The Determinants of Thailand’s Road Vehicle Exports

Road vehicles, which are a major manufacturing export, can increase employment and income for the Thai population. It has therefore necessitated the effective integration of information and communication technologies to enhance the comparative advantage in international markets. The research aims to investigate the factors affecting Thailand’s road vehicle exports. The four factors (foreign direct investment, exchange rate, openness, and GDP per capita) were analyzed in the period 1980 to 2018. The findings from the cointegration test shown that all four factors were positively related to road vehicle exports. The impulse response functions present that the real exchange rate was essential for road vehicle exports to grow from the third year onwards. A variance decomposition analysis revealed that GDP per capita and real exchange rate were an important factor of the ten-year forecast for road vehicle exports, followed by trade openness and foreign direct investment. Based on empirical research, the growth rate of GDP per capita can help to expand production capacity and to expedite exports. The depreciation of the Thai baht attracts more foreign investment and demand for Thai products. The growth in trade openness and foreign direct investment is also linked to increased export volume in this sector. Therefore, to promote sustainable growth in vehicle sales, the government needs to expand market destinations and entice foreign investors by offering more incentives.