Thailand’s Participation in Global Value Chain under Changing International Economic Landscape: The Case of RCEP and CPTPP
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This paper investigates Thailand's position in Global Value Chains (GVCs) and analyzes supply chain linkages in the RCEP, CPTPP and its potential expansion, including India, the United States, the United Kingdom, and China. Employing the GVCs framework, the study addresses data constraints and unveils a moderate increase in Thailand's backward linkage from 1995 to 2018, while its forward linkage remains steady. The intra-bloc GVC analysis underscores robust supply chain connections within RCEP and CPTPP blocs. As an ASEAN member, Thailand deepens its GVC participation via the RCEP bloc, and joining CPTPP could fortify Thailand’s global trade linkages position. Subsequently, VECM results validate the existence of long-term relationships, and VEC Granger Causality results reveal short-term causal relationships within the supply chain of Thailand’s production and its trading partners, based on monthly data from January 2011 to July 2023. These evidences further ascertain Thailand's supply chain linkages with its trade partners, notably highlighting robust linkages between Thailand and China. Although backward linkages prove resilient across all trading partners, forward linkages suggest unstable supplies of Thai products. Two policy implications emerge: Thailand's weakened position in GVC and supply chain links underscore the urgent need for Thailand to upgrade its domestic production capabilities, enhancing economic integration especially to attract foreign direct investment and hence, improve the country’s competitiveness. Additionally, taking part in CPTPP trading bloc can be crucial for Thailand to strengthen its GVC participation and moving up the value chain via efficiency and productivity enhancement, especially with the potential inclusion of China in CPTPP. The dominance of Chinese economy in the region elaborates greater supply chain benefits relative to the US or UK taken into consideration the size of the economy, possibility of technology transfer and catching up, and the geographical location.
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