m a r k e t c o n d it io n s ..................................................................................... 259
C a p it a l m a r k e t c o n d it io n s .................................................................................... 265
N e t w o r k o f su pplie r s a n d su ppo r tin g in d u s t r ie s ........................................266

C O M P O N E N T S A N A L Y S IS ...................................

6.5.1
6.5.2
6.5.3
6.6

D e m a n d v a r ia b l e s ......................................................................................................255
C o m pe t it iv e c o n d it io n s fo r tec h n o l o g y d e v e l o p m e n t ........................... 257

N E T W O R K E X T E R N A L IT IE S

6.4.1
6.4.2
6.4.3
6.5

PR

6.3

267

P u b l ic ................................................................................................................................ 268
P r iv a t e .............................................................................................................................. 269
A c a d e m ia ......................................................................................................................... 270

O U T P U T /S U P P L Y F L O W _______________________________________________ 272

6.6.1
6.6.2

P r o x y in d e x e s fo r t e c h n o l o g y c a p a b il it y ..................................................... 272
E c o n o m ic in d ic a to r s fo r t ec h n o l o g y p e r f o r m a n c e ..................................283

C O N C L U S IO N ................................................................................................................................. 287

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

Vongpivat v

Chapter 7: Electronics Industry........................................................... 289

BACKGROUND................................................................................................................294
MACRO ENVIRONMENT..................................................................................295

7.1.1
7.1.2
7.1.3

MICRO ENVIRONMENT....................................................................................303

7 .2 .1
7.2.2

INPUT/DEMAND FLOW S................................................................................. 306

7.3.1
7.3.2

NETWORK EXTERNALITIES.......................................................................... 310

7 .4 .1
7.4.2

7.5

F a c t o r m a r k e t c o n d it io n s ....................................................................................301
N etw o r k o f su pplie r s a n d su ppo r t in g in d u s t r ie s .......................................317

COMPONENTS ANALYSIS................................................................................321

7.5.1
7.5.2
7.5.3

7.6

D em a n d v a r ia b l e s .....................................................................................................306
C o m pe t it iv e c o n d it io n s fo r t e c h n o l o g y d e v e l o p m e n t ....................... 309

7.3

7.4

T y pes a n d c h a r a c t e r ist ic s o f t e c h n o l o g y ....................................................303

M a r k et a n d in d u st r y st r u c t u r e ........................................................................ 304

EV
IE

7.2

M a c r o e c o n o m ic c o n d it io n s ................................................................................. 295
T r a d e , in v estm en t , a n d in d u st r ia l p o l ic ie s ................................................. 297
In t e r n a t io n a l c o n d it io n s .....................................................................................300

P u b l ic ............................................................................................................................... 321
P r iv a t e .............................................................................................................................323
A c a d e m ia ........................................................................................................................ 326

OUTPUT/SUPPLY FLOW ................................................................................... 327

7.6.1
7.6.2

P r o x y in d ex es fo r t ec h n o l o g y c a p a b il it y .................................................... 327
E c o n o m ic in d ic a t o r s fo r tec h n o l o g y pe r f o r m a n c e .................................337

PR

7.1

CONCLUSION.................................................................................................................. 345

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

Vongpivat vi

Chapter 8: Industry Sectors in the NIS:Similarities and Differences.349

INTRODUCTION............................................................................................................. 351
MACRO ENVIRONM ENT.................................................................................358

8.1.1
8.1.2
8.1.3

MICRO ENVIRONM ENT

8.2.1
8.2.2

8.3

N a t u r e o f t e c h n o l o g y ............................................................................................ 364
M a r k e t a n d in d u st r y st r u c t u r e ........................................................................ 365

INPUT/DEMAND FL O W S................................................................................. 366

8 .3 .1
8.3.2

8.4

..............................................................................364

M a r k e t D e m a n d v a r ia b l e s ....................................................................................366
C o m pe t it iv e c o n d it io n s fo r tec h n o l o g y d e v e l o p m e n t .......................... 367

8.2

M a c r o c o n d it io n s a n d p o l ic y ..............................................................................358
T r a d e , in v e s t m e n t , a n d t ec h n o l o g y po l ic y ................................................. 360
In t e r n a t io n a l c o n d it io n s .....................................................................................362

NETWORK EXTERNALITIES.........................................................................368

8 .4 .1
8.4.2

F a c to r s M a r k e t ......................................................................................................... 368
S u p pl ie r s n e t w o r k a n d su ppo r tin g in d u st r y .............................................. 369

IE

8.1

8.5

COMPONENTS ANALYSIS............................................................................... 371

8.6

OUTPUT/SUPPLY FL O W _______________________

8.7

PR
EV

8 .6 .1
8.6.2

372

P r o x y in d ex es fo r t e c h n o l o g y c a p a b il it y .................................................... 372
E c o n o m ic st a t u s fo r t e c h n o l o g y pe r f o r m a n c e ......................................... 375

SUMMARY O F THE FINDINGS AND SURVEY RESU LTS___________ 376

CONCLUSION AND POLICY RECOMMENDATIONS......................................... 384

Chapter 9: Conclusion.................................................................................389
Bibliography......................

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

401

Vongpivat

vii

List of Tables

Chapter 2: Thailands Eroding Comparative Advantage: In search for New

Assets

PR

EV
IE
W

T a b le 1
P e r c e n t a g e s o f ex po r ts by e c o n o m ic s e c t o r ............................................... 23
T a b le 2
V a l u e o f P rin c ipa l E x p o r t .....................................................................................23
T a b le 3
P e r c e n t a g e o f im ports b y ec o n o m ic c l a ss ific a t io n in T h a il a n d
24
T able 4
C o n t r ib u t io n o f a g r ic u l tu r e a n d e m pl o y m e n t sh a r e in GDP ..............25
T a b le 5
S h a r e o f e m pl o y m e n t in a g r ic u l tu r e a n d m a n u f a c t u r in g ....................26
T a b le 6
T h a il a n d s str u c tu r e o f e x po r t s ....................................................................... 28
T a b le 7
E x p o r t sh a r e by pr o d u c tio n c a t e g o r ie s ......................................................... 29
T able 8
M a r k e t fo r eig n ex c h a n g e r a t e s (B a h t t o U S $ ).......................................... 32
T a b l e 10
N u m b e r o f liv e b ir t h s .............................................................................................. 37
T a b l e 11
M a n u fa c t u r in g w a g e a n d pr o d u c t iv it y I n d e x ............................................37
T a b l e 12
In t e r n a t io n a l C o m pa r iso n s o f so u r c e s o f GERD .......................................46
T a b l e 13
In t e r n a t io n a l c o m pa r iso n s o f h u m a n c a p it a l in d e x e s ............................48
T a b l e 14
In t e r n a t io n a l c o m pa r iso n s o f n a t io n a l pa t e n t a p p l ic a t io n s
51
T a b l e 15
In t e r n a t io n a l C o m pa r iso n s o f t e c h n o l o g y b a l a n c e o f pa y m en ts . 52
T a b l e 16
T o t a l F a c t o r P r o d u c tiv ity : C o n tr ib u tio n s o f g r o w t h in T haila nd
..............................................................................................................................................................54
T a b l e 17
C o m pe t it iv e n e ss o f T h a ila n d fr o m 1 9 9 2 -1 9 9 9 ..............................................56

Chapter 4: Research Design

T a b l e 18
T a b l e 19
T a b l e 20
T a b l e 21
T a b l e 22
T a b l e 23
T a b l e 23
T a b l e 25
T a b l e 26

T e c h n o l o g y c a pa b il ity e q u a t io n ...................................................................... 119

D e t e r m in a n t s o f tec h n o l o g y c a p a b il it y .....................................................120
V a r ia b l e s in m a c r o a n d m ic r o e n v ir o n m e n t ...............................................124
In p u t / d e m a n d sid e o f t e c h n o l o g y ...................................................................... 125
N e t w o r k e x ter n a lities o f t h e sy st em in f r a s t r u c t u r e .........................127
C o m po n e n t s a n a l y s is ............................................................................................... 128
O u t p u t f l o w : t ec h n o l o g y C a p a b il it y s u p p l y ..............................................131
1996 E c o n o m ic in d ica to rs o f 13 t a r g e t e d in d u s t r ie s .............................. 136
M a n u fa c t u r in g pr o d u c tio n a n d % c h a n g e s fr o m pr e v io u s y e a r .... 137

with permission of the copyright owner. Further reproduction prohibited without permission.

Vongpivat

viii

Chapter 5: Automobile Industry

EV
IE

T a b l e 27 V eh icle T a x a t io n fr o m 1962 t o 2000 ( per c en t ) ...............................................155

T a b l e 28 Im po r t ta r iff r a tes o f b a sic r a w m a teria ls fo r a u to pa r ts pr o d u c tio n
......................................................................................................................................................... 156
T a b l e 29 1996 ASEAN A u to P a r t s N e t w o r k s ....................................................................... 162
T a b l e 30 E x istin g A u t o m o b il e a sse m b l er s in T h a il a n d .................................................167
T a b l e 31 S ale C o n c en tr a tio n o f t h e T o p M a n u f a c t u r e r s ...........................................171
T a b l e 32 N ew r e g ist r a t io n s o f A s ia s c a r m a r k e t (T h o u sa n d u n it s ) ..................... 177
T a b l e 33 R& D pe r so n n el o f pu b lic a g en c ies c l a ssifie d b y sec to r s in 1 9 9 6 ........ 179
T a b l e 34 R&D P e r so n n e l in t h e pr iv a t e s e c t o r in 1995................................................ 180
T a b l e 35 E d u c a tio n a l c o m po sit io n o f R & D per so n n el in pu blic c o r p o r a t io n in
1996..................................................................................................................................................181
T a b le 36 S upply o f h ig h e r e d u c a t io n in th e a u to m o b il e in d u s t r y .......................... 182
T a b l e 37 P rojectio n o f D e m a n d a n d S u pply fo r L a b o r in A uto a n d M eta l
In d u s t r y ....................................................................................................................................... 185
T a b l e 38 C o s t o f t e c h n o l o g y a c q u isit io n fr o m a b r o a d ............................................... 202
T a b le 39 R& D ex pe n d itu r e o f t h e a u to m o b il e ind ustry in 1 9 9 6 ...............................202
T a b l e 40 N u m b er o f T r a d e m a r k a ppl ic a t io n s c l a ssifie d by s e c t o r s ...................... 203
T a b l e 42 t e c h n o l o g y a s s e s s m e n t ........................................................................................... 211
T a b le 43 R e la tiv e a u to pa r ts pr o d u c t io n c a p a b il it y .................................................... 212
T a b l e 44 C o st c o m pa r iso n o f a u t o m o b il e a n d o t h e r su ppo r t in g in d u s t r ie s ...... 213
T a b l e 45 CM S a n a ly sis o f t h e T hai a u t o m o b il e in d u st r y ............................................215
T a b l e 46 R C A In d e x in A u t o m o b il e In d u st r y in 1 9 9 3 ..................................................... 219
T a b le 41 C o u n t r y r a n k fo r a t t r a c t iv e in v e s t m e n t ........................................................220

PR

Chapter 6: Textile Industry

T a b l e 47 M in im u m w a g e in T h a il a n d .......................................................................................229
T a b l e 48 T a r iff st r u c t u r e o f t h e T h a i tex til e in d u s t r y .............................................. 231
T a b l e 49 C om pa r a tiv e ra te o f pr o te c t io n a m o n g each pr o d u c tio n o f th e T hai
t e x t il e ........................................................................................................................................... 232
T a b l e 50 R e la tiv e r a w m a t e r ia l im p o r t t a r iffs in 1996................................................ 233
T a b l e 51 G ^ T T sc h ed u l e f o r MFA l ib e r a l iz a t io n ............................................................ 243
T a b l e 52 M in im u m e ffic ie n t p l a n t s i z e ...................................................................................252
T a b l e 53 R e la tiv e c o s t o f w a t e r u sa g e in t h e tex til e in d u st r y in 1994 .............. 261
T a b l e 54 S kill c o m po sit io n in T h a i t e x t il e in d u st r y ...................................................... 262
T a b l e 55 R ese a r c h pe r s o n n e l c o m pa r iso n in va r io u s s e c t o r s ................................... 262
T a b l e 56 T ha i t e x t il e l a b o r c h a r a c t e r is t ic s .....................................................................263
T a b l e 57 C o m pa r a tiv e w a g e r a t e in 1994 ............................................................................ 264
T a b l e 58 R e c o g n itio n o f pu b l ic a g e n c ie s , pr iv a te asso c ia tio n , a n d a c a d e m ic
INSTITUTES..................................................................................................................................... 271
T a b l e 59 C o m pa r a tiv e R&D e x pe n d it u r e in v a r io u s s e c t o r s ......................................273
T a b l e 60 T r a d em a r k a p pl ic a t io n s in t e x t il e , tex til e pr o d u c ts , a n d fo o t g e a r 274

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

Vongpivat

ix

T a ble 61 R e la tiv e c o s t o f t e c h n o l o g y acq u isitio n fr o m a b r o a d in t h e T hai

INDUSTRIES.....................................................................................................................................274
T able 62 S pin n in g m a c h in e r y c o m pa r iso n s in 1997........................................................... 276
T able 63 W ea v in g m a c h in e r y c o m pa r iso n in 1997.............................................................276
T able 6 4 R el a t iv e c o s t fa c to r s in rin g spin n in g pr o d u c t io n in 1 9 9 3 ......................281
T able 65 C o n s t a n t M a r k e t S h a r e ( CMS) in d e x e s .............................................................282
T able 66 I n v e s t m e n t a t t r a c t iv e n e s s ran ked in 1 9 9 3 ..................................................... 284
T able 67 C o m pa r a t iv e m a r k e t sh a r e am ong e x po r tin g c o u n t r ie s in m a jor
MARKETS........................................................................................................................................ 285
T able 68 S t a t ist ic s o f T ha i t e x t il e ex po r ts a n d im po r t s fr o m 1990 t o 1999...... 286

Chapter 7: Electronics Industry

T a r iff r a t e s a f t e r 1 9 9 7 ..............................................................................................299
S ize o f fir m s in th e T h a i elec tr o n ic s se c t o r .................................................... 305
R e l a tiv e m a r k e t siz e o f elec tr o n ic s in d u st r y fr o m 1993-2000............. 309
H u m a n r e so u r c e s o f t h e e lec tr ic a l c o m po n e n t s in d u s t r y .....................312
D o m e st ic sa l e s a n d e x po r t ratio a m o n g e l e c t r ic a l c o m po n e n t firm s
318
T able 74 E n t r a n t s in t o th e T h a i e lec tr o n ics in d u st r y fr o m 1970 t o 1990 s ...... 325
T a b l e 75 C o m p a r a tiv e R&D e x p e n d i t u r e in 19 9 6............................................................... 328
T able 76 C o m pa r a t iv e c o s t o f t ec h n o l o g y a c q u isit io n fr o m a b r o a d .................. 329
T able 77 T e c h n o lo g y t r a n s f e r a n d a b so r ptio n in t h e e l e c t r o n ic s se c t o r o f
T h a il a n d ....................................................................................................................................... 332
T a ble 78 C a p a b il it y a s s e s s m e n t in t h e T hai e l e c t r o n ic s f ir m s .................................335
T able 79 T e c h n ic a l pe r f o r m a n c e o f IC pa c k a g in g fir m s in T h a il a n d ................... 336
T a ble 80 R e l a t iv e R C A in d ex o f e lec tr o n ics pr o d u c t s .................................................339
T a ble 81 T rad e s t a t ist ic s in t h e T h a i elec tr o n ic s s e c t o r .......................................... 341
T able 82 R a t io o f l o c a l a n d im po r t ed in pu t fo r c o m p u t e r s .......................................341
T able 83 L o c a l c o n t e n t p r o p o r t io n ........................................................................................342
T able 84 In v e s t m e n t in c e n t iv e r a n k in g in e l e c t r o n ic s .................................................344
T able 85 SW O T a n a l y s is ...............................................................................................................346

PR

EV
IE

T able 69
T able 70
T able 71
T a ble 72
T able 73

Chapter 8: Industry Sectors in the NIS: Similarities and Differences

T a b l e 86 S u m m a ry o f t h e k e y f in d in g s t h r o u g h t h e N IS m o d e ls p a r a m e t e r s . .377

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

Vongpivat x

List of Figures

Chapter 2: Thailands Eroding Comparative Advantage: In search for New

Assets

PR
EV

IE

F ig u r e 1 C lim b u p t h e t ec h n o l o g y l a d d e r a n d pr o d u c tio n s t r u c t u r e .................... 19

F ig u r e 2 C h a n g e s in pr o d u c tio n s t r u c t u r e o f T h a il a n d ............................................... 22
F ig u r e 3 E m p l o y m e n t a n d r e a l w a g e b y s e c t o r s ................................................................ 26
F ig u r e 4 I r r ig a t e d la nd lim it a tio n in 1993............................................................................. 30
F ig u r e 5 T e r m s o f t r a d e o f T h a ila n d fr o m 1965 t o 1990..................................................33
F ig u r e 6 S e l e c t e d m a c r o e c o n o m ic in d ic a t o r s o f T h a il a n d fr o m 1970 t o 1 9 9 1 .3 5
F ig u r e 7 C o m pa r is o n o f w a g e rate in in d u st r ia l s e c t o r ................................................ 38
F ig u r e 8 R e l a t iv e C o m pa r a tiv e A d v a n t a g e (RCA) V a l u e ..............................................41
F ig u r e 9 A b so l u t e R&D e x pe n d itu r e a n d a s pe r c e n t o f GDP in T h a il a n d ..............44
F ig u r e 10 In t e r n a t io n a l c o m pa r iso n s o f G r o ss D o m e st ic E x pen d itu r e o n R&D
(GERD) AS PERCENTAGE OF GDP ............................................................................................. 44
F ig u r e 11 In t e r n a t io n a l c o m pa r iso n s o f B u sin e ss D o m e st ic E x pen d it u r e o n R&D
(BERD) a n d H ig h er E d u c a tio n E x pe n d it u r e o n R&D (HERD) as per c e n t a g e
o f GDP ...........................................................................................................................................46
F ig u r e 12 In t e r n a t io n a l c o m pa r iso n s o f R&D pe r so n n el a n d RSE ............................48
F ig u r e 13 In t e r n a t io n a l c o m pa r iso n s o f RSE pe r s o n n e l b y so u r c e s o f su pp l y . 49
F ig u r e 14 W o r l d c o m pe tit iv e n e ss in in f r a s t r u c t u r e f a c t o r ........................................52

Chapter 3: Literature Review

F ig u r e 16 E v o l u t io n o f t e c h n o l o g y c a p a b il it y d e v e l o pm e n t ...................................... 62

Chapter 4: Research Design

F ig u r e 17
F ig u r e 18
F ig u r e 19

S im plified w o r k in g pr o c e ss o f t h e NIS m o d e l .......................................... 109

T h e N a t io n a l In n o v a t io n S y s t e m (NIS) M o d e l ........................................116
R e l a t io n sh ip M a p o f t h e N IS ............................................................................. 123

Chapter 5: Automobile Industry

F ig u r e 20 P r o d u c t io n a n d D o m e s t ic s a l e s ........................................................................... 147
F ig u r e 2 1 C B U a n d S pa re pa r ts e x p o r t ...................................................................................147
F ig u r e 2 2 C a p a c it y U t il iz a t io n in t h e a u t o in d u st r y o f T h a il a n d .......................... 148

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

Vongpivat

xi

F ig u re 23 A u to m o b ile pr o d u c tio n by v eh ic le t y pe s in 1 9 9 9 ........................................ 165

F ig u re 24 P r o d u c tio n C a pa c it y o f V ar io u s V eh ic le T y p e s ...........................................168
F igu re 25 V eh icle S a l e s by C o u n t r ie s ................................................................................... 174
F ig u r e 26 E m p lo y m e n t S t r u c t u r e by L ev els o f E d u c a t io n ......................................... 185
F igu re 28 N e t Fo r e ig n D ir ec t In v estm en t in M a c h in e r y a n d T r a n spo r t
E q u ip m e n t ....................................................................................................................................204
F ig u r e 29 P ro d u c t - tec h n o l o g y m a t r ix .................................................................................206
F igu re 30 V a lu e a d d ed pe r w o r k er o f t h e T h a i a u t o m o b il e in d u s t r y .................. 213
F ig u r e 31 A u to m o b ile P r o d u c t io n o f T h a ila n d fr o m 1961 t o 1999......................... 216
F ig u r e 32 A u to m o b iles a n d P a rts E xpo rt o f T h a il a n d fr o m 1974 to 1 9 9 9 ..........217

Chapter 6: Textile Industry

PR
EV

IE

F ig u r e 33 S t a g es o f v a lu e c h a in pr o d u c tio n o f t e x t il e in d u s t r y ............................228
F igu re 34 M a r k e t sh a r e o f th e US tex tile im p o r t ........................................................... 239
F igu re 35 V o lu m e a n d v a lu e o f T hai a ppa r el e x po r t t o MFA a n d n o n -MF/1
MARKET..........................................................................................................................................241
F igu re 36 E x po r t v a lu e o f tex til e in d u str y o f T h a il a n d fr o m 1985 to 1995.... 242
F ig u r e 37 In d u st r y st r u c t u r e o f th e T h a i t e x t il e in d u s t r y .......................................253
F ig u r e 38 D o m estic c o n su m pt io n o f tex tile pr o d u c t s o f T h a il a n d ........................ 256
F ig u re 39 C o m pa r iso n o f elec tr ic ity c h a r g es a c r o ss c o u n t r ie s .............................260
F ig u re 4 0 S u rv ey o f pr o d u c t a n d pro cess d e v e l o pm e n t a m o n g T hai tex tile mills
.......................................................................................................................................................... 277
F ig u re 41 P r o d u c tiv ity t r en d in fo ur sta g es o f p r o d u c t io n ..................................... 278
F ig u r e 42 L a b o r pr o d u c tiv it y tr en d in fo u r st a g es o f p r o d u c t io n ........................ 279
F igu re 43 T r en d in v a l u e - a d d ed g r o w th o f t e x t il e a n d c l o t h in g in d u s t r y ...... 279
F ig u r e 4 4 R e a l price a n d q u a l ity im pr o v e m e n t o f T h a i t e x t il e p r o d u c t s ........... 280
F ig u r e 45 R ev ea l C o m pa r a tiv e A d v a n ta g e t r e n d o f T h a ila n d a n d o t h e r
c o u n t r ie s ..................................................................................................................................... 284

Chapter 7: Electronics Industry

F ig u r e 46 V a l u e c h a in pr o d u c tio n in t h e e l e c t r o n ic s in d u st r y o f T h a il a n d ... 292

F ig u r e 47 N e t flo w o f F D I b y in d u stries o f T h a il a n d ....................................................301
F ig u re 48 R & D pe r so n n e l in T h a ila n d c l a ssifie d b y in d u s t r ie s ............................... 312
F ig u r e 49 E x per ie n c e o f IT per so n n el in T h a ila n d in 1991........................................... 314
F ig u r e 50 C h a n g es in sk il l c o m po sit io n o f t h e T h a i e l e c t r o n ic s in d u s t r y .........315
F ig u r e 51 O w n e rs h ip s t r u c t u r e o f s u p p lie r s in e l e c t r o n i c i n d u s t r y dm 1993.... 318
F ig u r e 52 M e a n s o f a c q u i r i n g t e c h n o l o g y f o r T h a i PCB M o n i t o r f i r m s ............ 330
F ig u r e 53 FDI in th e ele c t r o n ic s su b - se c t o r s fr o m 1987 t o 1 9 9 3 .............................331
F igu re 54 R ela tiv e l a b o r pr o d u c tiv it y in e l e c t r o n ic s in d u s t r y .............................333
F ig u r e 55 R C A in d ex b y SITC pr o d u c t c a t e g o r ie s ........................................................... 338
F ig u r e 56 M a r k e t sh a r e o f v a r io u s elec tr o n ic s pr o d u c t s o f T h a il a n d ...............340
F ig u r e 57 R ela tiv e o u t p u t v a lu e g r o w t h ............................................................................ 343

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

Vongpivat

xii

Chapter 8: Industry Sectors in the NIS: Similarities and Differences

PR

EV
IE

F ig u r e 58
R ela tio n sh ip betw een ty pe o f t e c h n o l o g y a n d t y pe o f pr o d u c tio n
STRUCTURE THROUGH INCOME LEVEL AND TIME................................................................ 353
F ig u r e 59
T h e N a t io n a l In n o v a tio n S y s t e m (NIS) m o d e l ........................................ 355
F ig u r e 60
R ela tio n sh ip M a p o f th e N IS ............................................................................ 357
F ig u r e 61
S u r v ey q u e s t io n ......................................................................................................380
F ig u r e 62
S u r v e y r e s u l t s ........................................................................................................ 381

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

Vongpivat

Introduction

CHAPTER 1 INTRODUCTION

TABLE O F CONTENTS

STRUCTURE O F THE T H E SIS................................

PR
EV

IE

OVERVIEW .......................................

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

Introduction

Vongpivat

Chapter 1

Introduction

Overview

This dissertation develops and applies a national innovation system conceptual

model to selected industries of an emerging-market country - Thailand. The national

EV
IE

innovation system framework offers a new explanatory power for being national- and
system-oriented, rather than element-oriented. A novel framework, the National
Innovation System (NIS) model, is an extensive refinement of both Nelsons narrative
approach of the national innovation systems,1 and Gotschs and McEachrons pictorial

PR

technology development model2 that comprehensively identifies and frames all the key
variables in the innovation process o f various Thai industries. These previous innovation
system studies, however, locate variables in the innovation process without complete,
comparable frameworks or industrial applications in developing countries. Other studies
on the industrial performance generalize certain key factors across countries.3 Innovation
in one country like Thailand is, nonetheless, different from another country like the US.
1Richard R. Nelson, ed., The National Innovation Systems: A Comparative Analysis (Oxford and New
York: Oxford University Press, 1992).
2 Carl H. Gotsch and Norman B. McEachron, "Technology Choice and Technological Change in Third
World Agriculture: Concepts, Empirical Observations and Research Issues," in Technology Choice and
Change in Developing Countries: Internal and External Constraints, ed. Babara G. Lucas and Stephan
Freedman (Dublin: Tycooly International Publishing Ltd., 1983).
3 Please see the literature review chapter for details on various levels o f analysis behind industrial
performance from industrial organization and corporate-level school to strategic management advocates.

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.