PUBLICATIONS & REPORTS

Contents Introduction

The purpose of this paper is to compare labor productivity in local plants and plants of foreign multinational corporations (MNCs) by nationality in Thai manufacturing in 1996 and 1998. Differences between nationality groups of foreign MNCs and local plants are statistically insignificant in the vast majority of year-industry-nationality group combinations examined. The results for the relatively few cases in which statistically significant differences were observed suggest a weak tendency for MNCs from Europe, Japan, and the United States to have relatively high labor productivity. However, even when significant differences are observed, there is little consistency in productivity differentials across years, industries, or nationality groups, and a few significant differentials are negative. This makes it very difficult to provide a meaningful economic explanation for the pattern of differentials that is observed and suggests that differentials between foreign nationality groups and local plants may have little economic relationship to the nationality of foreign plants. In this respect, the results of this study are consistent with results from previous studies, which reveal relatively large variation in the relationship between foreign ownership, however measured, and labor productivity in Thai manufacturing, depending on foreign ownership type, labor type, industry, plant size, and year.