Localisation Processes within Global Production Networks: Automobile Component Sourcing in Thailand

Abstract

The political framework in Thailand regulating market access for global automobile firms aimed in particular to create and develop an industrial base in terms of component manufacturing and automobile assembly. The national regulatory framework included import substituting measures, such as a local content requirement (LCR), to force global automobile firms to use locally manufactured components for the assembly of imported completely knocked-down vehicles to benefit from much lower import tariffs as would be the case for the import of fully built-up vehicles. Therefore, with the increasing domestic demand for automobiles, this regulation also had the desired multiplier effects for Thailand’s industrialisation and national economic development. This paper aims to show how a changing political economy affects the localisation processes of automobile firms in a developing country context.