Testing localization of Thai automobile industries

The development of industrial clusters is crucially important for industries such as automobiles. However, it is still doubtful whether all parts suppliers should be localized, regardless of the parts categories. We tested the above hypotheses using data compiled from the Thailand Automotive Industr...

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Bibliographic Details
Published inIDEAS Working Paper Series from RePEc
Main Authors Kuroiwa, Ikuo, Techakanont, Kriengkrai, Keola, Souknilanh
Format Paper
LanguageEnglish
Published St. Louis Federal Reserve Bank of St. Louis 01.01.2018
Subjects
Automobile industry
Automotive parts
Hypothesis testing
Localization
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Summary:The development of industrial clusters is crucially important for industries such as automobiles. However, it is still doubtful whether all parts suppliers should be localized, regardless of the parts categories. We tested the above hypotheses using data compiled from the Thailand Automotive Industry Directory 2014. First, the factors affecting the location of the Thai automobile industry were reviewed. Second, the kernel density of the bilateral distances between parts suppliers was estimated. Finally, hypothesis testing on the localization of parts suppliers was conducted. The study found that the automobile industry as a whole was significantly localized, and significant localization occurs only within 150 km, in terms of bilateral distance between firms.