System dynamics approach to the analysis of interaction of foreign direct investment and employment in Thailand

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Taiwan Institute of Business Administration
This research studies the effect of FDI policy on the wages and employment in Thailand. A system dynamics model that simulates the interaction between labor market and foreign direct investment in Thailand is used. The results show that having an FDI policy results in higher FDI in the short term but lower FDI in the long term. The effect of the policy on unemployment in the short term is not significant but the unemployment ratio is higher than it would be without such policy in the long term. Regarding the salary, having an FDI policy results in having higher average salary in both the short-term and the long term.
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This paper was also presented at the Academy of International Business Northeast Annual Conference October 1-4, 2009, in New York City.