MNEs and the Global Integration of Thailand's Processed Food Exports: A Firm-Level Study

Abstract

This paper presents the findings of a firm-level case study examining the role of multinational enterprises (MNEs) in processed food exports from Thailand. The discussion covers both FDI (foreign direct investment) and non-FDI channels of MNE involvement in the export of four major items, namely, canned pineapple, canned tuna, processed chicken, and processed shrimp. The findings suggest that MNEs play a vital role in the expansion of processed food exports from Thailand. MNE involvement begins with the establishment of joint ventures with Thai firms (FDI channel). Then, other local firms engage in export-oriented production and enhance their competitiveness through technology spillover. As the industry gains maturity, links with MNE buyers begin to play a far more important role than the FDI channel. The highly liberal trade and investment policy regime of Thailand, as well as the absorptive capability of local firms and the presence of the Thai MNE, CP group, are important elements of the enabling environment that allows these Thai exporting firms to gain maximum benefits from MNE involvement. The Thai experience demonstrates that the conventional approach of focusing on FDI as the sole link between MNEs and domestic manufacturing tends to overlook the significant role of MNEs in the export performance of the host countries' diffused-technology industries such as food processing.