PUBLICATIONS & REPORTS

Contents Introduction

This paper examines the relationship between foreign ownership shares and trade propensities in Thai manufacturing in 1996. The results of this study suggest that foreign MNCs are more likely to have high trade propensities than local plants after controlling for differences in factor intensities, size, vintage, BOI-promotion status, and industry affiliation. Differences in trade propensities between foreign MNCs and local plants appear to be very pervasive, in contrast to the far less frequent observation of technological differences between these two groups of plants in numerous previous studies. Another important finding emerging from this study is the tendency low trade propensities to be more common in minority-foreign plants than in majority- or wholly-foreign plants, while differences between the latter majority- and wholly-foreign plants tended to be small. Moreover, in all of these cases, differences between local plants and foreign MNCs tended to be larger for export propensities than for import propensities. Combined with previous results for a smaller sample of Thai firms in 1990 and large samples of Indonesian manufacturing plants in 1992 and 1994, which also reveal similar patterns, these results suggest that the relationship between foreign ownership shares and trade propensities is an important aspect of foreign MNC activity in Southeast Asia.