PUBLICATIONS & REPORTS

Contents Introduction

The purpose of this paper is to compare labor productivity in plants of foreign multinational corporations (MNCs) and plants belonging to local firms in Thai manufacturing in 1996 and 1998. In view of the theoretical expectation that foreign MNCs will be more productive than local firms or plants, perhaps the most important result of this study is the lack of evidence suggesting that foreign MNCs have systematically higher labor productivity than local plants. This result is consistent with results from previous studies of Thai manufacturing, but contrasts with previous results for manufacturing in Indonesia and Mexico. Another important result is the apparent lack of a strong positive correlation between labor productivity and foreign ownership shares. Rather, these estimates indicate wide variation in the relationship between foreign ownership and labor productivity in Thai manufacturing depending on foreign ownership share, type of labor, industry, plant size, and year. Correspondingly, although foreign ownership shares appear to have increased after the 1997 crisis, these results do not suggest systematic changes in the relationship between foreign ownership and labor productivity between 1996 and 1998.