This project examines the competitiveness of the Thai economy in general, and that of its
automotive cluster in specific. We begin with a review of Thailand’s macroeconomic
performance since the Asian Financial Crisis in 1997 to provide a backdrop for the assessment of
national competitiveness. While recognizing the attractiveness of Thailand as an investment
destination, we identify key bottlenecks in terms of regulatory burden, skill and infrastructural
shortages. These same weaknesses are found at the cluster level. However, the automotive
cluster has performed robustly in terms of expanding its share of world exports. The study
concludes that to sustain growth, Thailand needs to improve its productivity and make a
transition from a Factor/Investment-driven phase of growth into an Innovation-driven phase of
growth1
, by addressing its skills, regulatory and infrastructure bottlenecks. Rather than compete
on factor cost with its neighbors, it can leverage on its neighborhood by positioning itself as the
hub for common clusters in the Greater Mekong Region. The automotive cluster can lead in this
transition. By deepening technical and marketing skills and attracting MNCs to relocate their
higher end product development and marketing activities to Thailand, this cluster can transit
from a “production base” to a “home base” for MNCs to tap the growing demand for
automotives in Asia, even while demand for automotives is declining in other parts of the world.