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The European Journal of Development Research

, Volume 29, Issue 1, pp 37–53 | Cite as

Industrial Policy, Multinational Strategy and Domestic Capability: A Comparative Analysis of the Development of South Africa’s and Thailand’s Automotive Industries

  • Justin BarnesEmail author
  • Anthony Black
  • Kriengkrai Techakanont
Original Article

Abstract

For developing countries seeking to promote the automotive industry, it has been essential to attract foreign investment, and the terms under which this takes place are key determinants of the resulting development impact. This article examines the development of the sector in South Africa (SA) and Thailand. Both industries have been driven by growing domestic demand, government support and rapid international integration, but the Thai industry has grown at a significantly faster pace. The article demonstrates that the Thai automotive industry has major firm-level cost and market advantages. The combination of a favourable location, supportive trade and industrial policy and supply-side strengths has led to large-scale investment and Thailand’s development as a major regional hub. Foreign investment in SA on the other hand has been at a lower level, aimed primarily at accessing the domestic market. The consequence has been more limited development of the automotive cluster.

Keywords

industrial policy multinational automotive industry competitiveness South Africa Thailand 

Abstract

Pour les pays en développement cherchant à promouvoir l’industrie automobile, il a été essentiel d’attirer les investissements étrangers et les conditions dans lesquelles ces investissements se déroulent sont des facteurs déterminants pour l’impact sur le développement qui en résulte. Cet article examine le développement de ce secteur en Afrique du Sud et la Thaïlande. Ces deux industries ont été stimulées par une demande intérieure croissante, le soutien du gouvernement et par l’intégration internationale rapide, mais l’industrie thaïlandaise a grandi à un rythme nettement plus rapide. L’article démontre que l’industrie automobile thaïlandaise possède d’importants avantages au niveau des coûts d’entreprise et du marché. La combinaison d’un emplacement avantageux, de politiques commerciales et industrielles favorables et de forces au niveau de l’approvisionnement ont conduit à des investissements à grande échelle et au développement de la Thaïlande en tant que pôle régional majeur. D’un autre côté, les investissements étrangers en Afrique du Sud ont été moindre, visant principalement l’accès au marché intérieur. La conséquence a été un développement plus limité du cluster automobile.

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Copyright information

© European Association of Development Research and Training Institutes (EADI) 2016

Authors and Affiliations

  • Justin Barnes
    • 1
    • 2
    Email author
  • Anthony Black
    • 3
  • Kriengkrai Techakanont
    • 4
  1. 1.University of KwaZulu-NatalDurbanSouth Africa
  2. 2.B&M AnalystsDurbanSouth Africa
  3. 3.School of Economics, University of Cape TownCape TownSouth Africa
  4. 4.School of Economics, Thammasat UniversityBangkokThailand

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